Nokia’s upcoming all-you-can-eat music service continues to create buzz. While mainstream media hails Comes With Music as an assault on iTunes, another nail in the CD’s coffin, or as a chance for the recorded industry to get back on track, pundits are still trying to wrap their heads around the underlying costs associated with the service.
The Financial Times points out that Nokia’s first handset bundled with Comes With Music, the 5310 XpressMusic, retails at Carphone Warehouse for £130 (€167/$231). The very same cell phone without Comes With Music normally costs around £70 (€90/$124) in the UK - give or take a couple of quid, depending on special offers by different operators.
In essence, Nokia is charging CWM customers a £60 (€77/$107) premium for the right to download as much music as they want via the service. To put this into perspective: This amount is equal to what you would pay to download 76 songs at iTunes UK, 78 songs at iTunes in the Euro-Zone or 108 songs at iTunes in the U.S.
How is this premium going to be divvied among copyright owners? There is no official or precise answer yet. This is what the FT offered:
“Some of the £60 premium will be distributed among the participating record companies. They include the big four labels – Universal, Warner, Sony BMG and EMI – plus smaller independent record companies.
How much each label gets will be determined according to the download habits of individual consumers. If half their downloads were of tracks by Universal’s artists, 50 per cent of the revenue passed by Nokia to the record companies would go to the label, owned by France’s Vivendi.
Further payments are likely to be made by Nokia to the labels if consumers turn out to be voracious downloaders. However, the extra payments are expected to be capped.”
Regardless of the actual license costs, Nokia’s head of music services, Liz Schimel, is convinced CWM will make money for Nokia and the labels. Most analysts seem to be more sceptical about the prospects of profitability. And 7digital even thinks of CWM as “fatally flawed”.
The first country outside of the UK to get Comes With Music will be Singapore, Nokia announced, with Australia being next. No plans for continental Europe were presented. The United States are scheduled for sometime next year.
One roadblock to success for Comes With Music will be Nokia’s ability to convince mobile net providers to carry their CWM handsets and to subsidize them. In the current set-up over-the-air CWM downloads will be connected to additional data charges. I suspect most sane CWM users will opt to download their songs via internet and then sideload them to their phones. Partnerships with mobile carriers will have to involve some kind of built in data plan for CWM downloads.
