I’m here at Nokia World in Amsterdam this week, listening to the company talk about its vision of the future and its current strategy. You can follow along with my photos on Flickr, and I’ll put some videos on YouTube as well. You can also watch some of the talks online at Nokia’s site.
The big news out of the keynote this morning is the new “Comes With Music” offering, which gives buyers of certain Nokia handsets a year’s free access to some music (currently only from the Universal label).
The big difference here is that after the year’s up, consumers will get to keep the music they’ve downloaded, they’ll just lose the ability to download more. For a label-backed service, that’s pretty astounding (though presumably Universal’s getting nicely compensated by Nokia, though execs wouldn’t discuss the numbers). The move will we widely seen as yet another attempt to unseat Apple’s dominance of the paid music download market, but that’s sort of debatable. For one thing, Apple’s dominating a fairly small market, really, and perhaps one that’s not got a really bright future. If this sort of free-music-with-device-purchase model catches on, will paid download stores be all that important?
The important thing for Nokia with this move is to drive usage of mobile handsets as music players. The company says that 20% of people who are buying its devices compatible with its new music store are registering for the service, and of those 20%, a quarter of the tracks they download are pulled down over wireless networks (ie not downloaded to PC and sideloaded to a mobile device). That’s not many users of its music services, honestly, and offering people free tracks should be a good way to get them using the service.
The common thinking will be that Nokia hopes that after a year, people will begin paying to download music from the Nokia Music Store, though that seems fairly unlikely; there’s a bigger chance they’ll just seek out other free sources of music like P2P networks. What seems more likely is “hey, this phone’s a year old… if I get a new one, I’ll get my access to the free music back… okay, I’ll upgrade to the latest model.” And that’s far more valuable to Nokia than somebody buying a few songs from their music store. Being the leader of the paid download market will be increasingly irrelevant, and perhaps Nokia recognizes that; being the leader of the legitimate download market, in which a lot of music content will be free, will be much more important.