hypebot

Nokia's "Comes With Music" Comes With High Price

NEW DETAILS EMERGE

Nokia is looking at a "crippling" financial bill for its "Comes With Music" program bundling free music downloads with phones, according to the UK's Register.

Universal Music and Sony BMG are on board and The Register claims that Nokia must pay the wholesale per-unit rate for downloads over a certain ceiling - reportedly just 35 songs per user. "It will cost Nokia a fortune - it's a reckless business move," an insider and supporter of the concept told the Register who also claims that at least two senior execs have been replaced over problems with the business strategy.

COMMENTARY: Something feels wrong with these numbers; but as I've written before, the devil is always in the details. I've asked repeatedly how the money would trickle down to artists and that question remains unanswered. But if the Register's reporting is true, the money the labels will receive are even higher than anticipated.

I also predict that if these numbers are correct "Comes With Music" will not come for long.

Nokia Denies High Payments To Labels

Last week it was widely reported that Nokia was paying Universal in the $35 range for use of its catalog in the cell phone giant's proposed Comes With Music service, and that other labels would receive proportionate payouts.  Nokia now says that figure is incorrect.

"That is not true. We are not paying that amount to any record label," a Nokia spokeswoman told PC World. But the actual details remain murky with the company siting ongoing negotiations. Whatever the payments to labels; how funds trickle down to artists, payments to indie labels and DRM restrictions all remain concerns.

Nokia's Comes With Music Could Mean Windfall For Labels

DETAILS EMERGE BUT HOW WILL ARTISTS AND INDIES GET PAID?

Two informed sources are putting the per unit payout to Universal for Nokia's new "Comes With Music" cell phones at $33.50-$35.00 per unit.

From there the numbers get staggering. Nokia sold 437 million phones last year and sales are growing. If only 1% of 500 million phones carry "Comes With Music" downloads, the payout to Universal is  $175 million. If it's 10%, Universal grabs $1.75 billion. Factor in market share and the other participating majors get similar checks.

Also intriguing is the leak that each phone comes with "a limited but relatively high number (of) songs", and that the songs are downloads rather than via subscription.

But the devil is always in the details. For example, what restrictions are put on moving the songs to other devices? How will the revenue be shared with artists?  And how will the indie label community be included and compensated?

That's not Nokia's problem....yet.

Danish TDC & 3 Majors Launch Free Downloads

UPDATE: UNION DEMANDS PORTABILITY

Denmark's largest phone company TDC has begun offering free downloads to its customers.  EMI, WMG and SonyBMG and many Danish labels are part of the launch of the million track catalog.  TDC claims to be the first telco in the world to provide such a service.  Nokia and others are still in talks with the major labels about providing similar services.

"The catch is that the format is WMA and DRM is everywhere," Danish music industry observer Rasmus Ardahl tells Hypebot. "The music is licensed each month and if you change your subscription to another internet or mobile phone provider you loose all the music. Furthermore it can't be transferred to iPods or any other MP3-devices."

"TDC is doing this to capture customers. They were very open about that part," he continues. "The DRM is a result of TDC wanting to boost mp3 on mobile tech, and the labels still being afraid;  even EMI and all the indies."

UPDATE From Rasmus Ardahl: "The IT Political union wants the Danish governing body for antitrust to look into it the problem that people can collect large collections of music they will then loose if moving to another service." 

Orange Tries Ad Supported Mobile Music

European mobile operator Orange has launch an ad-supported content trial on its mobile internet platform, Orange World. In the UK 800,000 of Orange’s 15.6 million EU-wide customers can download music to their mobile handsets.

Mobile advertising company ScreenTonic are managing the ads for the trial which include Paramount Pictures and Ford. Orange customers taking part in the trial will be able to download music either for free, for half or full price. Orange will make only 500 music tracks available on the service to start.

Mobile Music On $17.5B Track Despite Ringtone Decline

The global mobile music market is expected to rise to more than $17.5 billion by 2012, driven by subscription music services and full-track downloads, according to a new report by Juniper Research.

“I think it’s fair to say that 2007 marked the tipping point as far as mobile music adoption was concerned," says report author Dr Windsor Holden.  "Far more subscribers began downloading and subscribing to music content in developed markets, and it must be said that that the publicity surrounding the iPhone launch undoubtedly contributed to consumer awareness of mobile music services per se.”

However, the Juniper report also argues that current prices for ringtones are unsustainable and may already have peaked in a number of developed markets, arguing that competitive pricing allied to a steady migration to ad-funded and self-generated ringtones causing the decline.

Vivendi Launches Zaoza. A Preview To Total Music?

Universal Music's Vivendi has launched a subscription-based mobile content service called Zaoza that charges $4.50 a month for unlimited downloads including music, ringtones, games and videos. The service works with most cells and services except the iPhone. Content partners at launch include Sony BMG and several larger EU indies.

The site already has 100,000 beta users in France and launched in Germany and the U.K. will follow this year. In a departure from competitors, there is also a social networking component that allows users to share downloads with five friends.

Vivendi says that it is considering an expansion into the US. There Zaoza might find itself  competing as a kind of cellular version of the Total Music concept being floated by Universal's own Doug Morris. Combine the two services and Vivendi Universal could change the game. But this can only happen if the world's largest music company can move the ball forward more rapidly then it has in the past.

More: Moco, Business Week

Top Ringtones Of 2007

From AT&T

    1.  Shop Boyz - "Party Like a Rockstar"
    2.  Mims - "This Is Why I'm Hot"
    3.  Soulja Boy - "Crank That (Soulja Boy)"
    4.  Nickelback - "Rockstar"
    5.  Akon - "Don't Matter"
    6.  T-Pain - "Buy You A Drank (Shawty Snappin)"
    7.  Hurricane Chris - "A Bay Bay"
    8.  Sean Kingston - "Beautiful Girls"
    9.  Huey - "Pop, Lock & Drop It"
    10. Fergie - "Big Girls Don't Cry"

Apple Fails In Attempt To Stop Ringtone "Pirates"

A game of cat and mouse is developing between Apple and some iPhone users. Apple has just released a software upgrade that prevents users from turning tracks they purchase into ringtones. 

But as early as Saturday new work-arounds were being posted on the net, and third party apps like iToner had upgraded to again make ringtone creation easy. Apple's new concern with ringtone creation seems aimed a protecting a its own custom ringtone maker announced last week which requires track purchase from iTunes and a 99 cent fee.

COMMENTARY: It seems short sighted that anyone in the music or download industry should waste so much energy restricting consumer use of purchased tracks.  After all, isn't re-conversion from P2P grabber to buyer essential to the music industy's future?

Apple's moves will annoy only a small percentage of its customers, but it this is the same small tech savvy group that serves as trend setters and guides for their peers.

Apple Gets Aggressive: New iPods, Lower Prices, WiFi, Starbucks & More

Some music industry related highlights via Gizmodo of today's Apple product announcement:

• New ringtone store for the iPhone
• New models and lower pricing:

iPod Shuffle ($79), iPod Nano ($149, $199), iPod Classic, ($249, $349), the iPhone like iPod Touch player ($299, $399) with WiFi, lower iPhone prices (8GB model dropped $200 in price to $399)

• New iTunes Wifi Music Store for over the air downloads to enabled devices.

Free access to the iTunes Wi-Fi Music Store while at Starbucks.

"Their rollout starts October 2nd, starting NY and Seattle. 600 Stores, following up with San Francisco’s 350 stores in November, nothing in Christmas, and starts again in February ‘08 with LA (600 stores), and March ‘08 in Chicago. After these, that’s 25% of the Wi-Fi stores. In ‘09, they hope to have all Wi-Fi enabled stores online."