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Free Universal Music Downloads on New Nokia Phones
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By ERIC PFANNER
Published: December 5, 2007
LONDON, Dec. 4 — Nokia, the telecommunications company, and the Universal Music Group, the recording company, said on Tuesday that they would offer unlimited free downloads of Universal songs to buyers of certain Nokia phones as a way to promote cellphones as media devices and to develop new revenue for a music industry struggling with piracy. Under the agreement, Universal will let users download its entire catalog at no cost for 12 months, and keep the songs at the end of that time. Users will be able to download the songs to new Nokia phones or to their computers via mobile or fixed-line broadband connections.For Nokia, the announcement is a step toward its goal of becoming an Internet company like Google. The service will operate through an online music store that Nokia started last month, establishing the company as a rival to iTunes from Apple and to the music download and subscription services run by mobile network operators.Universal, meanwhile, will get a portion of revenue from sales of the phones.Despite a proliferation of digital business models, including subscriptions, paid downloads and free music services supported by advertising, the music industry has not come up with a solution to online piracy.“It’s one thing to have people downloading free music illegally,” said Mark Mulligan, an analyst at Jupiter Research. “What is bold and strategically important about this is that they are tacitly accepting that they will never get digital youth to pay for music.”Details of the service remained sketchy. Nokia said that it would start in the second half of next year and that it was negotiating with other music companies in an effort to get them to join Universal.Nokia declined to say how much the phones would cost, though analysts said it was likely that only premium models would be compatible with the new service. Customers would receive a voucher giving them access to the free songs on the Nokia Music Store; digital rights management technology would prevent further copying.While cellphone manufacturers, network operators and music companies have hopes high for this model, so far the biggest source of revenue for the music companies has been sales of customized ring tones. “Nobody can claim to have gotten it right yet,” said Martin Garner, an analyst at Ovum, a consulting firm. “There’s room for experimentation, and that’s what this is.” Nokia Raises ForecastNokia, the world’s biggest maker of mobile phones, has raised its forecast for profit margins while predicting a further decline in selling prices next year.Shares of Nokia fell $1.32, to $38.92. The company said yesterday that operating profit would be 16 percent to 17 percent of sales in one to two years, up from 15 percent predicted a year ago. Nokia also foresees some decline in average industry prices. It also said the industry would grow about 10 percent in 2008 from the 1.1 billion units this year and that industry volume growth in 2008 would top 15 percent in Asia, China, the Middle East and Africa.
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Past CoverageNokia Challenging Apple by Offering Music Service With Direct Downloads (August 30, 2007)CIRCUITS; Now, When You're On Hold, You Can Choose the Music (March 8, 2007)World Business Briefing | Europe: Finland: Nokia to Buy Music Distributor (August 9, 2006)
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