Nokia Buys Loudeye. Why?!

Nokia today announced the acquisition of Loudeye for $60 million. Iím still waiting for some of the details to be filled In for me by Nokia, but at this stage all indications are that they have acquired all of the assets of what was previously known as OD2. OD2 were the pioneers of the European digital music arena but struggled to keep pace with the arrival of Apple on the scene. Itís not been a great year or so for OD2, they had HMV and Virgin poached off them by MusicNet, MyCokeMusic closed down to be replaced with a strategic alliance with iTunes and they were one of the most poorly ranked companies by the industry in Jupiterís Digital Music Vendor-Perceived Proficiency Rankings. All this amidst mutterings in the industry about their technology.

All of which raises the question why have Nokia bought them? It is instructive to look at a key quote from the Nokia press release

ď”Our combined teams will deliver a comprehensive mobile music experience to Nokia device owners all over the world.Ē

Nokia are interested in the platform not the partners. This is all about boosting Nokiaís digital music footprint, primarily, though not exclusively, across mobile. Which adds further confusion to the already complex mobile music value chain: just about every stakeholder is aggressively competing to seize new territory: Nokia as a digital music provider puts them up against the mobile operators who have high hopes for music services driving increased mobile data revenues. But of course Nokia depend upon the operators to help subsidize their music enabled phones. Not to mention all of the mobile content aggregators such as Jamba getting increasingly aggressive in stealing market share. Something has to give somewhere: there is only so much pie to slice.

Finally it will be interesting to see what happens with OD2ís very strong relationships with Microsoft and MSN following Nokiaís acquisition. Nokiaís majority holding in Symbian doesnít exactly made them natural bedfellows with Microsoft.