First Take: Nokia’s ‘Music With You’

Nokia today finally announced their ‘Comes With Music’ offering. This has been in the pipes for some time and whilst they’d have loved to have had a full suite of record labels on board at announcement, Universal is undoubtedly a huge catch for them. (It also confirms Jupiter’s research that Universal is the most digitally ambitious and innovative of the record labels – ironically with, arguably, least need to be). Nokia should realistically be able to attract some more of the majors to the table by time of launch (2nd half 2008) as they’ll be willing to offer sizeable advances. Universal (not exactly known for their modesty in advance payment terms) will not have committed to such a radically new approach without having some pretty major financial commitment as security.

Regular readers of this blog will know that Nokia’s download store left me a little cold, but this offering puts Nokia exactly where they should be: at the forefront of innovation in the mobile music space. Due to their scale and newly acquired aggressive Internet strategy Nokia are in a unique position to turn the mobile music market on its head. This offering is a massive step in that direction. It gives buyers of some of Nokia’s music optimized handsets unlimited free access to Universal’s music for a 12 month period, and potentially continued access thereafter.

Regular readers will similarly know that I’m no massive fan of mobile music when it pretends to be PC music. This offering and Vodafone’s/Omnifone’s Music Station are the direction in which mobile music should go i.e. step out of the PC Internet’s shadow and be something brave and different that plays to the strengths of the platform rather than being hindered by its weaknesses.

As I’ve already stated on this blog, 2007 is shaping up to be the worst year ever for the European music industry and digital is failing to live up to expectations, let alone come close to offsetting declining CD sales. The record labels are being forced into considering much more ambitious digital initiatives for the simple fact that the current digital model isn’t doing enough and they know that something different is required for the mass market. Unfortunately it appears that the only way to drive mass market adoption of digital music will be give it away for free, or close to free. But if the alternative is for people to be downloading for free from illegal networks where the labels get nothing, it’s pretty clear which is the preferable option.

The real long term challenge will be to sufficiently differentiate these offerings from premium digital services like iTunes and from CDs. Otherwise there is a risk that everyone will simply go free.

However they are long term tactical challenges with should not detract from this essential strategic move. Nokia and Universal have taken the first brave steps forward, now it is for the rest of the industry to follow in their wake.