Image by Dekuwa via Flickr
Comes With Music is a newly launched Nokia service which includes music from the top record companies with its handsets for a flat upfront fee. It’s Nokia’s attempt to slowly get into the Apple-dominated music business. It includes unlimited downloads for a year from all four major labels accounting to about 4 million songs. After the end of the first year, users can keep all the music they’ve downloaded and continue to update their collection with a la carte purchases.
This is a paradigm shift, because it’s the first time in the mobile phone industry that you pay a flat fee upfront and forget about the cost of downloading and listening to music. This type of cost transparency is extremely important to promote usage of a service because if people don’t know how much it’ll cost them they won’t use it, however if they know the cost clearly, they are willing to pay. This has been proven by the boom in mobile web usage after flat-rate data plans were introduced.
The handsets with the service are priced well below the iPhone. This is aimed at users who consider iPhone too expensive, mainly targeting teenagers.
Anssi Vanjoki, Nokia’s executive vice-president for markets, describes the target market for handsets with this service in a Business Week article
the 5800 is a “youth-oriented multimedia product made very affordable to the target audience of heavy music consumers.”
It’s designed for young folks whose lives revolve around music. The $407 price tag, before taxes and subsidies, is more than a third below that of an unsubsidized iPhone. And the 5800 will be available from a range of telcos, in contrast to the iPhone, which is officially available only from select providers such as O2 (TEF) in Britain or T-Mobile (DT) in Germany.
It won’t be a free ride for Nokia though, MEX did some informal polling with people outside the mobile industry to see what their reaction was to Nokia’s headline offer of a GBP 129.95 Pay-As-You-Go 5310 and unlimited music for a year. The responses demonstrate the challenges Nokia will be facing:
“For me, I would need it to be compatible with iTunes and my iPod. I don’t want to have to deal with two separate libraries.”
“Is it really unlimited?”
“I read that Nokia were doing this to combat the iPhone.”
“Corporate users like me won’t be interested, as I have my bill paid for me by work and I have to use what I’m given.”
“‘Any song you want’ is a mighty claim! When you said its unlimited, what you really meant was unlimited until I started downloading the whole catalogue!”
“If the Pay-As-You-Go had no monthly top up, I would be interested in GBP 129 one-off charge for 30,000 tunes.”
“Absolutely! It’s well cheap! I’ve done GBP 1500 on iTunes in two years.”
“Is that [GBP 129.95] on top of normal line rental?”
“If it is compatible with iTunes, and I can get it worked into my existing deal, I will definitely do this.”
Most responses were characterised by a sense of caution – people seemed to feel there must be some sort of caveat involved. Reactions were also significantly distorted by individuals existing experiences with iTunes, the iPod and iPhone.
Comes with Music may not match the iTunes experience but it’s mass market and your the average teenager would be more than willing to put up with it because of the cost factor. That said, new pricing models tend to be copied very easily, Sony Erricson has already annouced a competing service in partnership with Omniphone. To remain competitive, Nokia will have to focus a lot more on making the experience as rich as possible.