Answer the call for music

Nokia is putting up a challenge to Apple's iPhone and iTunes with a premium that offers an easy and legal way of downloading music, says BRIAN BOYD

EVERYONE IN the music industry knows that, at some stage, music will become a service that will be paid for in the same way we pay for broadband - with a fixed monthly fee. This new "subscription model" was always going to be fraught with difficulties. How much to charge? How much goes to the artist? The record label? The publishers?

It was believed that if any company could get the "all-you-can-eat" subscription model up and running it would be Apple, who have proved themselves to be pioneers over the past few years - first with the iPod, the iTunes store and more recently with the iPhone.

Apple have advanced plans for an "iTunes Unlimited" service, where, for a monthly fee, you will be able to download all you wish from iTunes. However, the normally innovative company was beaten to the punch by Finnish communications company, Nokia.

When Nokia unveiled their new "Comes With Music" (CWM) service in London last month, it marked the culmination of five years of intense research and development into how mobile phone users wanted to receive their music and how much they were prepared to pay.

The Nokia CWM service is now available in the UK across a range of Nokia devices and will be rolled out around the rest of Europe and onwards from next January. Instead of a monthly fee, you pay a premium charge on the price of the handset; the Nokia 5310 XpressMusic phone, which has a normal retail price of €110, will retail for €190 if you opt for the CWM application. With the €110 phone, you pay for each individual download, but with the €190 phone, you can download as much as you want from a library of over two million songs.

The €80 premium you pay is then divided between all the record labels that own the songs you have downloaded, depending on your download habits. So if 50 per cent of the songs you download are from artists on the EMI label, then EMI will get 50 per cent of that €80. If, after a year, you decide not to renew your mobile phone subscription, you still get to keep all the songs you have downloaded over the previous 12 months.

When you buy the CWM-enabled phone you receive a voucher which unlocks the Nokia Music Library and you download tracks, first to your PC and then transfer them to your phone. The songs are DRM protected, which means they can't be transferred to any other devices you might have. The "free music" voucher lasts for a year, after which, if you want to continue, you have to buy a new handset.

It is believed that the payment made to the record companies from every Nokia CWM handset sold is more than the average person would spend on CDs in a year - hence the record companies' eager participation.

The benefit for the record label is that, given that the music is free, consumers may take a chance on a new band, thus helping to widen people's musical tastes.

Liz Schimel, Nokia's head of music services, says the CWM initiative is "a seismic shift in how we think about music".

"We kept hearing back that people wanted an easy-to-use, elegant and legal way of downloading music," she Schimel.

Armed with the knowledge that there was a demand for this service, Nokia had to sit down with all the record labels and draw up a pricing policy.

"Once that shared vision was in place - that this was a great way to drive people away from the illegal downloading sites - everyone just rolled up their sleeves and eventually came up with an agreement," she says.

Study after study has shown that if people are given the option of an unlimited, subscription-based service that is reasonably priced, then there would be far less migration to the illegal file-sharing sites.

Schimel can't confirm speculation that Apple knew about CWM and had planned to unveil their own iTunes Unlimited last September. It is rumoured that Apple's talks with the record labels broke down, delaying it.

Not content, though, with stealing a march on Apple with the subscription service, Nokia's most attractive phone with CWM capability is already being termed "the iPhone-killer".

The Nokia 5800 will be available in January for two-thirds of the price of the iPhone and has full touch-screen technology. It seems that Nokia may have just launched a loss leader that will, in the long term, drive handset sales and revolutionise the way in which we purchase music.