Nokia's Comes With Music now has a price tag
The last secrets about Nokia's long-awaited Comes With Music initiative have been revealed, kinda sorta. The phone manufacturer announced this morning that it was launching the program in the U.K. Oct. 16, but only on prepaid mobile phones sold by retailer Carphone Warehouse. The least expensive of these is the XpressMusic 5310, which is expected to sell for just under 130 GBP (about $230). Carphone Warehouse has been selling that model for upwards of 80 GBP (about $140), which suggests that Comes With Music will add $90 to the price of an entry-level phone. The premium may be smaller on higher-end phones, which have bigger profit margins, and on phones sold with a multiyear contract, which typically are subsidized by the mobile-phone carrier.
Is it worth $90? That depends...
... on how large your appetite for music is, how wedded you are to your MP3 player, how willing you are to steal music and how much you have in your bank account. Nokia is trying to carve out a new (legal) market segment between free, non-interactive services (e.g., Slacker) and fully interactive subscriptions (i.e., Rhapsody and Napster), the portable versions of which cost about $180 per year. Obviously, if you're happy to spend less than $50 or so annually buying tracks from iTunes or Amazon.com (or just copying them for free from file-sharing networks), you're not the sort of person Nokia is targeting. Nor should you pay any attention to this offer if you can't imagine using your phone to play songs.
Comes With Music is more restrictive in some ways than its unlimited-downloads competition, less restrictive in others. Comes With Music customers can keep the songs they download to their PCs* forever, assuming their computers (and Nokia's DRM servers) last that long. But they can be transferred only to their Comes With Music phones, not their iPods (or any other flavor of MP3 player). Customers can transfer the songs to a new PC within three years of buying their Comes With Music phone, but not after that. And if you should keep your Comes With Music phone for more than a year, you'll be stuck with the tracks you downloaded in the first 12 months -- unless, of course, Nokia offers extra months of downloading for an additional fee.
I'm obsessing on the price here 'cause I think it's important, but Nokia is trying to get consumers to focus on anything but that. Its goal is to make the music seem like a cool feature included in the phone, rather than something you pay extra for. That's consistent with the major record companies' efforts to profit from the burgeoning demand for "free" music. Thus, when I asked a couple of Nokia execs how much the Comes With Music service would cost consumers, they bent over backwards to avoid answering. Here's an example, culled from an e-mail from Nokia's Camilla Pagliaroli about comparing Carphone Warehouse's prices for the 5310 with and without Comes With Music:
When looking at the Nokia 5310 Xpress Music as it is currently selling on their site -- the price range is tens of pounds depending on the carrier and the bundle set for that offering -- i.e. it's not linear. Similarly some carriers and/or distributors might sell the Nokia 5310 currently with speakers bundled, or on a service contract/subsidy (like CPW for example who do both). For example, T-Mobile currently sells the Nokia 5310 Xpress Music here in the US on contract for $49.99 - and this includes a 2GB memory card. It is important to realize that Nokia does not ultimately set the final retail price for a product and solution bundle - this varies market to market, carrier to carrier, outlet to outlet, and bundle to bundle.
And when you start looking at other products that will become part of the Comes With Music offer, like the Nokia N95 8GB, there are another set of bundles that the distribution is putting into place, again with local market conditions and distribution decisions making the ultimate final pricing decisions, and the delta may not be be the same as for the Nokia 5310 for example. And similarly with the Nokia 5800 Xpress Music when it will join the Comes With Music family next year, and others onwards.
Hey, Nokia -- You might be able to obscure the exact premium charged for Comes With Music phones. But good luck persuading consumers not to compare the price of those models with other music phones.
The company hasn't said anything specific yet about when the program would come to the U.S., where prepaid and unlocked phones aren't nearly as popular as they are in Europe and Asia. My hunch is that Nokia will have to find a business model that works for carriers, who already have alliances with Napster and Rhapsody. If you're a customer of Verizon Wireless, for example, you can create a service like Comes With Music by subscribing to Rhapsody-to-Go. Of course, that's twice as expensive, but its limitations are different.
*(Don't download to your phones, kids! You'll have to pay your carrier airtime and, potentially, data charges!)
-- Jon Healey