What’s Next for Nokia’s Comes with Music? November 25, 2009

Nokia’s Comes With Music offering launched in October 2008 as a new way of bundling music subscription services with mobile phones. The company initially launched the product with a few handset models in the UK. Users get access to unlimited downloadable music service for a year. After that, they can keep the downloaded music on their mobile phones and their PCs.

I was curious to find out what would happen after the bundled music service expired. So I had a chat with Lenn Pryor, VP Product for Music at Nokia. He shared some of their findings from this past year and some of their thinking moving forward.

Depending on the country, Comes with Music (CWM) can be purchased directly through Nokia or through Nokia’s mobile operator or non-operator partners. CWM was first launched in the UK without an operator. Instead, the bundled product was sold through Carphone Warehouse, Europe’s biggest mobile phone retailer. Today, it is offered through 23 operators in 12 countries. The initial “free” music subscription period can vary between 12, 18, or 24 months, depending on the region.

While there is still no date for a US launch, Nokia is focusing on other markets. These include UK and Germany, Singapore and Australia, Brazil and Mexico, and soon Russia.

Nokia does not share specific data on the uptake of this offering. The official word is that the results have met and/or exceeded the internal targets, though this conflicts with reports hear around MIDEM earlier this year that uptake was only 15% of projections.

But Nokia believes users now have a new alternative to discovering and consuming music, and this is borne out by statistics that Pryor shared on CWM usage.  Without worrying about paying for each track, users seem to be more adventurous in their music consumption. According to Pryor, the average CWM user downloads 450 tracks in their first 30 days of use. This compares to an a la carte music user downloading 15 tracks. Also, CWM users tend to broaden their music horizons for an average of 7-8 genres per user versus an average of 3 genres for an a la carte music user.

These early data points show a correlation between higher music consumption to subscription services where users don’t have to make individual payment decisions. Of course, the downloading of 450 tracks in the first month includes some level of novelty factor and would be hard to sustain. And having a “free” music subscription can encourage that behavior.

The question then becomes: Can these high levels of interest and consumption be translated to paid subscriptions once the honeymoon period is over? That question will not be answered for at least another three months. For now, Nokia is offering free 3-month extensions as a gift to its initial CWM customers in the UK. The company plans to offer paid monthly or 3-month subscription increments after that — though ideally, Nokia would like to sell them a new CWM phone.

The users will get to keep their DRM-protected downloaded music on one mobile phone and one PC after the subscription expires. Regarding DRM-free music, Pryor says the Nokia a la carte music store is going DRM-free — which would be one of the first mobile music stores to do so.   They would like Comes With Music to go DRM-free too, but it is up to the music labels to make that decision.

Azita Arvani is Principal of Arvani Group.  Bill Rosenblatt contributed reporting.