“Nokia managers would never admit to being influenced by the Apple iPhone, which mobile phone industry insiders regard as clever but technologically unimpressive,” Jack Ewing reports for BusinessWeek.
MacDailyNews Take: The phrase “technologically unimpressive” must have been either fed to the unwitting business publication writer or said scribe came up with the flawed conceit himself. The iPhone is actually quite impressive technologically, as are its users since they can actually use the capabilities the device offers while others who are shackled with much lesser technology (but perhaps have a few more megapixels or something else here or there) struggle to use even the most basic features due to incoherent user interfaces requiring incomprehensible 100+ page instruction books. Features that go unused due to poor design are worthless and people who judge technology on specs alone are true idiots.
Ewing continues, “‘We don’t determine strategy based on the competition,’ insists Anssi Vanjoki, Nokia executive vice-president and general manager for multimedia. ‘The consumer is our compass.'”
MacDailyNews Take: And that compass points straight to Apple’s iPhone.
Ewing continues, “Beginning next year, higher-end Nokia phones will come with a built-in music service offering unlimited downloads of songs for a year. Nokia has signed up Universal Music to provide its catalog.”
MacDailyNews Take: Universal CEO Doug Morris, a 68-year-old technophobe, is trying to break Apple’s dominance before his free money-for-nothing conveyor belt grinds totally to a halt. Read all about it here: “Universal Music CEO Doug Morris looks to break Apple’s iPod+iTunes dominance.” Morris seems to have forgotten, or doesn’t understand, that all of his music is already available for free — forever, not just for a year — via P2P file sharing. Does he realize that people pay for his music via Apple’s iTunes Store, unlike those who use Acquisition, Azureus, LimeWire, Transmission, etc.? And Morris isn’t even the stupidest one in the room: he got Nokia to pay him for a year of free music on the promise that they’d sell more phones to people who already have access to the same exact free music (plus vastly more free music – all without any limits whatsoever) than Nokia will be offering through this ill-considered deal.
Ewing continues, “‘Comes With Music,’ as Nokia is calling the service, seems aimed at preventing Apple from dominating mobile music the way the U.S. company’s iTunes service has dominated sales of digital music on PCs and MP3 players. Consumers will certainly have less incentive to buy music from iTunes if unlimited downloads from the Nokia service are included in the price of a new phone. The songs can be played on both the Nokia phone and on a PC, and all the material downloaded in the first year can be kept after the end of the free subscription period—a first for the recording industry.”
MacDailyNews Take: This idea sucks worse than Microsoft’s Windows UI department. The music is already available for free. Why would we downgrade from an iPhone to pay for some Nokia thing when we already have access to free music if we want it?
Ewing continues, “Vanjoki wouldn’t disclose terms of the deal with Universal except to say that it will be profitable for both companies. In any case the music companies have an interest in ensuring that the online music business isn’t dominated by a single company such as Apple with the power to dictate prices. Of course, the unlimited downloads deal is good only for a year. But Nokia is betting that by then customers will be so hooked on the service they will be willing to pay more. The fee after a year hasn’t been determined, Vanjoki said in an interview.”
Full article here.
MacDailyNews Take: The first hit is free, kid. Is mimicking the business model of a street corner drug dealer really the best course for Universal and Nokia to chart? Especially when users have been making their own and sharing it for free everywhere for years?
Again, the music is already available for free, without limiitations, rendering Universal’s and Nokia’s big idea completely moot before they even press the button to explode it on the launch pad (sometime in mid-2008 is what they’re promising). And, if, as the Nokia stooge asserts in the article, “it will be profitable for both companies,” then Nokia is paying Universal less than it will be charging its suckers for devices, be they consumers or carriers. In the cases where they’re carriers, the carriers will be charging the end consumer instead of Nokia, so those lucky suckers get marked up twice. There is no such thing as a free lunch. Make no mistake: people who fall for this “Comes With Music” scam will be paying for their music and probably paying more than they would via iTunes.
“The music companies have an interest in ensuring that the online music business isn’t dominated by a single company such as Apple with the power to dictate prices” because they want to keep that pricing power restricted to the music cartel’s existing four members so they can continue along with the business of overcharging as usual. One last time, they forget or want to forget that the music is already available for free. The consumer has the power now; not the big four dinosaurs; not Apple. The consumer. This idea of Universal’s would only have a chance of working if piracy didn’t exist (but, it does, and in overwhelming popularity vs. paid online music sales). Can Universal and, by extension, Nokia really be that stupid? Why, yes, it seems they can. Being unable or unwilling to grasp basic market realities is a condition which does not bode well for future business success.
Dinosaurs do still roam the earth; Doug Morris is a prime example. His greedy, backwards thinking begets counterproductive ideas that end up devaluing the very product to which he seeks to ascribe value while driving paying customers toward piracy. If music is “free,” then there’s no such thing as stealing it, right, Doug?
UPDATE: 5:43pm EST: David Chartier reports for Ars Technica that “Nokia’s ‘Comes With Music’ implementation will be handicapped by DRM. In fact, Nokia chose Microsoft’s PlaysForSure DRM… ‘Comes With Music’ tracks won’t be compatible at all with the iPod… Tracks can be downloaded via Nokia’s phones or PCs, and the DRMed tracks will remain playable even after the one-year subscription period finishes. Here’s the kicker though: In order to renew the subscription and regain access to new music for another year, Nokia says consumers can purchase a new device. Burning a CD of any track(s) will require an upgrade purchase for each track.”
Chartier reports, “Nokia says the cost of a ‘Comes With Music’ subscription will be included in the price of the device.”
Full article here.
MacDailyNews Take: Obviously, as far as Universal Music and Nokia are concerned, what “Comes With Music” are many strings. We predict failure.
With Universal charging nothing for this music, I bet they only pass on 5% of nothing to the artists and keep most of the nothing for themselves. Old habits die hard.
No drug dealer ever gave me free $#!t.
This seems to me that two businesses are consipring to bring down another. Bit like British Airways and Boeing colluding to squeeze Virgin.
Universal should be compelled to offer Apple their video catalogue at reasonable prices given that they are selling to others. If they ever pull their songs from iTS then I bet it will go to the monopolies commission.
AlanAudio…
I’ll make you a different bet!
UMG will recover the music from the artists because the accounting will make this look like marketing expenditure on their behalf which, if I remember the way the music industry tends to work, is normally deducted from the artist’s royalty statements like video production, recording costs, etc.
If anyone thinks that Doug is giving anything away from UMG’s pocket, they need to take a long, slow drink of reality.
Here’s the rub: only one phone and one PC can play the songs. They might be able stuff their hard drives, but in two years when they have replaced their phone, all of those DRM’ed songs will be worthless. You won’t really be able to keep your songs for long. I can also guarantee that the user interface will be awful. Transfers between the phone and PC will be handled by archaic crapware which has the user friendliness of a Microsoft only product.
Plus, imagine the bandwidth costs that Nokia will have to provide? That will be expensive.
Good luck to both companies — I hope that the execs have their golden parachutes ready!
Nokia agreed to pay Universal $5 per phone in order to subsidize the music subscription. Sort of like the $1 Zune tax they collect/collected. Of course, the music uses “Plays for Sure” DRM, so we all know how long “forever” truly is here…
In short, you’d have to be an idiot to go for this and expect to keep the music for good.
So, back to the “renting music” idea.
Apple has proven time and again, people want to OWN their music.
Please – we did a poor deal with Apple… we wanted too much control. We will broadcast last weeks tv shows for free on the net with tones of commercials. And, now we plan to give away as much free music for a year. Oh yeah… the music is DRM.
Hmmm… and Universal was blaming iTunes and iPod for music piracy. This will only encourage more of it. Tell a kid not to do something and that kid will find a way to do exactly what you discouraged he/she.
money smells bad anyways
Drake
BTW. Why doesn’t he pull the Universal library from iTunes?
I mean, obviously, the man wants to give it away instead.
Stock smells good – eh!
“We don’t determine strategy based on the competition…”
Yeah ’cause strategy has nothing to do with competition.
Some people think that Apple isn’t competing – just doing their own thing. It’s one thing to be the first to invent and/or market a product and be out in front leading the competition, and another thing to be in the middle of the competition trying to come in second or third. When you’re out in front with truly useable innovation you’re often, well – In a league by yourself, and therefore are not in the competition, but indeed you are creating competition.
If I could partner my product or service with a company in a league all their own then my sense of competition would pull to do exactly that.
I wonder what the artists get out of the “free” subscription service… I guess they get a tiny percentage of nothing for their efforts.
I’d imagine musicians and composers would revel in their lost income being used to sustain an outdated distribution control model and sustain the corporate vampires.
The part that is missing is the tracks are only playable one on Nokia Device and one PC they are DRM’d and it requires you to pay extra per track burned to a CD. The Music is not playable on MACOS or Linux just Windows Vista and XP.
2 points
First, this reminds me of the free three or six month satellite radio service offered with many new cars. Yeah, it’d great when it’s “free,” but the thought of paying $13 per month forever afterwards sure makes that CD player that came with the car suddenly look very attractive. If Nokia is going to charge for the music after one year, well, it’ll be back to music from some other source in no time at all.
Second, I’ve said this before, but the Universals of the world missed the boat big time last year when Steve Jobs proposed to make the big boys lots of extra profit from the sale of music via iTunes. I speak of iTune Plus, of course. iTunes Plus music at $1.29 per track provided for the perfect means for differentiated pricing schemes, but the Bozos were too dumb to see the potential. Instead of seeing iTunes Plus as the chance to release popular performers’ music at a higher price, and letting the rest go for the usual 99 cent price, the Universals moaned about the lack of DRM and scoffed at the idea. And what do they have to offer now? Cheap DRM-free music and (now, apparently) heavily DRM laced “free” music from all the cell phone companies and mp3 player manufacturers they can sign up. These guys must have got their MBAs from a catalog.
sweet,
oh wait a second,
“Consumers will certainly have less incentive to buy music from iTunes if unlimited downloads from the Nokia service are included in the price of a new phone”
hey, doesn’t “unlimited downloads from the Nokia service are included in the price of a new phone”
kinda mean, it’s no longer free?
There is virtually NO music released in the past year that I listen to. My iPhone is populated with the best recordings (okay, my opinion only) music of the past 50 years. If music is good I want to be able to listen to it 5 years from now, not replace it with a new crop of “maybes”.
While this idea seem a bit desperate, the MDN Take is off-base. Music acquired from P2P is “free” in the same sense that shoplifting is “free.” I think most consumers want a reasonably-priced alternative that is legal, easy to use, and comprehensive (as in not just Universal’s music). The iTunes Store is that “alternative.” I think that’s all that needs to be said.
Universal said it wanted a PIECE of the iPOD business – huh!
Like Apple locks music to it’s device so WE at Universal should reap the profits cos our music sits on it.
Didn’t get it… eh Universal.
Quick lets find something that plays music.
Yeah, Nokia!!!!!
We want you to GIVE us 8 bucks for every Cellphone you sell cos we are giving away music. Yeah it only plays on a Nokia phone… sure but were so so desperate!!!!! PLEASE!!!!
We weaseled a deal with Apple and failed… come on we are human too. We know how to compete in this digital realm. Please please give us a chance.
WOW – really Nokia Accepted. Boy are they – uhmmmm well DUMB!
Nokia will run to MS to team up with the phone service…
– some one has to teach Apple how to do business… they play so unfairly… hahahahahahahaha
So the dark side is building it’s team… to stop Apple.
OOOOOOOOOOOO
hahahaha – what a JOKE.
Subsidized music? Higher activation fee? Monthly fee is all of a sudden $15 more than other plans? Or “the music if free, but the data usage (downloading the music) is not”.
Something like that is going to happen, and yes, it will be profitable for both companies for a few weeks, then it will die. Just like all the other attempts to compete with Apple.
It bears repeating that Universal Music (like all the major labels) is dying, and is desperately trying anything to prove to their shareholders that they are still a worthwhile investment. The rumor a few years back was that Apple was considering buying Universal, in fact was reported by many news outlets as practically a done deal. My guess is that Steve looked into it, maybe considered it, but realized that if he waited long enough Universal Music would go belly up due to their irrelevancy, and he could negotiate directly with their more popular acts.
Also, at the time there was the consideration that Apple Computer’s agreement with Apple Corps (The Beatles) precluded Apple Computer’s entry into the record business. It was pretty well spelled-out that Apple Computer couldn’t act as a record label. But the recent agreements between the two companies may have negated that concern.
I firmly believe that most if not all brand-name, established music acts will be selling their wares independently soon, easily by the end of this decade. Some are already doing so. That leaves up-and-coming acts, that rely on publicity (currently provided by the label/media networks) to break out beyond a regional market, by creating their own web-based publicity. Again, some acts are already doing that, mostly with limited success. It’s becoming nearly impossible for new acts to rise above the noise anyway. I think YouTube (and social-networking sites e.g. MySpace/clones) will continue to play a role in publicizing new acts – I’m hoping beyond the novelty act stage those network’s users seem to gravitate towards.
In the meanwhile, I’m personally boycotting NBC and Universal records, by refusing to pay for their output. Most of their output is garbage anyway, so it’s not a huge sacrifice. I watch some of NBC’s programming, for free, but I won’t pay for admission to a Universal film. Again, not much of a sacrifice.
You think Universal is only charging Nokia $5 or $10 for you download as much as you can for a year? It’s definitely going to be more than that, AND they are going to constrict the pipe to the phone so you can only download a few songs a day. And that “you can keep listening after a year” part will go away REAL FAST if this gets any market penetration.
1. Inconvenience doesn’t scale.
2. It’s because music playing phones were inevitable that Apple had to get into the phone business. But having come to this conclusion, Apple did NOT create a “music capable phone”. They reinvented the phone itself, and put OSX inside.
I don’t have an iphone yet (too cheap to pay them cancellation fees), but amongst the reasons I want one, its ipod-ness doesn’t even rate.
Nokia paying Universal to bundle in music shows them being distracted by music. It’s the phone with a real OS and real world class software, especially the web browser, stupid. The web in your phone so well done you actually use it. Approximately 1 in 1000 web accesses are now made from an iphone. A number that will go waaaay up.
Put another way: it’s not 10,000 songs in your pocket. It’s the web in your pocket.
3. Meanwhile the record companies are “We don’t care how cheap we have to sell our stuff… as long as we set the price.”
BWAAAAAAAAAAA The Unviversal baby needs another shitty nappy change.
I reckon I could drag anyone of the street at random who could run Universal better than that decrepid dinosaur.
I am constantly amazed how alot of people who run massive businesses are so out of touch with customers and reality.
Well guys LISTEN UP!..
All you shit CEOs out there in your ivory towers need to learn the basics on business…
Business 101 (remedial class):
– ALWAYS LISTEN TO YOUR CUSTOMERS!
@Bantapudu
“Apple is great, everybody else is stupid, yada yada yada ..MDN is worse than any M$ fanboyz site ever. Why even bother with these MDN Takes when there is never any substance of objectivity whatsoever? *yawn*”
Yep, just another MS troll. These people are getting so transparent its not even funny anymore. 🙁 I have to wonder if these people are paid to do this?
Yea, as this Nokia deal gets more objective coverage, the weasalie deals and rules will become more obvious. They will attract some new people who do not read between the lines but I suspect only the first time. 🙁
Oh, well, back to work. 🙁 x 2.
@JB, It’s not that Universal didn’t/doesn’t get it, it’s control. Corporate music in this country is used to having the first and the last word on every aspect of the business, and most notably the price.
Objectively speaking, I don’t know if Apple has the right long term model or not, but it’s clear (and I think that Apple got this years ago), that the way people actually acquire their music, legally and otherwise, is changing and has indeed changed, and the obsolete industry patriarchs continue to, in desperation, try to keep the old system in place, at least in principle, if not in fact. The fact that we no longer go to the store (as much as we used to) to get our music is not Apple’s fault, it’s not anyone’s fault it’s just the way things have evolved, and companies like Apple have simply changed or created delivery models that meet the needs of the people who actually drive the industry – us, we, the end users, the consumers.