Nokia changes the face of business with an unmissable deal

Something just happened that will change our business. Competition between mobile handset manufacturers has taken a step beyond design, price and functionality and into content.

This week, Nokia launches a "Comes with Music" contract, which entitles its users to unlimited music downloads.

This is big - the kind of thing you do if you have a billion customers to protect. For the legal music lover, the deal is unmissable. You pay £130 for a handset and you're in. That's about 12 CDs in my currency or, looked at another way, the 6,000 songs you can get into the phone memory would cost £4,740 from i-Tunes.

Even when you add in data charges, the economics are compelling, and I can keep the songs on my authorised PC (not Mac, sorry) forever.

The four major record labels have signed up, as have indies and - although no details of the terms have been published yet - it's assumed that Nokia will pay a small rent to the labels for each track downloaded.

Their calculations assume that most legal buyers prefer to own the physical CD and use downloads only to experiment with new artistes, or to add the odd orphan track here and there.

This is probably a fair summary of current behaviour, but it's a hell of an extrapolation to assume that the removal of the price tag will not change that. I could cost them a fortune.

But the logic continues that as 85% of music is already downloaded free, the bulk of the market is not going to pay £135 just to get legal and give Nokia pain.

That said, the new service will sell phones and, more strategically, it's the kind of deal that will help the mobile leapfrog the PC.

Eric Schmidt, Google's chief executive, believes the day will come when Google will earn higher revenues from mobile advertising than from online.

Nokia's move is the kind of game-changer that will be necessary to deliver Schmidt's prediction. Because it will not stop here.

Nokia's competitors will respond with their own music deals, and one will up the stakes - free mobile TV?

Just as the football rights ushered in mass pay-TV, compelling content for mobile users will kick-start the change in behaviour that will make mobile advertising a fact of normal life.

Everybody ready?

Richard Eyre is chairman of Rapid Mobile, a technology provider for publishers
richard.eyre@haymarket.com

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