Nokia has unveiled a new music partnership that it hopes will reinvigorate its struggling digital download service, which was launched last year as a key part of its strategy to diversify into services.
The world’s largest mobile phone maker has joined with Universal Music Group to provide Nokia customers with exclusive access to new material from hip-hop singer Rihanna in the run up to Christmas.
Nokia’s Comes with Music (CWM) service was launched a year ago with great fanfare as a lynchpin of its move into services. The Finnish company wants to emulate the success Apple has had with cross-selling high-margin services via the iPhone.
Analysts are sceptical that Nokia can make the transformation from hardware manufacturer to a software-based services company.
CWM offers unlimited music downloads for a year or 18 months as part of the handset purchase price. But according to figures leaked to Music Ally, a consultancy, Nokia – which sold over 100m handsets in its third quarter – had attracted just 107,000 active CWM customers globally by July this year. The figures were confirmed to the FT by one music label.
In the UK, the first market where CWM launched, it had less than 33,000 subscribers in July, up from 23,000 in April.
Nokia declined to comment on the take-up of the music service but admitted the service, which launched outside the UK earlier this year, was a “slow burn”. The company insisted that it was “still 100 per cent committed” to CWM.
By comparison, Spotify, the free music streaming application for PCs, which was launched around the same time as CWM and which is trying to get subscribers to pay for its service on mobile devices, has 27m users in the UK alone.
Improving subscriber numbers for the service is crucial to meeting its target of 300m services customers by 2012 . Nokia had 54m subscribers by August.
It had to pay substantial upfront fees to secure the rights to the music from all four major labels, according to people familiar with the negotiations, setting high price expectations for any other companies wanting to launch a similar service.
Since July, Nokia has signed up new operator partners – including T-Mobile in the UK – to resell the music phones and has improved the range of compatible handsets.
Yesterday it released its flagship entertainment device, the touch-screen X6, which includes the unlimited music offering. It privately admits its launch handset for CWM, the 5310, was not the best showcase for the service.
Under Nokia’s partnership with Island Def Jam Music Group, a Universal subsidiary, Rihanna will launch her new album in November at a live concert in London, to be streamed online to Nokia phones.
Additional reporting by Salamander Davoudi
