October 4th, 2008

If someone told me that there is a place where I can download all the music I want for free, I’d have guessed it to be ThePirateBay or one of those torrent sites. But if they told me that I can download all the music I want for free LEGALLY, I’d be stumped for an answer. And then if they told me that, *THAT* place is Nokia.com, I would’ve been gobsmacked. And that’s exactly what I heard at the Nokia Remix in London.

If you buy any of the latest N95, XpressMusic 5310, or the latest 5800, you get the candybar opened up all for you. For the next one year, you get to download as many songs as you want and get to keep them for life.

Now, you’ll realize the importance of this when you look at the kind of people offering this music. Take a look. Universal Music Group, Sony BMG, Warner Music, EMI, The Ministry of Sound. Gosh, do you realise what you are reading? These are the biggest music companies in the world. Between them, you have pretty much the entire list of big name artists.

Let me throw you a real-life example, just so you understand this well. You go to a cell phone shop, let’s say ‘The Mobile Store’ in Spencers Plaza. When you make the payment for the phone, the lady at the counter says that there is a ‘Free Gift’ that comes with the phone. And that free gift is that you can walk into Landmark, Odyssey or any music store in India, and pick up any CD or cassettes you want. Yes, there’s no limit. You can fill up your car’s entire trunk and if that gets filled, you can fill up the back seat too. That’s not all.You can come back to the store everyday, if you want, and continue the swindling. All this is legal and the securiity guard will let you go with a bow and a smile.

Now, why would Nokia and the Music companies want to give away the music for free? Considering that Nokia sold an estimated 100 crore music phones, isn’t the music companies going to lose billions of dollars?

Look beyond the obvious. Lets first look at Nokia’s angle. It’s a coup de grace. The BEST ever marketing strategy that I have heard this company do. They are giving you an offer you can’t refuse. And its an offer that the competitors cannot easily replicate. You can copy mobile phone features, but you can’t replicate relationships. And its never easy to do that with the world’s biggest music companies.

Another reason what Nokia wants to do is hook you. It wants you to get familiar with its music store, which is part of Nokia’s big business revenue strategy. One look at Apple’s iTunes success will tell you the reason why Nokia is after this market.

But Nokia knows that the majority of the folks don’t like paying for music. When you can get free music from torrent sites, why pay? Tell me about it! :) And so they are taking piracy head on with the most potent weapon, the FREE. Now, there’s nothing holding back from downloading songs. Once you know how easy it is for you to use, you get comfortable first and then get hooked to it. So, when your one year free license expires, there’s a fair chance you might continue to pick up music by paying a reasonbaly small amounts of money. It may be small money for you but multiply that small money into multiple millions of users and suddently, you are looking at huge money. So that’s the strategy.

What’s in it for the music companies? Simple. They’ve realized that they can’t fight piracy. They know they are fighting a losing battle which they can never win. So, the smarter thing is to flow with the tide. They know that the days of buying CDs is gone. Internet is the future and the mobile phones will be the biggest gateway. Hence it makes sense to tie up with the world’s largest producer of mobile phones. They immediately get a fantastic distribution system. So, when the free period finishes, they can hope to share the revenue pie.
To me, Its a wonderful case of win-win-win situation.


9 Responses to “The ‘Eat-All-You-Want’ Music Store Strategy”

  1. Venky Krishnamoorthy says:

    Are you in london as a nokia invite? This post gave me a feeling of a “paid post”. If so, I think, you should mention it.

  2. Kiruba Shankar says:

    Hi Venky, very good point. Thanks for the pointer. I have added a disclaimer at the beginning of the post.

    Appreciate it.

    Cheers!

  3. Kavi says:

    I think there is a ‘12 month’ time frame, and the question is what happens after that.

    Nokia would perhaps expect an upgrade to a paid form at Ovi. Or even perhaps for the young crowd to change a handset !

    That does sound as a great strategy. Music becomes a commodity ! And i wonder about the impact it will have on music companies in the long run.

  4. wilson says:

    Thats Cool infromation .Kiruba thank you for the input

  5. -=A.R.N.=- says:

    I’d like to think there’s another angle to this.
    True, Nokia and the biggest labels in the music industry are crossing their fingers in probably the biggest deal in music history (I’ve never heard of anything like this before..or maybe it’s just me) but on the other hand its not like their sales are gonna sky dive just because they offer free mp3.

    The real audiophile doesn’t care for mp3s on a phone…they want REAL music on REAL CDs which they can play on their Harman/Kardon or Bose device.

    Either way, its a brilliant strategy!

  6. Anonymous says:

    Kavi is right… There is a 12 month period for which you have access to the music.. At the end of which, you either buy a new phone or lose all the music you bought during the year… Think about it, $300-400 or even $500 a year on a new phone… With economies of scale, it averages out for Nokia…

  7. Gowri says:

    Kiruba, is this going to be available worldwide? And from when? I was about to purchase a N96, and I might delay the purchase if this deal is upcoming!

  8. Ankur says:

    From the car trunk example, and your mention that I get to keep the music for life, I didn’t get an impression that the music would be lost if i don’t get into the paid account or change my phone!

    If i understood correctly, one could well take the free music legally while he can and then go back to his original source – the pirated music!

    Would be interesting to see the % conversion at the end of the year!

  9. TopesZZ says:

    Ha ha..notwithstanding the disclaimer, there comes the aggro concept selling that Nokia wanted from you.

    A fantastic win-win indeed for them and you.

    The music labels will offer it free to Sony Ericsson or Motorola or anyone else too – why exclusively to Nokia alone. So you can pack your bags again for the next trip courtesy Motorola :)

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