Nokia Jumps On Music
By Carlo Longino, Mon Aug 09 18:45:00 GMT 2004

The top handset vendor has inked a deal with Loudeye to develop a mobile music download platform.

It would appear at first glance that Nokia's moving to counter Motorola's announcement a couple of weeks back that it would work with Apple to build a version of iTunes for its handsets, but this deal with Loudeye should go a lot further, and prove much more attractive to handset vendors' most important customers -- mobile carriers.

The press release is short on details, but says Loudeye will develop "an advanced wireless digital music platform for mobile operators and their subscribers worldwide" -- and that's the rub. While the Apple/Moto alliance may at some point evolve into a mobile download platform, the two companies risk alientating carriers by not including them in the equation between the iTunes Music Store and the Motorola handsets.

But this arrangement, when looked at alongside last week's deal for Major League Baseball content, shows that Nokia is taking an approach that benefits carriers by easily enabling advanced data and content services, but also hoping to stimulate end-user demand for its devices by making the content exclusive to its own handsets.

Carriers are searching for content and applications that will drive data usage, particularly on 3G networks, and if Nokia can combine with Loudeye to create an easily and cheaply deployed download platform that will generate both traffic and content revenues, it should prove to be quite successful. The system makes sense: Loudeye, which already has experience in the mobile market, does most of the heavy lifting, designing the system with Nokia, then handling each operator's store on an outsourced basis, like it does for its wired customers. Nokia can pre-load any necessary client software and settings on the devices it sells to carriers, so the system will work straight out of the box when users get a new phone.

Like the earlier MLB deal, this is an arrangement where everybody wins: carriers get data traffic and download sales, Nokia has an exclusive feature for its handsets, and Loudeye takes its cut. Carriers and handset vendors have butted heads over who "owns" the customer, but that battle doesn't have to be a zero-sum game. When everybody's making money, that ownership really doesn't seem so important.