Nokia Signs On Warner Music For Its Flat Rate Music Service; EMI Only Major Holdout

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Rafat Ali

mocoNews.net
Monday, June 30, 2008; 10:59 PM

Nokia ( NYSE: NOK) is muscling through with its "Comes With Music" flat-rate digital music subscription plans: after signing on Universal Music and recently tying up with Sony ( NYSE: SNE) BMG, the handset giant has now brought Warner Music Group ( NYSE: WMG) aboard, with EMI being the only major left sitting out on the service. For WMG, which has long been mobile-music friendly, this is among the biggest such deals it has done, the company says: "This is probably the most important deal of its kind that we've done so far," said Michael Nash, Warner's chief of digital strategy, to FT. WMG may also do similar deals with other handset and carrier companies.

"Comes With Music" was unveiled with repertoire from Universal in December last year and is due on handsets in the second half of '08. Buyers get free tunes on the handset and PC for a year, and then must renew their device or move to Nokia's subscription-based unlimited-access store.

Nokia executives have previously said that even if only a small percentage of the group's devices are sold with Comes with Music, annual revenues would exceed $4 billion, equivalent to last year's total digital music sales. Of course the big news is that users are now veering towards shorter 18 month contracts, instead of a two year one, which will cut into ARPU Nokia and labels get from each loyal customer. Nokia's hope is that after a year of heavily using the free service, users would pay up to keep the service and the legacy history/downloads they would have built up during that period.

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