Nokia Really Thinks this Free Music Thing Will Work

Offering unlimited music downloads to phone buyers will make money for Nokia as well as record labels, the handset maker said in a new Reuters report, and dismissed talk that the move would come at the expense of profits.

“We expect to make money both from our traditional device sales, as well as from the ‘Comes With Music’ service,” said Liz Schimel, head of Nokia’s music business, in the article. “I can assure you that we are looking out for everyone’s interests in creating these new business models, including our own.”

Heck, we’ll be thrilled if it does work; unlike every other mobile music service, Nokia lets you keep music you downloaded during the first (free) twelve months. “Reports on different Internet media have suggested the world’s biggest handset maker was paying $35 to Universal alone for each sold handset; and some reports suggest Nokia would be paying an extra fee for each downloaded song after the first 35 songs, potentially eroding its close to 40 percent gross margins in cellphone operations,” the report said.

The record labels are also fans, since they’ll applaud anything that takes attention away from Apple and its iTunes Store. Some analysts agree, too: “Comes with Music is one of the most exiting things out there in the digital music,” said Mark Mulligan, research director at Jupiter Research, in the article. “Apple is facing market perception of iTunes looking like yesterday’s service. Basically, iTunes looks pretty much the same it looked 4 or 5 years ago,” he said. That’s especially true if Nokia follows through on rumors that it will offer video with the service one day as well.

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