nokia to share music revenues with

Nokia to share music revenues with Operators

Nokia, the world's biggest maker of mobile phones, will share revenue

with phone operators from a program to sell handsets with unlimited

music access according to the Nokia's head of entertainment.

``In those cases where we cooperate with operators, there will be an

arrangement so they can get a piece,'' said Tero Ojanpera, an

executive vice president and a member of Nokia's executive board, in

an interview today in Cannes, France.

The Finnish company unveiled in December the ``Comes With Music''

program, which will allow customers to buy a phone with a year of

unlimited access to millions of tracks included in the purchase price.

Nokia agreed to offer tracks from Vivendi SA's Universal Music Group,

and is in talks with other major labels.

Its a good start for the world's largest mobile phone manufacturer to

offer a revenue sharing scheme but not too sure whether how the

Operators will see this gesture. Most of the Operators

sell music downloads to subscribers to help lift average revenue per

user. Nokia's shift into services has caused concern among phone

companies about how revenue is spread among the players.

Even if Nokia isnt in this space they are many other music providers

who had started offering music over the internet. At this present

moment most of the musics on the mobile are actually side loaded from

the PC downloaded via the internet and most of them are ripped from

the CDs. In order for the mobile music to take off, all the providers

including Nokia must have strong value proposition why users should

pay for the services or in Nokia's case, why pay more for the

handsets.

The bundling of musics with Nokia phones is a great value proposition

and if the incremental cost to the phones arent that high, users will

see this as a good value. With unlimited downloads offered via "Comes

with Music"program, Nokia is in good position to shape the mobile

music industry. I guess thats the advantage of having 40% market share

afterall with such volume, i m sure its alot easier to negotiate with

the record labels and get the best deal.

With a whole array of services offered via the Nokia branded phones,

from music, games, maps, gps, and many more, Nokia is in a good

position to continue dominating the market. If i were to be one of

their competititors, i certainly need to think harder or eventually

surrender it to them. The only area that Nokia needs to improve is on

the design. While the features are great, the shape and design has

still some catching up to do. I m sure they can learn from Apple and

Samsung. Who do you reckon as a real competitor to Nokia in the longer

term?