Nokia's Comes With Music lost in the shuffle?

The two-year anniversary of the announcement of Nokia's breakthrough Comes With Music service is rapidly approaching, and what does the company have to show for it? So far, not much.

Nokia announced its Comes With Music strategy in December 2007, and the idea seemed a sure-fire hit. Users who purchased Comes With Music-capable devices could download all the music they wanted for free, and they could keep the music forever. What a deal, right? Of course, there are caveats: The music files are protected with Microsoft's digital rights management technology, which means you can't move the songs onto other digital music players, or burn them onto a CD. But still, getting access to unlimited music downloads is a pretty solid selling point for a cell phone.

And, according to Nokia, the program is popular among those who have it. Nokia's Laurie Armstrong told me that Comes With Music users have downloaded over 24 million tracks since the service launched. "Music fans are downloading an average of 12 tracks every day," she said. "In Singapore, which launched in late February, over 4 million tracks have been downloaded. Mexico passed 3 million downloads in just 12 weeks."

Today, Comes With Music is available in 10 countries from a variety of operators: Brazil (TIM Brazil, AMX, Telefonica), Mexico (AMX), UK (Orange UK), Singapore (Starhub, M-1, Singtel), Germany (Debitel), Switzerland (Swisscom, Sunrise, Orange), Italy (Wind), Sweden (Hutch) and Australia (Optus, Hutch, Virgin Mobile).

However, analyst firm Current Analysis takes a decidedly negative stance on Nokia's Comes With Music efforts so far. The firm looked at the "low level of visibility and marketing NCWM has gained within existing operator channels to date" and found evidence of an "operator nonchalance which is threatening Nokia's entire software and service strategy," according to author Emma Mohr-McClune.

Specifically, Mohr-McClune looked at how operators are promoting the service and found that, by and large, Comes With Music is "conspicuously absent" from most operators' marketing. Further, most Comes With Music operators provide only a brief description of the service "without any further clarification, or even a link to further information." Mohr-McClune did note though that a few operators, mainly those in Singapore, do promote the service heavily.

So where does this leave us? First of all, it's hard to say definitively whether Nokia's Comes With Music is a success or failure. The company does not break out sales figures or revenues for the service. But Nokia executives have admitted to various stumbles along the way.

Secondly, Nokia delayed the U.S. launch of its Comes With Music download service, according to Forbes. The company had previously intended to introduce the service to American subscribers this year.

"Why the reluctance?" asks Current Analysis' Mohr-McClune, and rightly so. It would seem that wireless carriers would jump at the chance to offer their subscribers all-you-can-eat music. Mohr-McClune posits that "most European and U.S. operators have an incentive to protect their existing, own-brand music services before promoting Nokia's, hence the reluctance to market an alternative which has more to do with ensuring customer loyalty to the Nokia brand than growing an ARPU relationship with their own customers."

I'm not sure this is entirely accurate though. For example, in the United States Sprint Nextel's forthcoming Android phone, the HTC Hero, eschews the carrier's branded music player in favor of Amazon's offering. And Verizon Wireless last year folded its V Cast music offering into MTV and RealNetwork's Rhapsody service (and has been promoting Slacker Radio to its BlackBerry users). And AT&T Mobility's promotion of Napster Mobile has been eclipsed, along with just about everything else, by the iPhone. Add into this mix Pandora, Spotify, Sirius XM and other mobile music plays, and it's clear there's plenty of action on the scene.

So perhaps Nokia's Comes With Music service, despite offering a clear reason to purchase Nokia phones, is just getting lost in the shuffle. And that's probably not good news for a company in the midst of shifting from a hardware maker to a direct-to-consumer software and services provider.

"In evolving its business from devices to software and services, Nokia is moving from a traditional B2B model to an effective B2C," writes Mohr-McClune. "The new B2C go-to-market strategy assumes the same level of operator reseller support and co-operation which was a given by-product of the former relationship, but as the recent NCWM experience demonstrates, that support is just not there. ... We predict that more operators will pick up on the trend of bundling music content with services and devices in the coming weeks. Nokia may be about to lose its first-mover advantage, and the problem is not the product, but distribution." --Mike