Nokia says its buying the Seattle-based digital music company Loudeye for $60 million, which aggregates content and rights from music labels for distribution across mobile, Internet and other platforms. Nokia said it is paying $4.50 per share. Loudeye’s stock had sat under $1 for weeks, mostly because investors did not give the money losing music service any chance of making it to the black. It had lost $4.6 million for the first quarter of this year on sales of $8.7 million.
Loudeye previously sold its U.S. assets to Muze, which included the technology used by AT&T and O2 Germany. That was indication that there was a firesale in progress. Loudeye’s other technology, the “OD2 Platform” is used by many more companies in Europe and comes from a company co-founded by the pop singer Peter Gabriel and bought by Loudeye in 2004, says a Loudeye spokesperson.
Loudeye’s troubles are emblematic of the bigger issues around mobile music downloads, which have been slow to take off. (Update: Rafat leaves an insightful comment which explains Loudeye’s problems succinctly.) There is a school of thought that 3G would change that, as faster downloads could make it easier for consumers to buy music on their mobiles. Nokia’s new multimedia phones such as N91 are geared for those kind of services.
That’s what Nokia is buying and plans to launch a branded mobile music service , which could include devices, and the ability to purchase digital music, in 2007. The Post points out that Nokia sold more than 15 million music-enabled phones in April to June, roughly double the amount of Apple’s iPods and making it the world’s largest manufacturer of digital music players. With the amount of iPhone rumors out there, Nokia is gearing up for a mobile music fight.
However, the service could put Nokia in direct conflict with the mobile music service plans of various service providers such as Vodafone.