Billboard’s Mobile Entertainment Live, the pre-conference day before CTIA, started this morning with a panel including Michael Nash, EVP of Digital Strategy and Business Development from Warner Music Group (NYSE: WMG), and Paul Smith, head of major label relations for Nokia (NYSE: NOK), moderated by Antony Bruno of Billboard. The show kicked off with an extraordinarily light audience, with organizers blaming airport delays, and flights having a hard time getting into San Francisco.
– Comes With Music: Smith said last week they announced the launch of Comes With Music in the U.K., which will be available through 810 Carphone Warehouse stores. We haven’t made any announcements with cost. There will be more announcements coming shortly. There’s a real need for new business models in this marketplace. Nokia is concerned about the role of the consumer and keeping them happy. We believe in giving them choice. Last year, we announced that Nokia wanted to be an Internet company with music, maps, etc. They are going to be sustainable businesses. Without going into precise figures, if you bundle Comes With Music with various devices, we have the ability to massively change this business. 147 devices represent the number of music-enabled devices, but they will not become all Comes With Music devices.
– Music industry’s perspective: Nash: “We love this model and would love to see it role out as broadly as possible. We’d love to see some significant percentage of music-enabled footprint attached to the Comes With Music plan. With this approach that Nokia is taking, where there’s an out-of-the-box experience, where you are a music subscriber right out of the phone. I think you are going to see scaled achieved this this type of approach.”
Much more after the jump…
– Revenue generation: What’s the bigger revenue play, the music or the sale of the phones? Smith: “The reason Nokia is making this play, is to create a profitable, sustainable business. Device sales, you can’t ignore device sales. They will remain an important part of the business, but it will not be a key driver in selling devices. We are in this business to make money from music.” From Nash’s perspective: “We want more alignment. When you have that, you have the best interest in acquiring and maintaining the consumer. Every time someone acquires a Comes With Music customer, we acquire a customer. We are deeply interested in having Nokia succeed.” Marketing plans? Nash: “The music industry needs to shift approach to marketing…There’s a philosophical shift that will be required that will be focused on this kind of access model.” Smith: “We are partnering with the music industry. With respect to integration going forward, this is ultimately a premium product, so we are concerned with customers…providing access to a VIP room, etc.”
– Why not the U.S.?: Smith: “The U.S. is a key market for us. It’s the No. 1 music market, but it’s a priority market for devices and services for Nokia. One size does not fit all. What we launch in the U.K. might not be what we launch here. We want to continue to make good music devices…We want to launch in the U.S. There are some consideration with carriers, we want to make the right content deals.”
– Working with handset makers vs. operators: Nash: “I want to give credit to Nokia for having the vision, and doing the heavy-lifting behind the model. But there’s no reason why network operators can’t create interesting music propositions to customers. You are going to see an evolution of this space with how handset-makers and operators bundle content with other services. We want to be in the content plus connectivity equation, but we need to form better business models.”
– Japan, the second-largest music market: Nash: “In Japan, you are seeing the deterioration of the master tone market. But in Japan, you have a compound annual growth rate of 34 percent, and five percent in the U.S., but what you see [in Japan] is the bundling of the full-track and master tone. It has livened up the mobile music proposition. I do think we have to focus on all aspects of the equation.”
– Ad-supported music: Nash: “It’s key to the social media space. We think ad-sponsors is important when it comes to sampling and discovery, but you won’t be whole without a commercial component.”