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Nokia’s struggle to compete against Apple (NSDQ: AAPL), and drive more sales of its own smartphones, hit a new low today, as the Finnish com…

Nokia Comes With Music Phone and PC

Nokia’s struggle to compete against Apple (NSDQ: AAPL), and drive more sales of its own smartphones, hit a new low today, as the Finnish company said it would be discontinuing its free, bundled music service, Comes With Music, in 27 of the 33 markets where it has operated since 2008, after low subscriber takeup in several markets.

Nokia (NYSE: NOK), which had rebranded the service as Ovi Music Unlimited in August 2010, will continue to offer the service in six emerging markets — China, India, Indonesia, Brazil, Turkey and South Africa. And it is keeping its more conventional music store — where users pay for downloads — open in 38 countries.

The news was first reported by E’s Phone Blog, citing leaked documents, and confirmed by Reuters.

Comes With Music was Nokia’s attempt to compete against Apple’s iTunes music service, which it hoped to one-better by modelling it on the many unlimited music offerings that have made their way to mobile and PC platforms. The main idea was to use Comes With Music to attract music-listening consumers to buying Nokia devices.

Nokia waded into the music waters with confidence at first, securing agreement from all four major record labels — EMI, Sony (NYSE: SNE) Music, Universal Music and Warner Music — launching first in the UK with a splashy marketing campaign and offering 12-month subscriptions to the service when purchased with selected Nokia handsets such as the N97.

Nokia has not released numbers on how many people were actually using the service, but it did face some challenges. For one, the offering was largely unsupported (read unpromoted) by mobile operators, who were trying to push their own music services, or at least offerings that didn’t bypass them completely as Comes With Music did.

Another big problem was that “Comes With Music” tracks came with some fairly stringent DRM encoding. Users initially couldn’t listen to the music on anything other than their handsets, which ran counter to the trend among consumers to make their music significantly more accessible and share-able across multiple devices. More recently, the service in India currently lets users transfer between the phone and the PC, and the China service is actually promoted as “DRM-free.”

It’s interesting that Nokia is continuing the service in six markets. Consumers in China, India and Indonesia will still be allowed to buy selected devices bundled with a 12-month subscription. Brazil, Turkey and South Africa have six-month offerings.

It’s not clear whether these services will continue in these six markets because these are places where the service has seen stronger uptake; or whether it’s because these are still key markets for Nokia where it feels it needs to keep offering services like this to fend off competitive onslaught from companies like Apple and the many ODMs developing myriad Android devices. Likely a combination of the two.

People in the 27 markets where the service is being discontinued, who have already started subscriptions, will be able to use Comes With Music for the remainder of their contracts. Nokia also says subscribers will be able to keep their music for life.

The Ovi music store, which remains open in 38 markets, offers DRM-free music.

We are reaching out to Nokia to see if the company can confirm how many Comes With Music subscribers it has picked up.

Update: No numbers from Nokia itself but Music Alley reported in October 2009 that the service had only picked up 107,000 customers worldwide since its launch in 2008.

In a blog post, Nokia has cast the closure of its unlimited music service as a necessary step in its strategy to “deliver new, innovative music experiences”…that Nokia says it is creating in response to demand for more local content. “However, the new deals and other arrangements necessary for this to happen meant that old ones needed to be ended.” No details yet on what these new services will be, or when they will be launched.

  1. I think a local approach would be a better one, hopefully supported by some editorial and local promo and tie-ins. I was never too sure why I should turn to Nokia for music that was available elsewhere.

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