Feeds

Nokia buys Loudeye to kickstart iTunes rival

New owner for Peter Gabriel's old download company

Build a business case: developing custom apps

Nokia is to buy Loudeye, the US digital music company that owns On-Demand Distribution (OD2), the European music download supplier started by Peter Gabriel. The Finnish mobile phone giant is paying $60m in cash for the company.

Nokia described the deal as the foundation for its own music service with which it will target owners of its phones, in particular is N-series handsets.

It said the service will go live next year and target Nokia handsets the way Apple's iTunes Music Store targets iPods. You can tell that's the model Nokia has in mind: it specifically described itself "the world's largest manufacture of digital music players".

Loudeye characterised the deal as an indication of its standing in the digital music world, but we'd say it's a sign of the value of its content distribution licences. Nokia's essentially buying those to avoid having to negotiate directly with the music labels, particularly those who, having had to deal with the explosively successful Apple isn't keen on facing another big-brand vendor who's prime interest is hardware sales.

Loudeye acquired OD2 in June 2004, paying $40.5m in cash and shares for the company. By that point, OD2 had signed deals with a stack of European ISPs, PC makers, music retailers and others to supply, host and maintain digital music stores. Loudeye bought OD2 to bring an international focus to its them US-only offering. Ironically, OD2 proved the more successful of the two and earlier this year, Loudeye sold its US operation to local rival Muze. As a result, Loudye is OD2.

OD2's problem is that it's dependent on its brand partners to market its services. Many of them, like Coca Cola, Oxfam, Tiscali, MSN, and Packard Bell, are not music-related companies. As such, the company has struggled to carve out a significant chunk of the market in the face of new, digital music-specific brands like Apple, Napster and Wippit. MSN had six per cent of the UK market in April 2006, according to market watcher XTN Research, compared to Apple's 44 per cent.

OD2 recently lost Coca Cola, which shut down its MyCoke music service, apparently in favour of a deal with Apple. OD2 has also lost music retailers HMV and Virgin during the past two years.

How the company's relationships with its current partners will be maintained once Nokia takes over - the deal should be completed in Q4, the phone company said, remains to be seen. Nokia's interest in driving demand for its phones may see it shift the acquired firm's focus away from the Windows Media-based services to the Nokia phone-friendly one. In any case, OD2's partners may not like their idea of working with a supplier who also competes with them directly. ®

The essential guide to IT transformation

More from The Register

next story
Reg man looks through a Glass, darkly: Google's toy ploy or killer tech specs?
Tip: Put the shades on and you'll look less of a spanner
So, Apple won't sell cheap kit? Prepare the iOS garden wall WRECKING BALL
It can throw the low cost race if it looks to the cloud
One step closer to ROBOT BUTLERS: Dyson flashes vid of VACUUM SUCKER bot
Latest cleaner available for world+dog in September
Samsung Gear S: Quick, LAUNCH IT – before Apple straps on iWatch
Full specs for wrist-mounted device here ... but who'll buy it?
Apple promises to lift Curse of the Drained iPhone 5 Battery
Have you tried turning it off and...? Never mind, here's a replacement
Now that's FIRE WIRE: HP recalls 6 MILLION burn-risk laptop cables
Right in the middle of Burning Mains Man week
Apple's iWatch? They cannae do it ... they don't have the POWER
Analyst predicts fanbois will have to wait until next year
Tim Cook in Applerexia fears: New MacBook THINNER THAN EVER
'Supply chain sources' give up the goss on new iLappy
HUGE iPAD? Maybe. HUGE ADVERTS? That's for SURE
Noo! Hand not big enough! Don't look at meee!
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.