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Nokia: Keep the music, pay to burn

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Those gotchas in full

The devil, as ever, is in the details, so here's one that escaped first-day reports.

Intriguingly, Nokia is seeking to make a little extra money from this great music giveaway by charging for usage rights. One of those extras is the "right" to burn music to a CD. No fee has been set for this right yet - we're still a long way from launch in the second half of 2008.

A few years ago, we thought DRM was a format scam: a way for the music business to get us to buy music we already owned in a different format, like the transition from vinyl to CD. Is it now thinking of charging for usage rights we already have?

Probably not.

A source close to the deal was keen to point out, however, that the trend is to inexorably move away from DRM. The market has spoken: take-up of DRM-encumbered music services is sketchy. Amazon has already made a big impact by selling DRM-free music. If Universal and other labels are banking on technologically-enforced restrictions as the basis for new tiered-service business models, then that window will close fairly shortly.

Another drawback is that it's limited to one PC plus one device, and the device is going to be one that Nokia decides is fit for purpose. Today, only three phones support the Nokia Music Store, and only support it to varying degrees, but it's still early days.

Omnifone yesterday put a brave face on the announcement, but it can take comfort from the fact it offers a broader service with greater reach. MusicStation runs on 70 per cent of new mobiles.

"We are delighted to hear Nokia intends to embrace and develop its own version of the unlimited music download model, which we launched back in February 2007," said Omnifone CEO Rob Lewis in a statement. Omnifone also reminded everyone that it offers music from all four major labels, not just from Universal. "There is no doubt carriers will want to ensure... that these services are delivered on the widest range of handsets possible so that data networks are monetised as effectively as possible, and consumers can have as much freedom as possible when choosing a device."

Lewis was reminding carriers that Nokia and UMG are cutting them out of the loop.

Selling an abstraction like freedom is hard though, and Omnifone will be aware that if network operators don't absorb the cost of MusicStation, customers can turn to free, legal licensed music. That, Omnifone seems to be suggesting, is a price they may have to pay in the short-term, in order to gain long-term value.

There's no denying that the Nokia UMG deal sets an important precedent: we expect music to appear free. Now they're prepared to offer it for free. That's not an enviable position for any business to be in, but that's the price that sound recording owners are paying for not facing up to the challenge of digital networks ten years ago.

Interesting times lie ahead. ®

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