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Nokia Could Disrupt Music Distribution Models, Tick Off Its Competition

Yesterday Nokia shook things up a bit by announcing that it will offer free, unlimited music downloads to users of certain Nokia handsets for a full year. If you thought the deal sounded too good to be true, you were right.

It really is a cool offer on the surface. Who doesn't want free, unlimited access to music for a year? Even better, Nokia is saying that after the year is up, users will get to keep the music they've downloaded. But it's not quite that simple.

The first catch? Nasty DRM to the effect of Microsoft's PlaysForSure. PlaysForSure won't work with iPods and iPhones. Heck, it doesn't even work with Microsoft's own Zune. So don't think you'll be able to download a gazillion tracks and transfer them to your PC and standalone music player. It ain't gonna happen.

So if the user isn't paying for the music, who is? Well, you just might be after all. According to reports, Universal Music Group is charging Nokia $5 per month per handset for the "free subscription." Whether Nokia will add that $60 to the cost of each Comes With Music handset is unknown, but it won't be a very popular move if it does.

The hinkiest part of the deal? If you really want to keep accessing that music after the year is up, you have to buy a new Nokia handset or pay for the service outright, according to Ars Techinca.

Then there's the issue of handset choice. Nokia has not said which devices the service will actually work on, but it can be assumed that access will first be granted to Nokia's N Series multimedia-focused phones. These are among Nokia's most expensive and advanced devices, with retail prices typically above $400 and often far higher. That freebie Nokia phone of yours that happens to have a music player? Probably not going to work.

What this means for the future of other over-the-air music distribution models is hard to say. Universal Music Group stocks other digital download services with its catalog of music. What is it going to say to those for-pay service providers now? How can they compete with free?

And how are the wireless networks supposed to handle this service. If someone buys an unlimited wireless data plan, they essentially have the ability to download thousands of songs directly to their handsets, thereby taxing the systems used to deliver it. I would expect that wireless operators who've invested in music delivery services are going to be the least happy with this plan. They will lose revenue on lost sales, and have their networks pushed to the limit by music-hungry downloaders.

Lastly, this Comes With Music program competes with Nokia's own Music Store. Though the Music Store is only available in the U.K. at the moment, Nokia has to have plans to expand it to other countries. (Speaking of countries, Nokia has not said what countries the Comes With Music will be available in.)

So Nokia has given over-the-air music services something to think about and shake their collective fists at. Who knows if it will succeed or fail, but it will certainly shake things up. And perhaps that's the point.

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