Mark Halper. The creator of this rumor.

A news on ‘Nokia Comes with Music‘ will about to come I think (it means it’s still a rumor today). On Tuesday, April 15, Mark Halper from The Hollywood Reporter had published a post about the cost Nokia should pay to Universal Music for this agreement.

Citing an anonymous well-informed mobile industry executive, Mark told us that the cost will be (only) about $35 for every phone that Nokia loads with access to Universal Music’s Library.

Since Nokia had promised to deliver the ‘Comes with Music’ with totally-free stuff after customers buy it, we should even wonder how could a company like Universal Music want to signed up this agreement. Isn’t it make them look like stupid?

Mark said no they aren’t! In fact, he try to count the benefit and profit Universal Music will get from this service which Nokia had launched on December 04, 2007 in Amsterdam. So here is how Mark did it:

Let’s apply some modest math to this intriguing $35 phone figure. Nokia last year sold 437 million phones and could sell around a half-billion this year. If, say, 1% of 500 million phones carry the Universal tie-in, that’s $175 million in Universal’s pocket. If it’s 10%, Universal walks home with $1.75 billion.

If that $1.75 billion is the final and real conclusion he took, then here I just want to show Mark a Guy Kawasaki’s wisdom on that yet unproven method.

“All we have to do is get 1% of the market.”

There are two problems with this lie.

First, no venture capitalist is interested in a company that is looking to get 1% or so of a market.

Second, it’s also not that easy to get 1% of any market, so you look silly pretending that it is.

However, Mark seems to be more focused on Nokia than Universal Music. He revealed some business model which Nokia could use if this really happen.

1. Sell the handset as expensive as possible
2. Discount the phone but force customers to receive the ad

But not just an ads, Nokia want a location-based ad model which could satisfied their customers too. This is reasonable one since Nokia had bought Navteq, a world leader in premium-quality digital map data.

Comes with music … and ads?

Based on Navteq’s data, this plan is so much logical for me. Navteq don’t just covered North America or Europe, they also have stuff in 72 countries on 6 continents (Asia is in). It means they perhaps add antarctic too. Crazy, what kind of company want to do an ad campaign there.

Oh yeah Mark, what about EMI?

Source: The Hollywood Reporter via Digital Media Wire

Image courtesy of MIP World

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 Print Posted by Wim Permana on April 18th, 2008