Wednesday, August 09, 2006

Nokia & Loudeye

As announced yesterday, Nokia is going to acquire Loudeye for 60 Mio USD to offer to their customers an integrated music service. This goes along with the sales of music-enabled mobile devices, of which Nokia has been selling 15 million so far in the second quarter of this year, while aiming at 80 million by the end of 2006. This leaves room to wonder how the deal is going to influence Nokia's relationship to mobile service providers, but also how well a music service will be able to compete against Apple's iTunes.

I am wondering whether the current business models for music platforms will be appropriate for the masses. After all, not only are there download costs per tune (or media item, if extended to video), but also connection costs. So, I suspect that we will rather see other models - such as subscriptions or flat rates including access to specific application services. In order to be successful, I am convinced that this has to be combined with personalization and social interaction. As we already have platforms such as or Pandora, this does not seem to be too far away.

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