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Continued ...

But critics say that, with no ceilings on the amount of music downloaded, Nokia faces higher costs as quantities rise, and has failed to take account of consumption patterns. The per-handset royalty to UMG is about €10 (less than some have reported, but this will need to be replicated for each music partner), and each download incurs a cost of about 45 eurocents ($0.7). According to calculations by The Register, Nokia's profit margin is about 23%, and the average selling price of a music phone is about $200 - so there will need to be an additional revenue stream, presumably from operators. It may be, at least in the short term, that Nokia is being generous to the music business and taking a hit on its margins, in order to fight off Apple and win market share, which in the medium term should drive handset sales and uptake of other Ovi services.

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