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Nokia could close Comes With Music next year, says analyst

By CAROLINE GABRIEL

Published: 17 December, 2009

READ MORE: Nokia | Mobile Content | Handset | Symbian

Nokia is making progress with some of its web services, notably its Ovi store and the email and productivity apps it targets at emerging economies like India. But it has struggled to make any dent in the domination of mobile music by Apple, and a new research note from MKM Partners speculates that it will actually close down its Comes With Music service by the end of next year.

Nokia would likely hold onto its MusicStore, which offers tracks that are individually paid for and downloaded, like iTunes. Comes With Music was meant to be more disruptive, providing unlimited downloads for a year's subscription fee, and allowing users to keep their tracks even if they did not renew the subscription. But it has come too late to damage iTunes/iPhone, argues MKM analyst Tero Kuittinen, and another factor may be the rise of interest in music streaming services like Spotify, now available on iPhones, Android and Symbian handsets, for a monthly fee of around $14.

"The time to really push for a premium service to compete with Apple was two to four years ago," Kuittinen told news agency Reuters. "I give it a year before they close it." CWM is actually available in 15 markets now, having first launched in the UK in fall of 2008. Its most successful markets have been those less dominated by iTunes, notably Mexico and Brazil, both of which have seen 10m tracks downloaded since they went live this spring. However, in its first year, iTunes reported 100m downloads worldwide and has sold over 8.5bn tracks now, since launching in April 2003.

The problems that have afflicted CWM, at least in crowded western European markets, have included poor communication of the pricing model and the undoubtedly innovative approach; and a limited choice of supporting handsets, especially in the first months. Digital media research firm Music Ally also spoke to Reuters, saying: "It's been nothing short of a disaster. It was poorly executed and there was also a general level of disbelief of having unlimited music on a handset for one price."

Nokia continues to insist that the service is growing and gaining strong reviews from users, and says it regards it as a long term business, not a quick short term gimmick. Explaining the benefits rather more clearly than it did in its launch marketing, the company said it would

cost users €934 ($1,362) to download the top 100 albums on iTunes in addition to the cost of the device, compared to an all-inclusive €450 ($656) for the Nokia X6 Comes With Music handset. Music Ally says CWM now has 107,000 subscribers worldwide, as of July.