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The Week In Music Commentary

image from From Cannes by Stuart Dredge of UK consultancy and blog Music Ally.

Nokia is launching a premium tier for its Nokia Music streaming music service, charging users $3.99 in the U.S. and €3.99 globally per month for extra features for the personal radio service, including access on non-Nokia devices. Nokia Music launched as a preloaded application on Nokia’s first Lumia Windows Phones in late 2011, providing Pandora-style customised radio stations based on individual artists, as well as a range of pre-curated playlists.


That service continues, but users will be able to upgrade to Nokia Music+ to get new features, including the ability to stream on other connected devices via an HTML5 site – including computers and tablets.

Other premium features include the ability to download an unlimited number of mixes to listen to offline on a Windows Phone; unlimited track skips when listening to the stations; optional higher-quality audio when streaming over Wi-Fi; and lyrics displayed when “many” tracks are playing.

Music Ally talked to Jyrki Rosenberg, Nokia’s VP for entertainment, who explained more about the company’s strategy with the new premium tier – which will sit alongside the existing free, no-advertising Nokia Music rather than replace it.

“Feedback from consumers has been overwhelmingly positive, including in the US, where we launched in September,” he says.

“They understand the value they are getting from the service: no registration, no payment and no commercials, just straight-out-of-the-box streaming music. But based on this feedback, we have also learned that a certain segment of the market have requests for more features.”

Hence Nokia Music+, although we suspect Nokia has also been getting plenty of feedback from music rightsholders requesting a premium tier for the service.

“They really like the evolution, and in a way the fact that with this, our service is even more complete,” says Rosenberg. “There is a funnel of free users, and also a tier of people who are willing to pay for unlimited skips, higher audio quality and the other features.”

There’s an interesting dynamic going on in the music industry at the moment. The labels as much as anyone were responsible for setting the price bar for mobile access to on-demand streaming music services at €9.99 a month.

Yet at the start of 2013, they’re making more noises about a desire for mobile music services sitting in between free and €9.99, to provide a more graceful upsell curve for consumers.

“When we analysed the market, it was pretty clear from our research that this €9.99 type of service is still targeting a fairly narrow segment of the market – I would say less than 10%, initially,” says Rosenberg.

“That’s why it’s important with this new tier to still be addressing a large part of the market, not limiting ourselves to less than 10% of it. €3.99 is still affordable enough for us to be focusing on the massmarket.”

The HTML5 site is also interesting. So far, Nokia Music hasn’t merely been a mobile-first service: it’s been mobile-only, even if users can still connect their Lumia (wired or wirelessly) to speakers and hi-fis.

Rosenberg says Nokia Music will “definitely stay mobile-first” even with the new HTML5 site. Although it makes Nokia Music accessible for the first time on, say, iPads, he politely bats back a question on whether Nokia might launch a native iOS app for the service, as it has done for its Nokia HERE maps.

“At this point of time, our strategy is to differentiate Lumia,” he says. “At the point where the consumer wants more and is willing to pay more, it is hard to argue that they shouldn’t have access from elsewhere. But we will definitely keep on innovating on the devices as well.”

Nokia Music+ will roll out to the 24 countries where Nokia Music is available over the first quarter of this year. Users will be able to pay in-app using a credit card, or operator billing in countries where that is available.

Rosenberg says Nokia is avoiding an unsubtle hard-sell, suggesting instead that when users come up against some of the restrictions of the free service – they’ve used up their six skips an hour, for example – they may be asked if they want to upgrade.

Thus far, Nokia hasn’t ever published figures for usage of Nokia Music, making it hard to gauge how well the service has been catching on. Rosenberg maintains that policy, which is in part dictated by a reluctance to have Nokia Music compared to other services (Pandora and Spotify, among others, presumably) at this point.

“Our usage is of course proportionate to Lumia,” he says. “If we talk activation rates – how many people who bought a Lumia activate the service – that number is very big. The great majority of users activate it.”

That gives something to work with: Nokia sold 13.3m Lumia smartphones in 2012 according to its financial filings, and around 1m in 2011, making a maximum possible install base of 14.3m – although some keen early adopters may be on their second Lumia by now.

For now, further stats aren’t forthcoming, although Rosenberg says Nokia Music is retaining users after that first activation “well above” the industry averages for apps in general, as well as music apps.

(We wonder if Nokia is using analytics firm Flurry’s stats for this. In October 2012, it published some research claiming that the average music app retains 43% of its users 30 days after they install it, 30% after 60 days and 20% after 90 days.)

Rosenberg does have some stats on another part of Nokia’s music activities though: the Nokia Music Unlimited service in India. The service formerly known as Comes With Music was dropped in Western countries, including the UK, but it’s going strong in markets like India.

“It has been particularly successful in the Asha range of handsets in India,” he says, in answer to a question about Nokia’s lower-end smartphones.

Asha users are currently downloading more than 1m tracks a day in India alone, and last year Nokia consumers downloaded more than 200m tracks in India.”

Rosenberg adds that while Nokia sees an opportunity to bring Nokia Music+ to Asha, for now the service will remain exclusive to its Lumia Windows Phones.