Phones come cheap because the price of the unit is subsidized by the telco (they make up with the monthly plans). In the same light, digital music will now come free (hopefully!) because the cost will be subsidized by the price of the phone.
Reuters has an interestingly new article on the Nokia’s new Comes with Music offering (apart from their new touch screen phone):
I heard about Nokia’s Comes with Music plans during a dinner meet up with some of the online tech media a few months ago. Not a lot of details were released but the plan to go for a subscription-based model isn’t new. It just hasn’t been implemented on a wide scale yet (the only guys I know doing this is the Microsoft Zune online community for a price of a CD a month – unlimited song downloads!).
Nokia’s package will differ from others on the market as users can keep all the music they have downloaded during the 12 month subscription period. There are no charges for tracks downloaded, since the cost is bundled to the phone price.
“‘Comes with Music’ could potentially bring free music to millions of consumers, radically changing the music industry, and offering a significant threat to Apple’s dominance,” Strategy Analytics’ David MacQueen said in a research report.
“In a market where price and selection are so much more important than brand to consumers, Apple cannot count on retaining users when competing with an offering which seems free to the end user,” MacQueen said.
I think it’s come to that point where everyone in the market already has a phone, and changing mobiles every 3 months is turning to be a logistical nightmare. So even if Nokia has still been steady with the phones, entering these new avenues (games, music, maps, photo sharing) via Ovi will definitely peak interest.
What I really want to say is filled with irony: The key to keeping your customers is to not make anything exclusive. This isn’t the 1970’s anymore. Great job to Nokia for going pro-consumer!