Nokia will pay Universal Music USD35 for every handset that it bundles with its planned music subscription service, a “well-informed mobile industry executive” tells The Hollywood Reporter.
Nokia and Universal have not confirmed the news, which follow rumours that the Finnish firm would pay USD80 per music-handset. Meanwhile, a source tells tech blog paidContent that Nokia will guarantee Universal around USD33.50 per handset for the first 2.5m phones it bundles, after which the price will drop. The same source says the service, touted by Nokia as offering unlimited free downloads, will provide a “relatively high” but “limited” amount of songs.
If Nokia sells 500m phones this year – it sold 435m phones last year, according to Gartner – adding the music service to 1% of phones would give Universal USD175m. Adding it to just 6% would be enough to pass the USD1bn threshold. Nokia will not say how it plans to fund the service – whether using a subscription fee, premium price or just through advertising.
The music industry is highly secretive about revenue-sharing agreements, but labels are reportedly demanding increasingly high licence fees from online music platforms. The average threshold for “a major advance” has increased from USD500,000-USD1m to as much as USD2m-USD5m, in addition to “over-the-top requests for equity”, EMI digital executive Ted Cohen recently told Reuters/Billboard. The same report says SpiralFrog paid more than USD3m in advance payments to Universal Music before it even launched.
Rumours say Apple is in talks with labels over a bundled music service, but that negotiations have stalled over the low price that it is offering – around USD20 per device. Meanwhile, MySpace is reportedly giving music labels minority stakes in its newly launched MySpace Music, with each stake based on the companies’ market share to a total of less than 50% of the venture.