Nokia Announces $3.99 Per Month Streaming Service: Nokia Music+ #MIDEM

(UPDATED) 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.

NEW FEATURES:

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.