Qualms with music

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: companies have also started to combine their offerings with similar “all you can eat” music subscriptions. TDC, a Danish telecoms operator, has bundled such a service with its broadband connections. Orange, a European mobile operator, has launched Musique Max, which combines unlimited music downloads with a mobile-broadband service for euro12 ($17) a month. And Sony Ericsson, another handset-maker, is planning to launch an unlimited music service called “PlayNow plus”, which will be offered to consumers via mobile operators.

Will this new model work? For the record labels CWM is likely to be a good deal. If they receive, as some analysts estimate, a total of euro 4 ($5.60) per handset per month (about half the cost of all-you-can-eat subscription services on the internet) and Nokia sells 5m CWM handsets, the additional income would add up to euro 240m ($338m)—equivalent to more than 1% of global recorded-music sales in 2007 and 12% of the digital business. The potential market is far bigger: last year Nokia sold 146m phones that can play music.

But Paul Jackson of Forrester worries that Nokia will end up overpaying. The firm has not released details of its agreement with the record companies, but it is said that they will receive a fixed fee per handset, have been guaranteed a large number of handset sales, and will receive additional fees once a subscriber exceeds a certain number of downloads. So the promise of “unlimited” music is actually subject to a “fair use” limit, beyond which access will be cut off.

The economics of CWM will become clearer when Nokia reveals what exactly will happen after the 12 months of free downloads are over. The company hopes that most owners will simply buy a new CWM handset, says Elizabeth Schimel, the head of Nokia’s music business, since teenagers like to be seen with the latest model. (CWM could thus encourage people to upgrade their handsets more often than they otherwise would have.) But customers will also be offered the chance to switch to Ovi’s paid-for music service.