Nokia setting up music store to advance handset sales

Mobile phone company to buy producer of US music distribution services

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Nokia hopes to make serious inroads into the music business. On Tuesday the company said that it was buying the American Loudeye Corporation, a Seattle-based provider of digital music platforms.
      The deal is seen as laying a foundation for the establishment of Nokia's own digital music services.
      "The aim is to build an operating environment where it is possible to buy, and also to handle and store music. That is, to offer a very diverse service. We will give more details next year", says Anssi Vanjoki, head of Multimedia Nokia.
      Vanjoki says that Loudeye is a leading operator in the field, providing music distribution services to companies such as MTV and Coca Cola, as well as to Microsoft MSN portals in several European countries.
      Loudeye also holds the rights to the distribution of 1.6 million pieces of music.
      Vanjoki says that Nokia plans to continue to acquire more rights to music.
     
Vanjoki compares Nokia's opening with the world's most popular Internet music store, Apple's iTunes.
      Nokia is paying USD 60 million (EUR 47 million) for Loudeye, which is listed on NASDAQ.
      The price offered Loudeye shareholders is 2.5 times higher than Monday's listed share price. Vanjoki feels that the price is worth it, as it allows Nokia to benefit from Loudeye's know-how on a large market.
      "From the point of view of existing shareholders, the company's value has not been as great, because the terminal device environment, and distribution that takes place through those devices has not been there", he said.
     
Nokia calculates that it is the largest manufacturer of digital music players. In April through June the company sold 15 million mobile telephones which contained a music player.
      The figure does not reveal how many people actually listen to music on their phones. Nokia believes that listening to music will increasingly take place through mobile phones.
      Vanjoki says that the main aim of the musical service is to promote the sale of Nokia products, but the company also expects revenue from the service itself.
      "Our aim is to become a leading company in the market for mobile music and musical experience."
     
The deal still requires Loudeye shareholders to accept Nokia's tempting offer.
      Loudeye employs about 130 people, and estimates that its turnover this year will reach USD 26-28 million (EUR 20.23 million). However, its has been making a loss at the beginning of this year.


Links:
  Nokia press release: Nokia to acquire Loudeye and launch a comprehensive mobile music experience

Helsingin Sanomat