Nokia and Sony BMG’s announcement today that buyers of select Nokia phones will get complete access to the Sony BMG’s entire music catalog is a model that’s likely to be repeated over and over in the years ahead.

Financial details weren’t disclosed. But presumably Nokia — which signed a similar deal a similar deal with Universal Music Group earlier this year — is paying a hefty licensing fee for this interesting marketing vehicle: $20 (my number) for every phone sold? Not a bad idea.

Traditionally, music executives have decried the idea of allowing their songs to be "loss leaders" for other products, arguing that music is "devalued" if customers don’t pay for it. They’ve now suffered enough pain that any payment mechanism has to look attractive.

This one still has holes: users can’t burn the songs to CDs or iTunes, the two most popular ways of listening to digital music. But they do get to keep the music they download after 12 months.

If you think about it, there aren’t too many consumers products that wouldn’t work for free music downloads, so long as consumer products companies are willing to pay the freight — and the labels take the plunge.

See Also

• Sony BMG joins Universal in offering catalog on Nokia phones

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Google’s China plans could end up having a big impact on the music industry.
    The search giant is reportedly planning to join with China’s Top100.cn to provide free, licensed music to the Chinese masses – a direct swipe at home-grown competitor Baidu, which controls more than 60 percent of China’s search market and turns a blind eye toward the millions of users who download pirated content.
    Google would cover labels’ royalty fees by selling advertising and offering premium services such as tickets or ringtones through Top100.cn, according to the Wall Street Journal.

    Google’s goal, of course, is to increase its meager 66 percent share of China’s search market. But it could also the biggest test yet of whether ad-supported music can be profitable.
    Pay-per-download’s future is dim at best for a simple reason: no one has to do it. Even if every pirate in the world were shut down, you’d still have upstanding citizens trading their music libraries freely over the Internet and using every imaginable storage medium. The halcyon days of CDs are over for good.
    So the old music industry arguments that free or low-priced songs “devalue” their best product just don’t hold water. It’s hard to see how free songs that make the labels money devalue the product more than overpriced CDs and downloads that are slowly driving them out of business.
    Google will be able to amass invaluable information about the Chinese public by the music they download and tailor its search ads accordingly. That could finally make music a profitable endeavor in China. More importantly for Google, it gives consumers a reason to hang out on Google instead of Baidu.
It’s the same logic that drove Target and Wal-Mart to start selling CDs. They certainly don’t make much of their money from selling the discs (although it was enough to bankrupt the record stores). But people browsing for music are likely to buy something else on the way out.
That’s not devaluing music, anymore than listening to jazz while catching brunch at a restaurant devalues jazz.
Universal, Sony BMG and EMI – the three big labels that will probably accompany Google on its Chinese adventure – have a low-risk opportunity to test the feasibility of ad-supported, free music in a market that’s already stealing their product anyway. How ironic if the country most vilified for music piracy helped validate a system for making money from free music at home.

See Also

• Google Aims to Crack China With Music Push

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