Nokia moves to the music by landing Loudeye

9 Aug 2006

Nokia is to pay out close to US$60m to buy Loudeye, one of the leading players in the market for distributing digital music.

The mobile phone company believes that the acquisition will allow it to give consumers “a comprehensive mobile music experience” that includes devices, applications and the ability to buy digital music.

The deal is due to be completed by the fourth quarter of this year with the launch date for this “experience” likely to be some time next year, Nokia said.

Seattle-based Loudeye operates 60 live services in more than 20 countries across Europe and South Africa, Australia and New Zealand. Its business-to-business service boasts a back catalogue of some 1.6 million licensed music titles and the company has the rights to use content from all the major music companies in addition to hundreds of independent labels.

Nokia and Loudeye have some history together, having agreed a partnership two years ago by which the companies were due to develop a wireless music platform for mobile service providers.

This latest move is a further indication of how the music and mobile worlds appear to be converging, with many manufacturers launching multi-function units that are aimed at replacing single-purpose devices. Phone handsets are increasingly supplied with digital music player features, such as Motorola’s ROKR device which runs iTunes software or Sony Ericsson’s Walkman-branded phones.

Nokia now claims to be the world’s largest manufacturer of digital music players, having sold more than 15 million music-enabled devices in the second quarter.

Mobile operators are likely to be paying close attention to the outcome of the deal, as music is a growing potential revenue stream for them. The analyst firm Juniper Research has forecast a shift away from ringtones to full-track music downloads over the next five years. The total music market for mobiles is predicted to be worth US$14bn in five years’ time.

By Gordon Smith