LG has revealed that it’ll be the first handset maker to launch a phone with Omnifone’s new MusicStation Max service built in. What’s that? It involves buying a phone on a monthly contract from an operator, with free, unlimited music downloads bundled into the tariff.
“The consumer buys a 20 or 30-euro price plan that might include, for example, 500 voice minutes, 600 texts and unlimited data,” Omnifone CEO Rob Lewis told me. “But when they get their music phone out of the box, it also has the rights to unlimited free music downloads direct to the phone.”
LG’s first MusicStation Max handset will be released by June, and although the two companies aren’t allowing any photography of the device, they are showing it off: basically, it’s a 3G/HSDPA touchscreen iPhone-like handset, except with a slide-out keyboard.
It’s less of an iPhone rival though, and more of a direct competitor to Nokia’s ‘Comes With Music’ initiative, which uses the same ‘pre-licensing’ idea (i.e. buying the phone gives you the rights to the free music for the period of your 12-18 month contract).
LG has signed on to produce a range of MusicStation Max handsets with Omnifone this year, not just one. “There will be a series of different devices which have slightly different price points,” says Lewis. “Some will be touchscreen, and some won’t. We preferred touchscreen for the first device, as it lends itself to wonderfully for this kind of service.”
What about the music itself? Tonight, major label Universal Music Group announced it’s on board, and Omnifone told me that negotiations with the other major labels – as well as collectives of independents – are advanced.
“We are the only party in the world that already has unlimited music direct to your mobile with all four major labels and independents,” he says. “There’s a very minor enhancement that’s required on those licences, which we’ve already discussed with those four majors and which is ready to go, give or take the paperwork.”
The mobile operators are crucial to Omnifone and LG’s plans for these handsets, and it seems likely that the first partners will be the operators already working with Omnifone’s existing MusicStation subscription service – which in the UK, means Vodafone.
“The device is very similar to Nokia’s model in many respects, as it comes out of the box with the rights to free unlimited music,” says Lewis. “But unlike Nokia, it’s operator-friendly. All of the music comes down over the data network direct to the device, rather than by plugging it into a PC or using Wi-Fi.”
Other key stuff to know: Lewis says there’s already 1.5 million tracks ready to be made available through MusicStation Max, and when you download a song, you get the cover artwork from the album it belongs to as well. MusicStation Max also includes community features from Omnifone’s existing MusicStation service – so you’ll be able to add people as friends and share your playlists with them.
The MusicStation Max service is also dual-download, so there’ll be a PC application which synchronises with Omifone’s servers to match what you’ve got on the phone. So, every time you download new songs to the handset, the next time you fire up the PC app, they’ll come down to your PC too.
Lewis says a key advantage of Omnifone’s approach is that you don’t have to actually connect your phone to your PC, unlike Comes With Music. “You get an iTunes equivalent service that syncs the metadata over the network, downloading the songs to your PC in an appropriate file format,” says Lewis, who also confirms that the songs WON’T be DRM-free.
There are a few questions. What happens when you reach the end of your contract? You can upgrade to another MusicStation Max handset and automatically have your favourite songs, playlists and friends downloaded onto it, but if you decide to quit your contract, the favourite songs (i.e. those stored locally on the phone) are yours to keep.
How does the business model of all this work? Effectively, each MusicStation Max device will generate a monthly fee, which is split between the various labels depending on what tracks you’ve played and how often. Note, this is different to downloads – if you download one song and play it a couple of times, but download another and play it incessantly, the label behind the second will make lots more money from Omnifone.
“That’s the interesting thing for the music industry,” says Lewis. “First, they get to monetise their back catalogue – they’re getting the CD replacement cycle all over again. How glorious is that? And second, it’ll start mattering how good the music. Today, in the a la carte world [paying per track], if I sell a piece of music to you, I don’t care how good it is. But under this new model, I really care if it’s good and has longevity.”
During my interview with Lewis, he claimed three or four times that Nokia is planning to spend more than a billion Euros promoting Comes With Music in the second half of this year. Why talk up a rival so much?
The strategy appears to be that the operators won’t like Comes With Music because it cuts them out of the loop, but Nokia’s marketing might will raise awareness among music fans that they can get a phone with unlimited music – giving operators a reason to sign up with MusicStation Max to have an operator-friendly alternative to Nokia’s music phones.
However, Lewis can’t resist firing the odd barb in Apple’s direction. “If you’re a consumer going into a retailer, there might be a £269 iPhone on an 18-month contract, yet the alternative will now be almost certainly a price plan with more minutes and texts, plus unlimited music downloads to your device at no cost. And the phone will be free.”
What does the launch of services like MusicStation Max mean for the operators’ own music stores, which follow the existing a la carte model? Lewis chooses his words carefully, clearly keen not to offend.
“I just don’t think a la carte has a future. The era of having to agree to a transaction every time you do something, and which you can’t transfer anywhere because you won’t be able to do DRM-free for mobile handsets… I just don’t think a la carte is going anywhere.”
MusicStation Max is certainly something to chew over, but my initial reaction is it’s hugely positive. Not least because it means that two of the Big Five mobile handset manufacturers – LG and Nokia – are going to be selling phones with unlimited music built into the price.
Find more mobile news in our Mobile World Congress 2008 category