Few music business people expect Nokia’s unlimited free music giveaway to be repeated, or even last very long. There simply aren’t enough large consumer companies prepared to take such an expensive gamble .

And Nokia’s richest partners aren’t interested in helping out.

But it’s a radical and interesting offering that merits some serious analysis: certainly, much more than Nokia’s other Dad-at-the-Disco attempts to get down with da yoot.

As we wrote last December – Comes With Music is much more subtle and interesting than most people gave it credit for. There are strings attached, but fewer than with any such previous bundling promotion.

Nokia has been inhaling Chris Anderson’s “Freetardonomics,” and this is what comes out when it exhales. ..

The idea behind Comes With Music is to make Nokia’s handsets more attractive by giving away music – unlimited for one year, which the punter can then keep. Two or three particularly newsworthy aspects have emerged from the formal announcement today.

Unlike MySpace Music, Nokia has signed deals with (real) indie labels. The Beggars Group (representing 4AD, Matador, Rough Trade, and XL), Pias, and Pinnacle (representing hundreds more) have signed up – as well as the big four labels: Universal, Sony, Warners, and EMI. The major publishers are also on board, too, says Nokia. Although MySpace is a site with an “indie” audience, News Corp. seems to think that serving them the music they want is supernumerary.

In addition, Nokia has confirmed that users will be able to keep the music they download in the first year indefinitely (which we knew) and move it around different devices (which we didn’t). However, there is DRM involved, so devices must be “authorized,” or approved against a central authentication server. That might prove too freedom-inhibiting for many. And thirdly, CwM users will be able to exchange songs with other CwM users. Sort of.

The operators snub Nokia

The real deal, as sold through Carphone Warehouse – the bit you sign your name to – looks less attractive than the general concept. While CwM will be offered to pay as you go customers, it requires a £129.95 upfront payment. And for that, you merely get a year old 2G handset, the 5310 XpressMusic phone.

This tells us that the mobile operators have again kicked sand at the Finns, blocking Nokia’s traditional route to the mass market. We’ll see why this is important in a moment.

What it means is that in practice, the business end of Comes With Music is neither “free,” nor particularly cool. Since the big selling point is that it “feels like free” – apparently viewed as necessary to compete with free downloads – you may wonder what the point is. This is more a case of clumsy and slightly deceptive marketing, rather than a lousy product.

So right away, Nokia badly needs more CwM devices and more partners. But without the might of the mobile operators – their ubiquitous high street presence and deep subsidies – free won’t look or feel like anything but an expensive, upfront music subscription program.

Maybe Nokia took one inhalation of Freetardonomics too many? Well, maybe it doesn’t need to offer a free service, just one that’s convenient and cracking value? That’s where CwM’s rival thinks it has the edge.

Omnifone’s rival MusicStation offering is also unlimited – but the idea is that instead of “free,” it’s two quid a week. For this, you can chat and exchange playlists with other subscribers, grab music over the air, and crucially, you’re not tied to any particular handset or manufacturer. It’s won widespread praise for its user interface, and as an instant gratification “personal radio on demand,” people love it. Having used it, I can quite see why.

People paid astronomical amounts for SMS once, because it offered such value. The legal P2P file-sharing services – coming soon to the UK – are also making the same bet: people will pay for something of great value. Just make sure it’s insanely great. Research tentatively offers some encouragement.

Now Omnifone is spreading its wings a little. Significantly, Sony Ericsson became the first OEM to bundle a white-label version of MusicStation under the name PlayNow Plus last week – and unlike Nokia, it’s actually got the operators on board, doing what Nokia wished they’d do for ComesWithMusic and put their hands in their pockets. Well, one operator at least: Sweden’s Telenor will bundle MusicStation at no cost for the first six months. Sony Ericsson also won a concession on how much music you can keep at the end.

Omnifone’s Rob Lewis welcomed the Nokia move in a prepared statement.

“The music lover… will be able to expect unlimited music downloads as a fundamental part of their everyday mobile experience,” he said. Both Nokia and Omnifone both have that part of the proposition right. However, only one of them looks like a real business. And the problem is the ideology of “free.”

People don’t simply value free stuff that they know should come at a price. The fatal missing chapter of Freetardonomics (and its semi-respectable cousin, “Two Sided Business Models”) is that as punters, we just don’t respect stuff that’s given away – and we don’t really respect the people who give it away either. We’ll graze and move onto the next chump with a “free” offer. By contrast, we expect far higher standards of service from something we’ve paid money for. And persuading punters to pay for something they value is what reaps lasting loyalty for a service company or manufacturer.

That’s a lesson from another age of marketing, and one that Nokia in its rush to embrace the Californian Web 2.0 snake oil merchants, seems to have forgotten.

All this can be remedied by turning Comes With Music into an attractive music subscription service, dropping the false “free” claim that makes it look like a bit of swindle (when it shouldn’t), and gently showing the consultants the door. The only question is not if Nokia adds a modest price tag, but when – and turns it into a real business proposition.

©Situation Publishing 2008.