digital reporter

'Comes With' some advice for raking in more revenue

Sometimes the future flashes before your eyes. But at the MIPTV confab last week, the next couple of years of mobile film and video landed in my ear.

A well-informed mobile industry executive who wishes to remain anonymous told me on the hush that handset giant Nokia is paying record label Universal Music Group $35 for every phone that Nokia loads with access to Universal's music library. Neither Nokia nor Universal would confirm the deal.

You might recall that Nokia plans to sell phones this year that offer consumers free access to Universal's music library. Nokia calls it "Comes With Music."

If so, Hollywood should be pushing for "Comes With Films" and the TV biz for "Comes With Shows." Then, perhaps, the fuzzy picture that is mobile video would clear up.

Let's apply some modest math to this intriguing $35-per-phone figure. Nokia last year sold 437 million phones and could sell around a half- billion this year. If, say, 1% of 500 million phones carry the Universal tie-in, that's $175 million in Universal's pocket. If it's 10%, Universal walks home with $1.75 billion.

Name a Hollywood studio boss, a broadcasting honcho or producer who wouldn't want an extra $1.75 billion. They should be talking to handset companies like Nokia — the world's largest phone vendor — that increasingly are marching into the services business that once was the exclusive domain of such cellular carriers as Vodafone and Verizon.

Of course, Hollywood also should carry on doing business with the carriers, which have relationships with about 3 billion users globally.

But just as showbiz entities are now striking deals with new Internet companies and service providers — like production house ShineReveille's recently announced partnership with MySpace — they should cast their net wider in the mobile sector.

One problem in mobile has been that carriers and media firms have struggled to work out mutually beneficial business models. In response to a question after her MIP keynote speech, ShineReveille chairman Elisabeth Murdoch said, "The most difficult thing for producers is how you get paid on mobiles."

A Nokia "Comes With" model could rectify that by giving content owners a guaranteed cut of phone sales. It also helps usher in the type of free-to-end-user deal that marks the future of mobile entertainment.

Advertising probably will play a big role in funding mobile content, which still lags behind PC-based entertainment because pricing generally is too high or too confusing, and because it simply isn't easy to use. The free model works by giving end users content when they agree to look at or receive advertising. The advertising could be location-based, increasing the chance that a user gets a relevant ad for, say, a nearby cafe, a movie or a concert. Nokia believes in the "location" model — it's acquiring mapping firm Navteq for an eye-opening $8 billion.

Of course, free always comes at a cost. In this case, it's the premium that users will pay for a Nokia phone. Nokia hasn't announced pricing yet for "Comes With" phones. But expect hundreds of dollars.

Or perhaps Nokia will discount the phone's price to any user agreeing to receive advertisements. It's up to Nokia to decide how to make its money. But like Universal Music is doing, Hollywood and the TV world should help them first to spend it. Note to studio bosses: Sell to the handset guys.