The Loudeye saga has come to and end: Nokia, which has had a long and painful relationship with U.S. digital music provider Loudeye, has decided to buy the company for $60 million (We predicted as much back in January). Nokia said it had offered $4.50 per share in cash to Loudeye shareholders, 2.5 times Loudeye’s closing price of $1.77 on Monday.
The deal is not hinged so much on the online music, but the mobile music part, on which Loudeye and Nokia were jointly developing a solution for the last 2-3 years. Loudeye operates 60 live services in more than 20 countries across Europe and South Africa, Australia and New Zealand, but has always had trouble maintaining profitability.
What will probably happen with this deal is that Nokia will add mobile components to these online stores, and then push theirmusic handsets in the process, as the devices which can bridge the online-mobile music gap.
It sold of its U.S. digital services arm to Muze in April, for about $11 million.
AP: Nokia has previously cooperated with Loudeye in enabling mobile operators to provide a music download service over mobile phones such as Nokia’s high-end N91 handset. The company now aims to provide a music download service under its own brand sometime in 2007, possibly putting it in direct competition with its own operator customers.
WSJ: It isn’t the first time Nokia has courted content. In the late 1990s it launched its Club Nokia service where individuals could download games and ringtones. But operators were concerned that it would cannibalize their own offerings and Nokia scaled back its activities in 2003. Nokia says it discontinued the Club Nokia service because customers and phones weren’t at the time ready for it. Ben Wood, an analyst at U.K.-based research firm Collins Consulting, said Nokia could risk alienating some of its operator customers again if it launches its own branded service using the Loudeye technology.
Some more details in the release here.