According to Western music theory, familiar melodies containing alterations which shift them a long distance (harmonically) from the original should be considered perceptually dissimilar relative to the original. It is possible to obtain such a large shift with a small change in melodic pitch. However, this creates a paradox with pitch (contour) shifting, which is known to reduce similarity minimally if the distance from the original is small. We investigated the hypotheses that (1) manipulations to contour and implied harmony of an original melody reduce similarity scores and (2) novices are less sensitive to implied harmony changes than experts, but as sensitive as experts to contour manipulations. Twenty-eight novices and 44 expert musicians rated similarity of familiar nursery rhyme tunes compared with close and distant harmonic transformations plus close and distant pitch shifts. Results indicated that both groups use contour (pitch distance) to determine similarity, but that musically experienced listeners also use implied harmony to make further distinctions. It is argued that as listeners become more experienced, they rely on more sophisticated strategies for encoding and organizing melodies in memory, with deeper structural aspects of music being used when other strategies such as contour are uninformative or non-distinctive. These new findings, that contour and harmony affect judged similarity for simple, familiar melodies, have implications for theories of memory for music, and for the design of automated music retrieval and data mining systems.