MUMBAI: After over a year of scaling up its business, Flipkart is shutting down its digital music store Flyte with effect from 17 June 2013. The loss is attributed to problems faced in micro payments and internet piracy.

Sources from Flyte stated that the numbers they are looking at are larger and the music store has not been able to scale on the level compared to its other store sections. The company now aims to go back to the start and analyze what went wrong, although there is no certain timeframe set for it.

The team of Flyte will now focus largely on the e-books section. However, the content purchase has been enabled till 17 July. Moreover, customers having wallet balance can download and maintain their libraries till 17 August. The company states that the consumers who have wallet balance remaining at the end of the period will receive a refund of the amount.

In an official statement, Flyte head digital media and payments Mekin Maheshwari said, “We set up Flyte MP3 a year back in what was an extremely nascent industry. The aim was to bring legal digital content to consumers in India. However, we have realized that the music downloads business in India will not reach scale unless several problem areas such as music piracy and easy micro-payments are solved in great depth. Which is why, we feel that at present, it makes sense to take a step back from Flyte MP3 and revisit the digital music market opportunity at a later stage.”

In a short span of time, the company built a massive digital music catalogue with a user base of nearly 100,000 customers.  It had launched with a repertoire of one million songs and in the last 12 months added around three million tracks from close to 150 labels and aggregators.

The closure will not only affect the consumers, but also the music labels that had their content on the store. Some of the labels that were on-board included T-Series, Saregama, Universal, Sony Music International and Sony Music India amongst others.

While Flyte digital VP Sameer Nigam had earlier stated that the revenues were witnessing steady growth month on month, it seems that the paid ecosystem has a long way to go in India.

An industry expert said, “Indian consumer is too habitual of downloading pirated music and not paying. In such a scenario, it is very difficult for such companies to survive. iTunes will and may survive coz of apple users, but rest will find it difficult.”

However, Saregama had ended its deal with the company on commercial terms.

Speaking with Radioandmusic.com, Saregama business head music Adarsh Gupta said, “We were on the store but around a month back we ended the deal. We could not renew it on commercial grounds.”

On the other hand, senior officials from T-Series and Universal Music had no information on the shut down.

T-Series president Neeraj Kalyan said, “Flyte is a good platform to present our music and I have no news about the shut down. We have not received any confirmation from the company until now.”