| 20 Jan 2022
Music Industry - Rocking to digital tunes

The Indian digital music story can be described in a single word - mobile.

With the mobile phone industry making strides far bigger than Internet penetration and speed in the country; the ringtone, the caller ringback tone and the track download have emerged as the killer apps that the telcos and the music industry have all been riding on in the last year.

In March 2007, consumers were downloading almost 8,00,000 ringtones per day in India. Industry experts expect that number to go up by 60 per cent by end March 2008. The year ahead looks even brighter. India is already the second largest market globally where digital (both online and mobile) music sales outpace physical sales, a step behind South Korea.

Music drives MVAS

Mobile music downloads, comprising mainly Bollywood, spiritual and even regional genres, are growing rapidly outstripping all expectations, and will make India's mobile music market worth $800 million by 2009, up from $100 million in 2005.

"Music as a revenue generator for the MVAS space will continue to see encouraging times ahead. Mobile music has already surpassed Online music sales due to better accessibility and a penetration rate of around 18 per cent. The launch of 3G later this year is bound to facilitate Full Track Mobile Music, taking Digital Music a step further," avers People Infocom (Mauj) CEO Manoj Dawane.

The Internet is lagging behind in the race to encash the music craze, but the industry expects it to catch up, judging by the flurry of activity on the digital side in music companies. Labels like T-Series, Yashraj, Saregama and Shemaroo, which have partnered with content aggregators to push their content, have also been operating online stores for the last one year, but the fruits of labour are not likely to be visible for another year.

According to T-Series' president marketing & promotions, Vinod Bhanushali, "There is still a problem with the payment gateways. People in India prefer physically walking down to the music store, sampling music and then purchasing what they like. They are hesitant about purchasing music online. I believe that when the rock bands arrive on the scene in a big way, we will see a lot more people logging on to the Internet to listen to and buy music."

Bhanushali's assessment may be right. Although Bollywood music continues to hold sway over listeners, labels are increasingly looking at promoting fresh talent elsewhere.

While a Radiohead experiment may not be happening any too soon in India, creators of music are suddenly looking at the Net and mobile space in a different way. Composers are striking deals with mobile service providers to create exclusive content and composers and bands have launched portals that showcase their music to a far bigger audience, doing away with the necessity of a label to act as catalyst agent.

What sells

Apparently, everything sells, although Bollywood still takes the lion's share. Big Music CEO Kulmeet Makkar agrees that digital revenues from film music are as high as 40 per cent of the total. Makkar should know, as Big's recent releases, Johny Gaddar, Cash and Dhamaal have been significant on digital. "The success on digital is a function of how many hit tracks we have in the soundtrack," he explains.

In 2007, music distributor Soundbuzz also found that in the online space, only 15 per cent downloads were latest hits, while the 'long tail' - old classics, devotional and regional music scored high with customers.

'Cell'ing like hot cakes

A burgeoning cell phone industry and a young population (by 2015, the under-20 crowd will make up 55 per cent of all Indians) with the power to spend are ensuring that experiments in the digital space are succeeding, though in varying degrees. The country's handset population crossed 250 million by end-2007, and global brands like Nokia, Motorola and Sony Ericsson are doing brisk business with
wireless-enabled phones loaded with FM radios, MP3 players, and sizable memory capacity.

Obviously, while the music industry is gung ho about the ringing cash registers thanks to digital music, it isn't too happy with the drop in CD and cassette sales. Adding to its misery is the spectacular rise of piracy that is keeping pace with technology while the industry struggles to find its feet in a digital environment.

Piracy - eating away at the base

The industry's bane is that for every legal paid-for download, another four illegal downloads are being made. Dawane maintains that file sharing and rogue websites will cripple the industry in the long term. Trade body Indian Music Industry is fighting to shut down free music download Internet sites that are undercutting its profits, but inspite of having shut down over 600 of them, newer ones keep mushrooming.

The grey market flourishes with pirated copies of music CDs selling like hot cakes. Pirates do not pay for IPRS, VAT, excise duties and there is no cost of content, marketing and promotions, and they sell only chart toppers. Piracy, particularly in the ringtone market, has eaten into 80 per cent of revenues, according to PPL, the licensing arm of the IMI. The music industry is not too keen on DRMs and specially formatted handsets to block piracy.

Till the players catch up with technology then, it's advantage consumer.