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Mobile Music Industry – Way to go! (Special Report)

Posted by ElJay Arem (IMC OnAir) on May 31, 2007

Indiantelevision.com’s Special Report

By AAISHWARI CHOUHAN
Mobile music has emerged as the most prominent segment in the digital music industry and is a major money making business.Today, the definite buzzword with Indians is ‘mobile’. Everyone realizes how quickly the world is going digital and how important it is to keep in pace with the changing times.

According to the Soundbuzz Music Analysis (Digital and Physical), in 2007, digital music and more specifically mobile music, will surpass physical music in sales in India. To this estimation, IMI general secretary Savio D’Souza says, “In India, Music-to-Music accounts for Rs 100 crore (Rs 1 billion) and physical music to Rs 600 crore. So, I nowhere see mobile music sales surpassing physical music sales.”

But Universal’s Rajeev Gangal comments, “Not by the end of 2007, but by late 2008 one can expect mobile music sales to exceed, looking at the way the digital segment is booming.”

The Soundbuzz analysis also states that globally, online and mobile sales will represent more than 60 per cent of all music retail sales by 2009. Ringtones, the dominant digital format in terms of sales, will continue to be so through 2009. “Its all about monetizing it rightly,” adds D’Souza. Moreover, it concludes that Asia will generate more than one third of all digital music sales globally in 2009. Whoa!

Mobile music consisting of ringtones, caller ringback tones, music clippings ringtones, music video downloads, movies and scene downloads has emerged as the most prominent segment in the digital music industry and is a major money making business today. Gangal further adds, “Physical and digital formats are way away from each other. Some tracks are just meant for the digital market. But as far as revenue from them is concerned, they are neck to neck. There isn’t much gap there.”

According to the International Federation of Phonographic Industry (IFPI), with the evolution of the mobile handset, mobile music has become a major revenue stream for the music industry globally, running far ahead of revenues from the conventional music distribution channels. Adds D’Souza, “Mobile music has become a major revenue stream for music industry, but mobile music running far ahead in revenues as compared to conventional music distribution channels isn’t true. Globally, the music industry is a $32 billion business, of which mobile music accounts for 10 per cent, say not more than $2 billion.”

Be it an out-and-out whim or just the exposure to illegal downloads, mobile music is taking over the legal conventional music in India. Statistics prove that where mobile music downloads is growing by over 50 per cent every year; the growth of legal conventional music is more or less pining away.

The songs from 2006 blockbuster Dhoom 2 were a smash hit on the music downloads front

Adds Gangal, “If illegal distribution of music through mobiles is also included, the size of the mobile music market may be a lot bigger than conventional music. The biggest hindrance to the conventional music industry is piracy. The mobile music segment sees low piracy levels and hence, the industry is benefited more from the digital segment than the conventional one.”

Downloadable ringtones, which already make an annual business of $45 million globally, is all set to grow at double-digit levels in the years to come. Ringtones also generate about 40 per cent of the data revenues for India’s big wireless operators such as Bharti Airtel and Reliance Communications.

India’s entire mobile music market – encompassing monophonic and polyphonic ring tones, true tones, ring back tones and full track mobile downloads – will be worth $800 million by 2009, as predicted by Soundbuzz, which again doesn’t receive a positive nod from D’Souza.

Today, almost every handset is capable of playing polyphonic or actual music. Cell phones ranging from Rs 2000 – Rs 5000 sell the most in India and thus can avail just the mono or polyphonic tones. Video and song downloads does not come into the picture here. But, mobile music is developing faster due to higher penetration of phones compared to portable players or broadband, and also, due to ease of payment. Almost all operators today have launched an ‘Easy Music’ facility that allows subscribers to choose their favourite music from a huge catalog and download it onto their mobile phones or even iPods at affordable prices. This has helped the mobile music market boom to unexpected levels.

As regards choice, mobile subscribers have a yen for Bollywood hits, devotional music, but international tracks always remain a priority as well.

Adds Gangal, “In the mobile music segment, it’s all about hits. Like if we have the rights to Bryan Adams and a person wants to download Bryan Adams songs, then he will definitely turn to our label. The biggest challenge in this segment is to make music available in the three-inch screen as against other forms of distribution. Here, content and quality both matter a lot.”

Both digital formats have deep content in terms of language and musical genres. Radio on mobile devices as well as Internet radio is also pushing the digital music industry forward.

Presently, the techno-savvy generation is making use of mobiles in all the possible ways to get the best out of it. By the end of 2007, it is expected that India alone will have around 250 million handsets. Global companies like Nokia, Sony Ericsson, Motorola and Samsung are striving neck-to-neck to come up with handsets loaded with FM radios, MP3 players and a good memory capacity as buyers are showing an edge for such features in their cell phones.

Sony Ericsson is working and promoting its personal digital assistant phones with MP3 players and the popular Walkman phone line. Around 35 per cent of their Indian handset products feature downloadable music applications and the best-selling Walkman phone accounts for 65 per cent of total revenues. Sony has also expanded its chain of Expression Stores, which feature phones and music download stations.

Nokia can’t afford to lag in this rat-race. The handset leader has set up college sponsorship deals and collaborated with music companies to buy the rights for free downloadable songs on some of their handsets to encourage the use of digital music. Some of Nokia’s N-series handsets, with a 3,000 song capacity, offer 100 preloaded songs free; just to make a mark, and money of course, in this segment. Most of the major handset makers have tie-ups with music content sites such as Soundbuzz.com and OnMobile.com as well as revenue-sharing deals with local telcos and music companies.

Comments Hindustan Times (Lucknow) music feature writer Piyush Singh, “India sees a huge potential for digital music. Presently, MP3 songs are heard on PC, phones, web (streaming) etc. About revenue generation, according to me, it is an off-putting task to convince (Indians especially), to buy music online, as music is easily available from peers who might have purchased a CD or downloaded it online using P2P technology.

“If it is economical for people to download, store and write music on CDs and then transfer it to the cell phones; the search for songs from unpaid sources increases. But if paid sources price the song really low, no one would want to undergo this trouble of downloading-storing-writing. Also, the whole process will then look ‘legal’.”

Piracy and transfer of music from one handset to another, for instance transferring music clips via Bluetooth, have reached a volume that is three times the legal route. But such illegal downloads also appear as blessings in disguise as it actually helps the mobile music industry to grow. Comments Gangal, “Rich media usually observes a greater volume of transfers via Bluetooth. At the end of the day, everyone gets their share. 70 per cent of it taken away by Telco and the leftover is distributed.”

Local music companies and content owners often nitpick at the distributors like mobile phone operators and other companies that distribute digital music. They claim that the distributors walk away with a bigger portion of the revenues leaving them with a minimum amount. Says D’Souza, “The accounting of the mobile music business depends on some common denominators taken into consideration and on the parameters against which the market is calculated. Only then can one say how significant the contribution is.

“In India, the mobile piracy business is about Rs 30 crore. If a ringtone costs Rs 10, 15 per cent of the money goes to the government, around Rs 1.75 comes to the music industry. The rest is split amongst the music companies and content owners. Today, Telco accounts for 80 per cent of the business. This segment is bound to grow no doubt. Which distributors dominate the mobile music market is largely dependent on the end product available and negotiation skills.”

Talking of the competition penetrating this segment, Gangal gives a final peg, “We don’t really see a lot of competition and this comes as an advantage. It’s all about how you market your product and what strategies you adapt in order to keep selling. In the next five years or so, Universal will definitely witness an average of 400 million number of unit sales in the digital segment and around Rs 200 million in market prices.”

(31st May ’07 | Source: http://us.indiantelevision.com/special/y2k7/special_report_mob_music.php)

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