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| Upward mobility sets music industry on song |
| Swarup Chakraborty / Mumbai Aug 20, 2010, 00:24 IST |
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The Indian music industry is riding high on the success of the mobility sector in both emerging and mature markets.
Taking a cue from market trends, industry experts said the music business is poised to become the fastest growing segment in the Indian media and entertainment industry over the next five years, and most of this growth will be on the back of content being available digitally.
A recent tie-up of Reliance Communications with Universal Music — to make its entire music catalogue available to subscribers — is part of this growing trend. Once 3G services are fully operative in the country, subscribers will have access to full-track music downloads, video streaming, live concerts and ring tones on their 3G mobile phones.
Value-added services (VAS) for mobile phones contribute 28 per cent to the music industry - up from 14 per cent in 2008. By 2014, it is projected to contribute over 70 per cent, said a PricewaterhouseCoopers report.
Rajat Kakar of Universal Music said the share of music in digital format in the company’s total revenues has gone beyond 30 per cent. It was barely 5 per cent five years back. “I will not be surprised if the share of music sales in the digital format goes up to 50 per cent in the next two years.”
According to PricewaterhouseCoopers report, while the music industry is projected to grow at a compounded annual growth rate (CAGR) of 28.6 per cent till 2014 to reach Rs2,650 crore, mobile VAS music is expected to grow at 55.3 per cent to reach Rs1,900 crore.
“The music industry is scaling on a high note thanks to the increasing usage of mobile phones, advent of 3G and the burgeoning of portable music players. Though the physical sales of music CDs and audio cassettes charted a gloomy tune, the levitation in the ‘soft’ format of music and revenues from other media has covered up for the same,” said the report.
Consumers spend primarily on five fronts in the music sector: revenues from physical sales of cassettes and CDs through distributors and retailers as well as modern retail and online sales; mobile VAS, that is sale of music for ring tones, songs, CRBT (caller ring back tone) and other value-added mobile services; radio stations that pay royalty for the content played, a part of which comes to the music company; online downloads, sale of music through internet (it does not include pirated or illegal download) and public performance where royalty is paid by event organisers for the use of music in their events.
“Mobile VAS, which contributed 28 per cent to the revenues of the music industry in 2009 is expected to contribute 70 per cent by 2014. Currently it is dominated by CRBT downloads. With 3G, it is estimated that other forms of music usage such as live streaming will show increased demand,” said Timmy S Kandhari, executive director, leader-entertainment & media, PwC India.
There is a precedence to the projected numbers with Airtel declaring itself as the largest music company in India with revenues of Music Bharti (its mobile entertainment division) surpassing the revenues of Saregama - the largest music company in India. It is estimated that over 200 million music tracks were downloaded through the Airtel network in 2009.
Virgin Mobile, last week, launched its services ‘Music Unlimited’. The service allows users to download CRBT, ringtones or full download of a music track onto the mobile phone for free from a catalogue of 150,000 songs.
Niraj Roy, managing director and CEO of Hungama Digital Media is, however, not too optimistic of the projected growth numbers. “Of course there is going to be growth but monetising everything that is available is not an easy task and there is a key issue of rampant piracy, so we will have to wait and watch how this pans out.”
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