If a latest report is to be believed, 80 per cent of mobile subscribers are willing to accept advertisements in exchange for free music downloads.
Can buying music be made as easy as stealing music? Why not, thinks Nokia, which is offering unlimited free music to its consumers. The handset major admits that if it has to compete head-to-head with illegal music portals and pirated content that is available freely on the internet, it needs to brace itself for a bumpy ride. A part of the Finnish major’s endeavour while offering free music on Nokia handsets is to convey the idea of getting something for nothing.
In its latest report, KPMG-Ficci estimated that the size of the Indian digital music market was Rs 260 crore last year. It further reported that 80 per cent mobile subscribers were willing to accept advertisements if it meant they would get to download free music! “We believe giving free music that stays on your device forever could be the most effective way to grow legitimate digital music uptake,” says D Shivakumar, VP and managing director of Nokia India. The company claims it will make money by selling more handsets, where the cost of the music service is embedded in the handset’s retail price. “This way, we get consumers to switch to Nokia. That is a good return on investment that we will utilise to purchase digital music rights.” Shivakumar is referring to the four million-plus song library that Nokia has amassed and will distribute over five selected phone models.
The ‘mobile music’ movement
Airtel claims to be the largest music company in India, bigger than even Saregama India, in terms of revenue. “We are also the largest distributor of music and offer the largest catalogue of Indian music with more than half a million tracks. Our non-voice revenue, as a percentage of mobile revenue, stood at 11.8 per cent in the quarter ended March 31, 2010,” claims an Airtel spokesperson. Mobile revenue for Airtel for the quarter was Rs 8,197.5 crore.
In an attempt to catch the fancy of mobile subscribers, Vodafone, too, has launched an IVR (interactive voice response)-based radio service, Vodafone Music Junction, which offers customers a library of more than 1,50,000 songs at a monthly rental of Rs 30 (total listening time of 30 minutes) for both prepaid and postpaid customers.
Even music labels have digitised their catalogues for licensed delivery of their music albums. Sony released the album of the Bollywood film My Name is Khan worldwide on Apple’s web-based music store, iTunes, a full three days before its release on conventional media in music stores. “There are over 500 million mobile subscribers in India, 45 per cent of whom have devices that are capable of music transfers. With 3G roll-out round the corner, consumers are expected to be able to download full tracks by accessing the Internet at faster speeds,” adds Jehil Thakkar, media and entertainment analyst, KPMG.
Kumar Taurani, managing director of Tips Music, says the way digital music is sold will change in the future: “There could be graded pricing rather than a flat rate for all songs to make it profitable for content owners as well. For instance, popular numbers could come for a premium of Rs 25, while not-so-popular songs from the same album could be sold at Rs 2-5.”
Who owns the music?
Licensing and ownership of mobile music is also important. If users download a song on their mobile, do they have the right to transfer that to a PC, burn it to a CD or transfer it to an MP3 player?
Nokia is willing to give away these rights to its consumers, but there are restrictions as to what people can do with music downloaded from other websites. Content aggregators like Hungama.com give their considerably large consumer base an option to choose from different price plans that comprise both DRM (digital rights management)-protected and MP3 formats (that can be moved from one device to another).
Operators like Vodafone recently added music download services where subscribers can get full songs in MP3 format for just Re 1. Although the songs are DRM-protected, which means they cannot be transferred from one device to another, Vodafone claims “millions of Indian users” are already sampling its music download service.
Siddhartha Roy, COO of Hungama Digital, wants his firm to be a one-stop shop for entertainment with its library of 3,00,000 song tracks. “At Rs 99 per month, we let you download unlimited content; for Rs 20, you get four tracks and for Rs 10 a one-time download. You can’t ignore the fact that India is one of the fastest growing mobile economies in the world where consumers are spending a lot of time on their mobiles, downloading entertainment content,” he says. While Roy remains cagey on the number of downloads on Hungama, he does acknowledge that downloads have increased 50 per cent in the last few months.
Music labels make a scramble too
Tips Music, which has a library of around 35,000 songs, has give licences to as many as 10 websites, which include BigAdda and UTV, among others, to stream music. Users get to listen to these songs legitimately for free, while being a captive audience for a few advertisements. Other labels like T-Series, which owns more than 2,00,000 songs and 30,000 music videos and movies, have tried their hand at battling piracy by launching music on pen drives and memory cards. Music labels now aim to tie up with DTH players, trying to replicate the success telecom operators brought for them.
| TUNES OF THE TRADE YOU SHOULD KNOW |
| * The Indian mobile market consists of more than 565 million mobile subscribers growing at 10-12 million new connections per month. Expected to hit 700 million subscriptions by the end of 2010. |
| * Nearly 95 per cent of mobile phone users download music (including caller and ring back tunes) on their mobile devices |
| * On an average, an Indian consumer listens to nearly 100 songs on a monthly basis. |
| * The value-added services (VAS) industry has witnessed a 70 per cent growth in 2008-09 and is expected to touch Rs 9,760 crore by the end of June 2009 and Rs 16,520 crore by end of June 2010 |
| Source: Hungama |
| STREAMING MUSIC FROM THE WEB | |
| REVENUE MODELS | WHAT CONSUMER PAYS FOR |
| Streaming subscription | The streaming subscription model involves consumers paying a flat monthly rate for unlimited access to a certain library of music, very much like the monthly fee people pay for cable television now. The content is not downloaded to the user’s PC or mobile device. |
| Pay-per-song-download | Websites like Hungama, iTunes and several others charge a minimum fees of Rs 5 and onwards. This music usually remains restricted to the device or PC it was downloaded on. |
| Unlimited songs (monthly/yearly fees) | Users are required to pay a fixed fee starting at Rs 99 (every month) for unlimited song downloads. Mobile device vendors and telecom operators, too, have launched free song downloads. At present, a monthly fee is being charged by telecom operators to avail song download services, while vendors like Nokia give free music. Users pay only for the data usage during the song download. |
All’s not lost for music labels though, according to Mick Gordon, managing director of Synovate: “Indians are clearly passionate about music. But downloading a full song on their mobile phone is still at a low 13 per cent, and online music downloads are just 6 per cent due to lower levels of internet penetration in Indian households. Buying a music CD in a physical store still remains acceptable to Indians.”
While major labels are beginning to toy with streaming services themselves, the real added value is in aggregator sites that have licences from all the major players and can store all the music in one place. No one wants to go to the Sony site to get Sony artists or to the Universal site to get their albums — most people wouldn’t even know which label to go to in order to find most artistes. Taurani says: “We do not allow downloading yet through any stakeholders but are talking to a few aggregators like Hungama, Saregama and Landmark to work out deals.” Tips, he claims, gets up to 55 per cent of its revenue from licensing songs to mobile service providers, be they network providers or value-added service (VAS) players.
Meanwhile, sites like Hungama.com have sharpened their focus on digital content. “If you give consumers the right mix, people will pay for legitimate stuff,” says Roy of Hungama Digital.
Keeping in mind consumer behaviour, Hungama introduced a WAP site to facilitate legal music downloads and the MyPlay application on social networking site Facebook to manage them on the device.
Hungama is the official partner for almost all latest movies like Housefull, Badmaash Company and Ravan, and has tie-ups with leading labels like EMI and T-Series as well. “Digital music is the future and, with Internet and mobile penetration on the rise, it’s all set to grow even bigger,” concludes Roy. Taurani reckons: “It is better to support aggregators and give them exclusive rights for a few days after the launch than see piracy run rampant. However, most are relatively new in terms of level of acceptance.”
Arguably, with mobile music shaping into a business in its own right, the channel remains a valuable asset for players both on and off the mobile platform.