Users dump CDs, move to digital music

With an increase in the availability of licensed music, an overwhelming number of music lovers in India are opting to download music to their devices (computer, mobile phones and music players, among other gadgets) instead of buying music CDs.

Users like Shefali A Rastogi, a Pune-based homemaker, do not remember when they had last bought a music CD.

"It's tough to recollect my last CD because I have been downloading everything from the music company's website or purchasing songs on my mobile from my telecom operator or sometimes an app store."

Rastogi says she can spend up to Rs 500 for purchasing digital music every month.

"There are hundreds of websites that offer music tracks and albums, streaming services, free-to-use sites, internet radio, subscription models and online video channels. So, why should I buy music CDs?"

. . .

Even filmmakers are beginning to believe in digital downloads.

For example, the tracks for the film FALTU, directed by Vashu Bhagnani, were launched only on the digital platform. Powered by Geodesic's technology, the film's website www.iamfaltu.com allowed viewers to buy music tracks of the film online.

The site also features a radio widget by Geodesic's Mundu Radio that can stream songs from the movie.

The producers priced the music album for Rs 40 or Rs 10 per song.

With content creators rooting for digital content and distribution, the number of legitimate music services touched 400 sites at the end of 2010, according to IFPI Digital Music report, 2011.

The latest Internet and Mobile Association of India data shows that digital downloads as a category in India has increased from Rs 238 crore (Rs 2.38 billion) in 2007 to Rs 435 crore (Rs 4.35 billion) in 2009 with paid music and video downloads contributing about seven per cent or Rs 30 crore (Rs 300 million).

. . .

Music companies, like Sony Music, have invested in digital libraries.

Globally, Sony Corporation has launched Music Unlimited, a cloud-based music streaming service in the UK and Ireland in December 2010 and in the US in January 2011.

The service allows subscribers to store their music on remote servers (clouds) for use in a range of Internet-connected devices like smartphones, game consoles, TV and Blu-ray players.

In India, Sony Music has moved on to mediums that users are comfortable with. Vivek Paul, director (Digital), Sony Music says: "Our music catalogue is available across all segments (mobile and PC), live products (ringers, caller backs, m-radio etc) and distributors in the domestic market. In addition, are international majors like iTunes service and device-led services like Nokia's Ovi store."

. . .

Affordable mobile phones have contributed immensely to the growth in digital music sales.

According to a research report by IE Market Research Corporation, India will be the market that enjoys the highest growth and the number of paid users will increase from 56.6 million in 2008 to 213.4 million in 2013, for a CAGR of 50 per cent.

"The majority of these users will be downloading digital music to their mobile phones rather than on their computers," says the report.

But the road to digital music penetration is not smooth. As Apurv Nagpal, MD, Saregama India says: "Distribution is critical as it gives an opportunity to interact with the consumers and even if there is a small niche of consumers who desire it, there is no reason they shouldn't be able to get what they want."

. . .

Then again emergence of new markets like rural India -- where 41 per cent of the internet users watched, downloaded and listened to music, according to an IAMAI research -- are opening up new horizons for digital distribution.

Demand from consumers to access music across multiple channels and platforms are also spawning diverse models.
Raghav Anand, segment leader (New Media) at Ernst & Young feels that the Indian music industry needs to further leverage benefits of technology, broadband and telecom penetration levels.

"Today, consumers are comfortable with subscription services, one-time-payments across devices. It's up to the players how they now choose to monetise their content."

. . .

Deals with mobile operators are also seen as important.

"You cannot achieve scale in this marketplace without the involvement of operators," reasons Anand.

"That means highly visible distribution on the handset and direct billing that puts the consumer no more than two . . .

Even illegal music downloads have fallen off markedly since peer-to-peer file-sharing giant LimeWire shut down in October 2010.

The number of P2P users downloading music late last year fell almost 45 per cent from the numbers recorded three years earlier to about 16 million people across the globe, NPD Group said in a report.

Sony Music, with products like caller-back and m-radio that have demonstrated high consumption and contribution in revenues, believes that in the near future streaming, download, social and cloud-based services will take off among Indian users.

"Though we are seeing clear signs of the market moving from download to streaming, it is early in the Indian digital music market arena to pin point at one service.

"We are evolving on products, access and consumption," says Paul of Sony Music. The digital business is a sizable stream for Sony Music today, in comparison to being 25-30 per cent two years ago.

. . .

"The way the digital eco-system is shaping up, it can contribute to over 50 per cent to our business."
Nagpal of Saregama sounds less optimistic.

"We expect 3G to be a life changer, just as the mobile phone penetration has been in this country. However, true penetration of 3G would take up to two to three years. Growth is expected in 2011, but it will not still be significant in terms of revenues."

Deloitte joins in with its prediction that 2011 revenues for digitally distributed music will exceed physical music sales in at least one major market, most likely the United States. "In India, we will probably witness a sharp decline in CD sales, rather than a significant increase in digital music subscriptions or downloads. But digital music is here to stay."