MUMBAI: If you search for “Digital Music Space 2017” on Google, you will see a lot of results talking about numbers, percentages, data, etc. So I do not want to talk about the quantitative side but rather share a different and more analytical perspective.
However, before I get to 2017, let’s go back to when it all started. Music going digital is not a recent phenomenon. Although is it fairly new in one sense, in the digital sense, it has been quite some time. Initially, music was being digitised and consumed through peer-to-peer platforms and social platforms. In India, the first players to build a business around digital music did so largely via ringtones including monotones and polytones. That involved taking popular tunes and getting them converted into a monotone (single instrument) or a polytone (multi-instruments) of 30secs which could be downloaded from websites. While the initial download would come at a cost, once downloaded, it could be shared amongst people and hence this got heavily pirated and wasn’t a great success revenue-wise. This also worked only as long as there were feature phones or CDMA phones. Once smartphones came into the picture, people started making edits of original recordings and made them their ringtone.
While this started dying down, around 2005, a unique format of digital content was invented which would work at the telcos end that was built as a value-added service to subscribers of the telcos’ account – Ring Back Tone. The beauty of this content format was that it could not be pirated because the content was not downloaded into the user’s device but instead was being served from the telcos’ server. However, like everything that shows promise and needs to be further exploited, here to, there was heavy exploitation of the consumer’s subscription to a number through the telco and the telcos were making money out of the consumers by charging them for a RingBack tone which they may not have even manually subscribed to. This was being done at the telco’s end since he had access to the consumer’s account. While this made some big money for content owners and the platforms, the consumer felt cheated and after a whole lot of complaints, the TRAI came down strong and restricted subscription of RingBack Tones onto a user’s manual confirmation of wanting to subscribe. This obviously resulted in revenues going down.
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Towards 2012-2013, the music industry in India was going through a tough time especially with revenues going down with TRAI’s restrictions. Globally, iTunes had proven to become the saviour from piracy but in India with most consumers not interested in downloading music for a fee, monetisation of music in the way it was experienced with CDs and RingBack Tones was becoming impossible. Something had to give and that proved to be the next evolution of technology in music consumption a.k.a streaming apps. Surely and quickly there were multiple players that decided to build a business model based on content and streaming. With this, not only were platform creators looking at revenue but so were content owners because now they could see the value of catalogue.
Music Streaming platforms have once again put the music industry in control, where with the labels charging exorbitant license fees, there have been victims who have not been able to sustain their business and recovery and hence have had to shut shop. And for those who are still alive, they are all working with only one agenda – how to make the consumer pay.
Globally, some streaming platforms have built their business model on freemium very successfully and some purely on subscription. The big challenge in India. Will people pay for streaming? With most digital advertising revenue going to Google and Facebook, is there any other model besides advertising that consumers can be made to adopt?
2017 saw an interesting development with each of the mainstream apps trying to find their niche. Some through content, some through positioning and some through ease of subscription. Even independent music saw a surge in revenue numbers through 2016 and 2017 largely on the back of premium content like Coke Studio that helped in the discovery of other independent content.
Where can we see the digital music space go from here? Personally, I believe, if the current lot of Streaming platforms are here to stay and believe in the long game then instead of each platform inventing its own business model to build its P/L, it would be great to see one strategy; maybe one price point and only subscription and not advertising to be actioned which each player follows through its platform. And then each platform brings in its differentiator through technology and content. That to me will level the field for the consumer and allow healthy competition.
Authored by: Soumini Sridhara Paul, Vice President, Artist Aloud
