Ronnie05's Blog

Is India’s digital music business opportunity a dead business model?

Posted in Industry updates by Manas Ganguly on June 22, 2013

flyte

The music industry is officially dead! Or so it would seem with both the online versions and the brick and mortar versions failing to make it through. Sample the following-

1. Less than 18 months post launch, Flipkart shuttered down its digital music store Flyte, giving the reason that India’s download market ‘will not scale’.
2. After 16 years, and 40 outlets spread over 50000 square feet area, the RP-Sanjiv Goenka group is also shutting down its Music World operations under pressure from falling margins per store.
3. Perhaps lesser known in India, social music player Tunewiki is shutting down operations after 5 years of launch.

musicworld

All these direct to the one thing – Digital Music as a business opportunity is busted. Online Piracy (songs.pk), streaming services and other ad-supported music content have taken over – and there isnt enough innovation in the current business models around music to make money on content. What has saved movies is the 3D content which is still a crowd puller at theatres – an experiential thing for which viewers are ready to pay. Alas! The business of Music didnot have any such innovations to sail it through.

Profiling Sony’s accumulated losses across categories

Posted in Industry updates by Manas Ganguly on April 16, 2012

Sony’s loss in key categories such as Music and Televisions is the key to a accelerated downward spiral. The second part of the three series (Read part 1 here) blog examines the losses by the electronics giant across its key categories.

Music
With its catalog of music and foundation in electronics, Sony had the tools to create a version of the iPod long before Apple introduced it in 2001. The Sony co-founder, Akio Morita, envisioned as early as the 1980s marrying digital technology with media content for a completely new user experience. It didn’t happen. Initially, Sony engineers resisted the power of the company’s media divisions. Then Sony wrestled with how to build devices that let consumers download and copy music without undermining music sales or agreements with its artists. The company went its own way: its early digital music players, for instance, used proprietary files and were incompatible with the fast-growing MP3 format.

Television
Sony held aces in Televisions till about middle of last decade with impressive technologies such as Trinitron. However, lower-cost manufacturers from South Korea, China and elsewhere, are increasingly undercutting Sony. As TV’s shifted to larger and typically thinner formats, Samsung truly leveraged its expertise in thin panel screens to dislodge Sony and take the top mantle in Televisions. As Sony’s brand started losing much of its luster, the company found that it had a harder time charging a premium for its products.

The conundrum of many
Sony still makes a confusing catalog of gadgets that overlap or even cannibalize one another. It has also continued to let its product lines mushroom: 10 different consumer-level camcorders and almost 30 different TVs, for instance, crowd and confuse consumers. The diffused attention on multiple product lines has led to a divergence in focus (in sharp contrast to Apple’s focused strategy)

Gaming
An area where Sony has found success — and perhaps one that most crystallizes the transition from stand-alone consumer electronics into a digital, Internet-centered world — is video games. Sony marketed its PlayStation 3 console, for example as an integrated entertainment system that serves as a hub in the living room, connecting the Internet and television. But Sony’s obsession with hardware has marred that strategy. A delay in developing the console’s Blu-ray DVD player forced Sony to push back its release. Sales suffered because the PlayStation 3 cost much more than rival models from Nintendo and Microsoft. Sony was also slow to move into the world of online games, giving Microsoft a head start.

Online
Sony’s online strategy is problematic as well. The company has yet to come up with an integrated common platform to deliver music, movies and games, each of which, until recently, had its own network, with other platforms like the PlayMemories photo- and video-sharing services to boot. Now, these disjointed services, developed by far-flung units, are being forced into the Sony Entertainment Network, which Sony says will be its overarching content delivery platform. Experts say it will have to start exiting some product lines. It has already spun off a chemicals business, for instance, and some analysts wonder about its money-losing TV business.

to be continued

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The evolving Music Industry in the digital age

Posted in Industry updates by Manas Ganguly on May 11, 2010

A recently released FICCI KPMG report put the size of the Indian Digital Music market at Rs.260 crores for 2009. On an average, an Indian Consumer listens to nearly 100 songs on a monthly basis. Interestingly, the report also notes that 80% of mobile subscribers are willing to accept advertisements if it meant they would get to download music free. This is music to the likes of Nokia which is trying to generate revenues out of the music stream not by direct sales to the consumer (which as a model appears to be failing except for the iTunes store), but by pushing content relevant ads to the consumers looking for music.

The Indian VAS industry registered a 70% growth in 2008-09 from Rs. 9760 crores (07-08) to 16520 crores (08-09).Music is easily the biggest VAS opportunity in the Indian context and everyone from Telecom Operators to Device manufacturers to Content Providers and aggregators are vying for a slice of the music pie. However the downloading of a full song on mobile phone is still at a lowly 13% and online music downloads are 6% of internet penetration in Indian households. Buying a music CD in a physical store is still the most acceptable mode of buying music in India. And then there is Piracy.

The following are the online music access models prevalent in India:

1. Streaming subscriptions: Consumers pay flat monthly rate for unlimited access to a music library. The content is DRM protected and cannot be saved to any memory. The Airtel and Vodafone Radio services @ Rs.30 for 30 minute song streaming is an example of the service.
2. Pay Per song download: Like a song? Pay for it…. Download it. Hungama and iTunes charge a minimum of Rs.5 for DRM protected downloads. This means the song cannot be transferred to another device.
3. Unlimited Songs on a monthly/yearly basis: Fixed fee starting from Rs.99/month, where in the customers pays for a time period and can download as much as he can during that time period. This model is also referred to as “All you can eat” model and is available from different sources mostly in DRM formats which means device transferability is constrained.
4. Free Music: This new concept brought forth by Nokia de-couples the consumer paying for his music and instead serves up Ads to the consumers. As stated earlier, consumers seem to be fine with Ads if they get to keep the music that they like. Moreover Nokia aspires to leave out the DRM bit out of it which will make the music freely accessible and shareable to all.

The music eco-system needs to adapt itself very uniquely to stay relevant to consumers who have largely been swayed by P2P digital music sharing and privacy. A few interesting notes on that.
1. Music industry also seeks serves premium content at a graded pricing to make margins on more popular content. That way the normal content is available at flat rates and the premium content gets good margins for the sellers.
2. The other value add is in terms of content aggregation. Users appreciate a one stop solution for their music rather than going to each individual content source for their kind of music. That is where the telecom service providers and content aggregators step in providing a uniform platform to sell content from different labels.
3. Finally there is the question about MP3 (DRM free content) versus DRM content. In many terms Nokia is getting very ambitious experimenting with free music and coupling it to mobile ads. Thus to an extent it commoditizes the product, but also establishes a whole new Ad revenue connection with Online music access.

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Microsoft: Music for free/Download to own service

Posted in Mobile Devices and Company Updates, Value added services and applications by Manas Ganguly on July 14, 2009

Starting end of July, Microsoft will offer users the chance to stream music for free and also download to own. Music is an important area for Microsoft and they are looking at launching a music streaming service imminently (also from a view to bolster the appeal of Microsoft Zune). This music streaming service is similar in principle to Spotify.

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 Users can stream music for free in exchange for listening to around a minute of advertising every half hour but for £9.99 a month, the ads will be turned off. It is thought Microsoft’s offering will be ad-supported too as well as having a paid-for premium service.

 Microsoft is looking at how other similar businesses have structured their business models and trying to figure out what will work best for both consumer and Microsoft. The service would be operated and owned by Microsoft, while being promoted through MSN and other parts of the Microsoft network.

The service could be tied in with Microsoft’s Xbox gaming console, though the details of how a partnership would work have not been drawn yet. The addition of a Microsoft-owned music streaming service would tie in with an increasingly consumer focussed strategy from company to make its Xbox 360 console the main “entertainment hub” in the family home. Users are already able to download movies through their console and play games against one another online.

In an increasingly competitive marketplace, Microsoft can bring “scale and a quality of product” to the music streaming scene. The knowledge of the music industry the company had gleaned via Zune and also the player’s technology, had all been incorporated into the service’s development process. Microsoft recently announced it would launch a high definition version of its music player: Zune , but it will only be available in the United States. Microsoft is in talks to identify download partner for its music streaming service.

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