Let’s face it: as far as music content is concerned, there just isn’t an online market in India. Motorola owned digital music distributor SoundBuzz has released an estimate of music sales in India, and things don’t look good for the Internet space:
That’s a staggering difference in the legal downloads, and clearly, there’s only one winner.
But what this also indicates, is a clear dependancy of the music labels in India, on mobile distribution. That means they are even more dependent on companies like Hungama, Mauj, Soundbuzz, and of late, OnMobile for revenue. Around two years ago, industry executives used to talk about how leveraged Hungama Mobile is, by paying a huge minimum guarantee to T-Series, and only making up the margins. I wonder if we’ve seen a reversal of fortune now – with significant dependancy on Hungama’s distribution network, and the MG, is T-Series now dependent on Hungama?
Download the report here. We do need more data, though -
Mobile music consists of full track downloads, as well as derivatives like monophonic and polyphonic ringtones, truetones, Caller RingBack Tones (CRBTs), and even music videos. So what we haven’t got from soundbuzz is – an estimate of how much of this business is CRBTs, and also how full track downloads have evolved over the years.
I wonder what makes Soundbuzz estimate that online legal downloads, which during 2006 and 2007 wallowed at $0.04 million (around Rs. 22 lakhs), will suddenly jump up to $0.22 million (Rs. 1 crores). Or is it that they expect music to be retailed via the mobile Internet?
A few things to keep in mind when looking at this data:
– Soundbuzz is a music distributor, and not an independent third party source
– The revenues include operator share
– The estimationas are based on raw sales and forecasts sourced from Soundbuzz data, PwC Media & Entertainment Outlooks 2006-2010 and 2007-2011, Informa Media & Telecoms, IFPI, ARIA and local Industry associations.
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10 Comments until now.
Lets get our math right on the mobile Music revenues:
> more than 75% coming from CRBT
> 10-20% from mobile radio
> less than 5% from embedding
> neligible from ringtones and digital downloads.
Adfunded is yet to make significant/scalable presence so am ignoring it.
Out of the 4 rev channels, first 3 are piracy proof and can be estimated correctly even if the middle man( or company) is not involved. Last one is nothing else by under reported.
If the operators and music companies come halfway, there is no need for any mediator companies like hungama/mauj/soundbuzz/ handygo/phoneytunes/onmobile. The two issues need to resolve quickly:
1. Transparent reporting mechanism (business sol) – advantage hungama till the systems are non transparent
2. Efficient discovery mechanism (tech sol) – advantage onmobile/cellebrum/one97
Mauj and Hungama are contributing to music industry by providing the cash by commiting MGs. This has to stop as they in turn are asking for MGs from operators. Till last year VAS managers in TELCO never had content budgets. But since last year they have been committing large sums (upwards 20-25 crores by vodafone and Airtel and even 6-10 crore by small player like tata). This is actually negative for the music industry as the reporting goes for a toss and they do not get their correct dues. Also there is no rev share on the monthly subscription charged for the RBT to the content owner beyond the meagre 33% rev share on the first download.
This current scenario makes it important to have tough(?) negotiators like Hungama (everyone knows the name who runs mobile at hungama) to extract the money from operators. If you do the math, it is never possible for hungama to make money from the rev share operator provides and the rev share commited to music owners. That is one of the major reason, none of the content distributor will be able to convince the VCs to fund the business where the perishable commodity they transact is owned by some one else (T-series/yash raj). Non transparency was clearly evident from the failed attempt to raise money by hungama. Their valuation should more be on the basis of consumer they own. Look at mytoday service. They actually are interacting with the consumers. It will be very important for hungama to get away from the B2B model(which was critial in past 3 years) and focus more on the B2C model.
For the content owners and media companies, it is important to deal directly with the operators and create consumer business.
I think Cellebrum also has paid huge MG to hungama to continue its mobile radio business. I think the only one not paying MG would be ones like onmobile and reliance communication. Both have their wide discributed networks where the actual number can be buried deep inside and both are equally equipped to play hard ball with Mr. M and Mr. R.
Nikhil – I do not thik you will get any official reports from any corner. Right now the industry is thriving on non-transparency. The only one losing are content owners.
Sid: what do you need to know? mail me at nikhil AT medianama dot com within the next 1 hour. I’ll try. after that, will be diff.
That’s a very neutral source. It reads more like a slide from a Soundbuzz presentation (leveraging Motorola strengths) than a useful report for the industry.
The distribution model itself will change for music in the next ten years rather dramatically. I’m assuming most of the revenues mentioned are RTs and CBRTs, which is really not music distribution.
Key is to dis-incentivize piracy en-masse, but not via DRM or any other means that make it harder for legit users.
Just make it easier and cheaper to consume digital music is the very obvious solution, which is much easier said than done. Then again, compared to losing the vast majority of your market to the piracy segment, it is still a credible option.
Solution could be to include subscription packs of base units of 50 INR, billed to your regular account, induce the habit, make it a single point of discovery and sale, give it time and see what happens.
Of course, this assumes that all the copyright holders will fall over each other to sign up for this, but this is money they are not making at the moment in any case.
Hi. I want to know what is the rev out of rbt market. Out of that what is the pie size for subscription (monthly) amount and what is the rev out of download. Once you get that number, you will realized why telco are dependent on content and why content owner need hungama to Extract that money from the operator. Then you will realize why neeraj row is calling this market more UNIQUE :)
@Sid: CRBT: About 50 Million customers average pay out to operator per month of Rs 35 per month. Subscription has gone long tail this use to be Rs 30 but now you have smaller number too.
HungamaMobile is a play of right timing. Love them, hate them but no one can ignore them.
In long term who knows what happens to OnMobile also? Too much dependency on operator while level services could mean disastrous.
One good thing that has come out is , now in India you can have music sold to long tail without needing music players or physical distribution.
Who is making how much money? Alas! some one who has pipe (operator) or next to him (Platform providers) or next to him (Content aggregators). A true musician : definitely not yet.
I hope no one from T-series and yashraj is reading this article. They would not like to be in a business where their distribution is not in their control. Hungama is existing today just because of their content but right now they have content from almost all bollywood studios like Yash Chopra, Eros, UTV, Big Music etc. Right now they are paying Top Dollars and are making Top Dollars. So hats off to them for their success. But does that mean everything will stay like it is?
On the other note, Subhas Ghai can actually give a different twist to the Music industry fortunes. Last time it took a turn after Yaadein was sold at the exorbitant price of 12Crore. After that the physical rights have just dropped off the cliff. Companies like T-series did not participated in that pricewar then and they had their share of laughter when companies like tips/venus/saregama were licking their wounds. T-series took a well calculated daring (but very capital intensive) riks to acquire so many catalogues. In between himesh reshamiya also happened. But right now the companies like T and Big are buying music at exorbitant prices (deja-vu 2001). Right now when Yuvraj is launched, there is a huge liquidity crunch in the market. Maybe companies will stop paying MGs and music companies will be forced to deal with operators directly. And slowly they will start liking each other and will accept the ecosystem and the market will be more transparent and will keep growing.
But then, not everyone likes the transparent system. What say Dr. MO and Dr. RO!!!!
the worst and most scary part of mobile and digital biz is that there is no transparency in royalty details for the benefit of the artistes. since the system works on quarterly or bi-annual basis, most content owners are not able to pass on the artistes whose works are acquired on deals barring complete one-time paid acquisition. Its really sad out there especially for the catalogue artistes..
Intelligent conversation, thanks