A senior executive from the content industry, on condition of anonymity, sent us the following inputs on how revenues are split between the telecom operator and content aggregators/owners, following our coverage of Airtels claim of being India’s largest music company and the TRAI clamping down on the Press Star (*) to Copy service:

You need to understand that the two most important music distribution applications on mobile are:
1. CRBT (Caller Ring Back Tone/Hello Tune/Caller Tune etc)
2. MoD (Music on Demand)

There is no issue with handset compatibility and both these apps are piracy proof. They play as stream from the telecom operator servers and are never downloaded/stored on the handset – hence no piracy.

The ringtones market is almost but dead, plagued by issues of  piracy/search/content discovery. Cost of promotion of ringtones is more than the revenue.

For the two successful applications (CRBT/MoD), the revenue comes in two ways:

1. Monthly subscription – many combinations, from Re. 1/day to Rs. 30/month.
2. Actual usage/activation – when user actually selects the CRBT or listens to the music/songs.

For CRBT it is anywhere from Rs 10-15 per activation and for music it is 30 p/min to Re. 1/min. The subscription money is shared between the platform owner (OnMobile/Cellebrum/Bharti Telesoft etc) and Telecom Operator, and the content owner rarely gets any money.

The Content Owner/aggregator gets a revenue share on the usage/activation – anywhere from 15%-35% depending on negotiating power/skills (in that order ;)

Best Case Scenaro

Now take an example of where the user subscribes to the CRBT service and changes the tone once every month the revenue will be:
1. 12*30 = Rs. 360
2. 12*15 = Rs. 180
Total Revenue = Rs. 540

In best case scenario the content owner/aggregator gets 35% of 180 = Rs 63. That is hardly 12% of telco topline.

Worst Case Scenario

Now imagine the worst case scenario where the user changes the CRBT only once in the year (which is the typical case as the user can’t listen to his own CRBT owing to the very nature of the application). The calculation:
1. 12*30 = Rs. 360
2. 1*15 = Rs. 15
Total Revenue = Rs. 375

The Revenue Share to the Content Owner/ Content Provider = Rs. 5.25  (1.5% of the Topline of Telco).

Also on the Press (*) to Copy bit – why not enable Pound(#) to Unsubscribe to ensure the services can be unsubscribed easily?

(ED: What’s your take? In case you disagree, or have a different structuring of deals to offer, please do share)


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