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)
Note:
If you have an opinion or details to share with our readers, please do send across your contribution at nikhil AT medianama DOT com. However, please bear in mind that the selection of posts for publishing is a subjective decision, and we may request you for changes. We do publish anonymous guest posts, but exercise significant discretion while doing so.
Related:
– Airtel Claims To Be India’s Largest Music Company; We Do The Math
– On TRAIs Directive Limiting Content Subscriptions; A Case For Licensing VAS In India
– Your Take On TRAI’s Directive Limiting Content Subscriptions
– Motorola To Sell Soundbuzz; Exiting MotoMusic In Most Markets
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10 Comments until now.
I luv this app “press # to unsubscribe”. Mr operator / onmobile – will you make this app available to me?
i thinks if this will happen user will be more satisfied at least those not wanned to use service but still they are paying for that…
Hi . i think we have missed accounting the royalty that goes to the content owner / aggregator for CRBT every 90 days . nevertheless , the rev sharing model needs a sea change .
Various pricing models for Song charges exist in diff operator….monthly/quarterly ……..there are content owners being paid royalties on monthly subscription too……all depends upon how well u understand the content market and ur negotiation skills….there are professionals available -:)
Operators are going to scrap off the song change charges with only crbt monthly subscription….we will all see this happen soon
There seems to be different models being developed. Onmobile is working on a new biz model which will allow users to change CRBT any number of times. The rev share is being worked upon between T-series and PPL. Operators need to make the reporting very transparent and payout more regular. Right now the need for Hungama or any aggregator in Value chain is to fund T-series or any music label for content acquisition. They pay to labels like T or YRF in advance. The only way to make money is either lock the operator with MG or armtwist smaller operators like Aircel/Tata for larger share in content operations. The operators don;t want to take the overhead of dealing with smaller labels and I agree with Vasetomy that the VAS managers are too unskilled to understand the content biz. No one wants to look for long term biz interest. Vas mangers are too busy in jumping jobs or moving up in the corp ladder.
There is no one seasoned enough to negotiate with the largest content aggregator of the country.
Jai HO!!
The greed of operators has killed content aggregation market. unfortunate. vas managers or heads are too unskilled to give this reasonable thought.
Interesting !!! MoD-Music On Demand, seems to me that it'll flush out, with time and technology. Why wud anyone demand from an operator when they have data cable and memory card for their handsets?
I feel operator shud tie up with internet radio's so their's wider variety, choice, interest.
I think both of the services MoD and CRBT will exist. While the operators and content aggregrators are thinking of revenue models, no one is giving any emphasis on liking and disliking of the consumer. Increasing no. of CRBT shouldn't be misunderstood in terms of liking. It feels so irritating listening to a song which I don't like and too irritating, when I want a call to get connected immediately and a user is told to press * to copy a song. I guess companies should do lot more research in understanding and building opt-in content distribution models.
its time to charge flat 30-35% of the gross collection for content owners. I also gather the MOD, has an unofficial cap of 12% of the gross value!!!!!
Hello, I am Sameer Jadhav from MUMBAI, I am working for Trupti Movies as a Market Research Manager, Recently Our company had published New Songs for MAHARASHTRA NAVNIRMAN SENA (MNS) Which is leaded by Shri Rajsaheb Thackray, Reason for sending this letter to you is that, we need to PUBLISH are songs in the form of Callertunes, We have already approached VODAFONE, AIRTEL and MTNL and we have got a good response, We have published our advertisement in Newspaper also and our songs are very much demanding, We would like to approach you also for this concern, PEOPLE OF MAHARASHTRA WILL LOVE TO KEEP THIS RINGTONE AND KEEP MARATHI FAME (ASMITA) ALIVE IN THIER HEART, Please revert back to us as soon as possible, Contact number: 9930567165 : Sameer Jadhav.