(Preethi J and Nikhil Pahwa)
Legalised online music retailing is taking off in India: even as Hungama has launched its online store for music, video and mobile downloads, handset maker Nokia India has set up its own store Music.Nokia.co.in and a pan-India retail infrastructure to support it. The store has 3 million international, Bollywood and regional soundtracks.
In an interview with Medianama, Jasmeet Gandhi, Head of Nokia India’s music division, discusses how music is an essential part of Nokia’s services strategy and going “beyond devices”. Gandhi talks about how he plans to get scale, the delivery model, the delay and “giving back” to the music ecosystem.
What is the purpose behind Nokia launching a music store in India?
Not only India, music is a very central part of the entire services strategy of Nokia for a very simple reason – devices keep on evolving. We are going closer and closer towards the form factor of, say, a PC experience, right from speaker quality, memory to screen size and processor speeds. The next logical step is to invest in platforms which will help enhance the experience of the device itself.
Is the purpose to help you to sell devices or add another revenue stream?
The entire services strategy is based on the fact that we will definitely want to the extract the value out of services beyond the device. If you look at it, today, every device category goes through its own curve of normalisation and cycle of innovations become shorter and hence more commoditised. So how do you add value to the business? It has to be through services. And music is an integral part of the device, experience. Therefore you cannot sit outside of that category. It is one of main categories in the mobility business.
Hence the question about whether the purpose is it to sell devices or look at it as a separate revenue stream.
Both. We look at it from a solution perspective.
Is this going to become a handset manufacturer agnostic service or will it be a Nokia-only one?
Right now we will focus on reaching our own consumer base to start with.
If you take music, for example, we are starting with all new devices and the range of devices only keeps on increasing. The piece of software we have created will be compatible backwards with many handsets. We will definitely then give them the opportunity to purchase offline or online.
And by reach out…?
If you buy a code, you can go to the music store platform and even if you don’t own a device, you can enjoy the same music. The same proposition works for existing base and for new base.
In terms of distribution, what are you doing?
In terms of content distribution, online is the biggest for us because the moment you acquire the code you can go and start downloading.
A video on Nokia Music Store India is here.
Why will the user who can get the same thing from a CD shop buy it from you?
So I think that is a debate nobody can win or argue. You can keep at it till the cows come home. We strongly believe that if you can give a proposition which is encompassing, which includes giving you the entire range, bring you quality, at a very very affordable rate….today, from a roadside CD guy you would pay Rs. 100 for 100 songs. There is a price point already existing in that (market). Our endeavour would be to go and partner with the industry and try and match it or do better than that. We will experiment with this, we want to go aggressively after it. We dont want to go the normal route and say, “There is a store online..you don’t have a credit card? Too bad.” You will never get scale that way.
No, that’s by choice. You know the scale is not there.
But wouldn’t every bit count?
It would, but what would you rather have – the millions of people or few hundreds? It’s a conscious choice, we would rather have a scale business right now. It’s also about demand. It’s just a matter of turning it on; the Nokia music store has the capability of doing that. Concepts like buying music tracks with a credit card will evolve. We have the technology.
You have a competitor and partner in Hungama, that is launching with a subscription based model, and has already launched a store with BSNL. How are you poised to tackle it?
The more people entering the fray the merrier. Because it really will turn around the industry. Today if you go to a label and say, “Hey, please promote this talent”, the economics of the business (are such that) they will not be able to invest in him. It’s a very sad state of affairs in which the industry is, today. We have so much talent in this country it’s unbelievable, but nobody will promote these guys. The industry does not have the money to invest behind talent. So the more people who enter this fray, with more business models mean you are giving back more for that content and for the catalog. We are really happy to see it happening. And everybody will have their own model: we have one, operators will have their own model.
How would you compare your model with theirs?
It’s not for us to comment on that. We would rather talk about our own platform, model because we believe in it.
Why did you chose it?
Because this is our strength: we had the reach, now we have the platform, content and the business model. We know our consumer and we have the distribution to back it up. If tomorrow there is another business model that is viable and is using our strength, we will experiment with it. There is nothing stopping labels from giving music away for free and quoting advertising income: that is the third model.
Our endeavour is to serve the consumer first. Given the device in the hands of the consumer, how to maximise that experience. First is to create a platform which gives the content, which then enhances the experience. Second is to join the ecosystem: go and partner with all the right people to create attention.
Currently there is no model which is affordable enough (for music downloads). Here I am excluding all the illegitimate business. We want to participate in this business and create enough value for everybody in the ecosystem.
What about the retail model? You are restricting yourself to about 7 million broadband users in a sense, even with a retail infrastructure that you have, it’s going to be a bit slow start for you?
That’s not a very small number to start with, look at it that way. We are not saying that we are going to get millions of users right away. We are into it for the long haul and for every business that has a very strong illegitimate side to it, obviously it’s an uphill battle. It’s not going to change fortunes of people overnight. It’s not as if we will put out an ad tomorrow and day after tomorrow everything will change. So we know that.
How open were the labels?
Oh, very. They were just waiting for somebody like us to come and participate in the industry. They are absolutely very very enthusiastic about it.
How do they get paid? Per track?
We have our back to back agreements with them.
You can’t talk about the premium?
We will not declare it.
What caused the delay in the launch of the store?
After announcing that we will launch it in India, what we went back and did was make sure the proposition is right. Then we went to consumers, who said, “Yes, it’s a great idea. Today I get it anyways, why should I come to you?” The only thing that works for them is “show me the range”. Show me a way of finding what I want under one roof. Today, it’s a pain to go to across different sites and get music of your choice, especially for long tail. We went fully after that to resolve that issue.
If you go back and search the database, you will find tracks that are rare, you will not find them anywhere on the Internet, like AIR recordings from the ’50s. So we went back to get them.
Then we went for the distribution model, because India is very different, and having a presence in retail, we went about putting infrastructure in those places. We were making sure that people could walk in through the door and even if they did not own a PC at home, for example, could download music of their choice, make a playlist, put it onto the device of their choice and walk out. So it’s a very different way of approaching and doing things.
Will you be going down that route?
That model is totally different.
But this model is very restrictive, you will not get scale.
Yes, but if you want to offer choice to the consumer, you have to keep it on him. An SD card is like a pre-burnt playlist, it’s like buying a CD with a mix, or the best songs by an artist.
When you look at it, how many users will buy a card, go on the web and download a large file? There are a lot of hurdles. It took me a long time to download it.
It’s 6.93 Mb. That’s why we chose to go ahead and do things the way we did, because that takes away the hurdles. We will do many things and something will click. That’s why we are following 2-3 models.
What’s the retail part of the picture?
A user can go to a retail shop, sign in, check his account, download, search, stuff like that. We have a Wi-fi connection, a laptop, so even if u chose to register from your phone and download over the air using Wi-fi you can do that.
If you go to many of our shops in Delhi today you will see that infrastructure ready.
And this is being rolled out next Q?
It’s already out.
The mass roll out?
It’s already on. You may not see the impact right now because it’s being bundled with a select set of handsets but that range will go up and you will see a lot of users coming in. We are also of course increasing the presence in retail. It’s not a trivial investment, let me tell you. That’s why the industry feels very clear intentions and that’s why they are participating.
I’ve seen a lot of labels, just about everyone on the store. Who is not there?
A few, I dont want to name anybody. But not for any reason other than that they may not be represented through a body and will have to come and sign up independently with us.
Are you looking at the mobile delivery model for this store or is it an Internet-only model? Is it going to be a dual delivery model where the content is directly downloaded?
That’ll come, we’ll talk to you when it happens. It’s definitely on.
What’s the cost of mobile delivery?
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