Spice Digital, the Mobile Value Added Services company in the Spice Group, has entered into an exclusive arrangement with Phonographic Performance Ltd (PPL) for Voice based Music Streaming Services (Mobile Radio). The exclusive tie-up gives Spice access to over 1 million songs, including some of the most valuable catalog content in India. PPL represents, according to a recent filing, 139 music labels in the country.

On Licensing and Telecom Operators

The deal is for three private mobile operators – Airtel, Idea and Vodafone, which will essentially allow Spice to guarantee that their platform remains with these three; we’d heard murmurs about some issues at Idea, and it’s interesting to note that on Idea, both Spice Digital and competitor OnMobile Global are running Mobile Radio services.

Mobile Radio is the second most successful Value Added Service in India, after Caller Ringback Tones, and with increasing competition for rights, Spice would want exclusivity. Speaking with MediaNama, Shehzad Azad, Head (Business Development & Alliance) for Spice Digital, said that the Mobile Radio business for Spice Digital is profitable, but input costs and direct costs of content licensing have risen; thus, profitability has suffered, but with since the company does large volumes, they maintain healthy profitability. Azad, however, said that because of their scale, there wasn’t much competition: it’s just that now it is inked and legally binding. That said, Spice Digital’s Mobile Radio service is not limited to PPL alone – they have content from Hungama (which represents T-Series) as well. “If you’re running a national service, it has become a bipolar (licensing) situation with T-Series and PPL, over the last year and a half,” Azad adds.

Also read: PPL Reported Rs. 137 Crore Mobile & Digital Income In FY10;

Some excerpts from the interview:

MediaNama: Who Subscribers To Mobile Radio?
Shehzad Azad: Typically, if you look at our target segment and our audience, there are a lot of migrant population, people who don’t have access to free to air mobile radio and FM services. Since it is an on-demand service, they can dial in and listen to it at any time, wherever he is. There is a huge demand of non-Bollywood music. We have made it a reasonable services, since we have over 200,000 songs. Secondly, even the access is available in 17 Indian languages. He can log into the service in his own native language.

MediaNama: What kind of a blended ARPU do you have on Mobile Radio?
Shehzad Azad: If you look at it, it’s anywhere between Rs. 20-22 rupee per month.

MediaNama: That’s a significant part of most prepaid users balance…
Shehzad Azad: Yes, if you provide the right kind of content, and the navigation is easy, then there are people willing to pay for the right kind of music. You could be sitting in Delhi and listening to Radio of Mumbai or Bangalore.

MediaNama: How do they discover mobile radio?
Shehzad Azad: Typically, the route followed is traditional SMS marketing and cross promotion. There’s a lot of operator push, and we also sometimes buy inventory on TV channels, on scrollers. The tie-up with (Radio) Mirchi also helps, because with the new telemarketing guidelines coming in, we didn’t want to push any unsolicited SMS. Ads come on their network every half an hour or one hour.

MediaNama: What’s been the impact of the Mirchi tie-up in terms of number of subscribers for you?
Shehzad Azad: We keep it as a separate standalone product (Mirchi Mobile), and within a period of six months, we have almost reached 40% of what we do on Mobile Radio. We have gone live with BSNL and Reliance, and hopefully will be live with Vodafone and Idea soon.

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