The digital medley

Have we really become a nation of law abiding citizens or is it just evolution? Till three years ago the Indian music industry was a basket case thanks to online piracy. Now it seems there is no stopping us. India was one of the three fastest growing markets along with Brazil and Mexico in 2012 according to figures released by the International Federation of the Phonographic Industry or IFPI. In 2012, the Indian music industry grew to Rs 1,060 crore up from Rs 740 crore in 2008 going by FICCI-KPMG’s 2013 report. Almost 60 per cent of this came from digital formats.

Right tunes: As legally sold online music becomes a bigger part of the market, it means more revenues, experimentation and many more live concerts. PIC/THINKSTOCK

Why should it matter? Music is the lowest bandwidth product. That means it takes the least amount of space on telephone wires or airwaves while being transported from say a website to your phone. As a result it has always been the first to be hit by everything that comes along — compression technology in the form of MP3, the internet, streaming, peer-to-peer sharing and so on. The fact that digital, in legal form, is finally bringing results suggests that a shift is happening. It is also indicative of the future for TV, films and media.

There are two trends driving this shift. One, smartphones and other devices make it easier to subscribe to or download and listen to music from services such as Spotify, iTunes, Deezer or Vevo.

Two, the packaging, pricing and availability of legal music is now widespread. More than 100 countries have services that offer legal downloads and streaming against only 23 in 2011. So millions of users who would have otherwise chosen a pirated service, now have a convenient, affordable option. You could argue that in India, caller tunes, ring back tones etc have been sold through mobile phones, legally, for ages. So what's new? Music sold through the mobile phone does not reflect the revenues of the music industry because telecom operators keep over 80 per cent of the money.

Now music streaming services such as, offer packages ranging from Rs 100-Rs 400 a month. There are direct download sites such as iTunes or These sell single songs at anywhere between Rs 7 - Rs 15. They also offer streaming music services starting at Rs 100 and going upto Rs 200 a month. Then there is music bundled with hardware such as smartphones or tablet computers. From these new formats music companies get a more generous revenue share of between 20 - 50 per cent. So the money comes back into the business.

Much of this is the evolution the global music business too is going through. The global music industry made revenues of $16.5 billion in 2012. This is a growth of 0.3 per cent over 2011. This is the first time the industry has recorded a growth since 1999 says the IFPI. Of this one-third came from digital which is growing at 9 per cent. There are markets such as Korea and Japan where the industry has gone totally digital.

As a market swings more towards digital, legally, two things happen. One of course the industry gets more money to share with artistes et al and to invest in experimenting. Two, funnily enough the money to be made from live concerts goes up. That is what a lot of the research in the US market shows. Digital allows for huge amounts of sampling for a song or a piece of music. Then people want to watch the singer or musician live. So ticket prices go through the roof and concerts are usually sold out.

Given the paucity of concert venues and crazy amounts of taxation on live events, it is not clear if they will take off in India. But the one big thing digital will do is help monetise the potential outside of India. Till the mid-nineties the overseas market was a promising revenue stream. At one point it brought in as much as 30 per cent of a music album’s revenues. Piracy and the lack of distribution and marketing money, however, limited Indian music companies from exploring the overseas market. Digital music, whether on the Internet, mobile or satellite radio, can help unlock this potential.

This should be music to the industry’s ears. ¬†

The writer is a media specialist and author. Follow her on twitter at 

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