If a consumer buys a CD, it can be played through a home stereo, in the car, on the computer. If a consumer downloads a song onto a mobile, the story usually stops there—there is nowhere else it can be heard.
Soundbuzz India Pvt. Ltd will try to change that by bringing what the digital music industry calls “dual delivery” service to India in the third quarter 2007.
Soundbuzz is preparing to capitalize on the digital music revolution happening worldwide—and it is not alone in eyeing this business. Mobile and Internet service providers, as well as Indian music company Saregama India Ltd are looking at the growing mobile and Internet usage.
Soundbuzz research projects that the combined online and mobile digital music market will be about $800 million (Rs3,280 crore), up from about $99 million in 2005, the most recent year for which data was available.
When Soundbuzz brought the dual delivery technology to Australia in 2005, its telecommunications partner Optus saw music download sales immediately increased by 10% and continued growth. And about a year after launch, Soundbuzz won an award at the Mobile Marketing and Advertising (MMA) awards for removing the “technology pain” caused by incompatibility.
Given this success, the company plans to roll it out in Indonesia in May, Singapore in June and then India—all the major geographic regions the company operates in now.
Dual delivery is a move towards making digital music interchangeable across devices and help digital music companies broaden their overall market.
A consumer can buy a “dual delivery” song for Rs25 (a 20% premium over the cost of a mobile song), and download the song to the phone and the personal computer at the same time. Once the song is on the computer, it can be taken to the treadmill on a portable device, burned to a CD or played from the computer, the company says.
Sudhanshu Sarronwala, director of Singapore-based Soundbuzz, claims he has 100% market share in India for online digital music, and is the top 3 among mobile music distributors although there is no way to independently measure the size or relative shares of various players in this nascent industry.
Soundbuzz owns the licences and distributes songs from its 750,000-song online library and 500,000-song mobile one through its India partners: Planet Hutch, Airtel and Airtel Broadband, Tata VSNL and Tata Indicom, indiatimes.com and their mobile arm 8888, and MTV India’s website. The company expects about 40% of revenues to come from India in the next three years.
For online music, distributors, such as Soundbuzz, end up earning profits of about 25% off the retail price and 5% to 15% for songs provided to mobile devices.
This is the year that India will see digital music sales— from both online and mobile—outpace music sales via CDs and tapes, said a report from PricewaterhouseCoopers and the Federation of Indian Industries.
The distribution of digital music happens through mobile devices and the Internet and, depending on where the consumer is, the preferences of buyers vary. Consumers in the East prefer downloading music to their mobile even in countries where broadband Internet has taken off, unlike in the West.
Soundbuzz research suggests that mobile music sales in the Asia Pacific region are driven by ringtones, which generated revenues of $5.75 billion in 2005 and is set to grow to $12.5 billion in 2009. Recorded mobile music will also grow, from $210 million in 2005 to $3.9 billion in 2009.
Those who own digital music rights, including players such as Soundbuzz want the mobile business to continue growing, but are also looking to expand their market on line.
“In addition to dual delivery that will undoubtedly bring the web closer to the main stage of action that is mobile, there are now at least six major broadband providers ‘pumping the volume’ in India,” Sarronwala says.
He added that India’s broadband (the connection that is best for downloading music) reach will expand to around 30 million by 2009 from two million today. And India may also see the advent of high-speed broadband Internet mega-cafes such as in China and South Korea. All this will push Internet usage, and digital music sales, he predicts.
Saregama also sees opportunities here and will be launching its music portal at the end of the month, which will feature downloadable music (Rs12 a song) along with products for on-line purchase and a service for creating CDs for those less comfortable with digital music technology. Sunil Menghrajani, controller of publishing and new media at Saregama, said the company is still experimenting with revenue models to help grow the market.
“For the first five to seven years it is not a market share grab,” says Soundbuzz’s Sarronwala.
“It is marketing.”