New Delhi: Vijay Singh, chief executive of Media Magic Retail Pvt. Ltd, is downbeat these days. The market for legal music on memory chips, a business he launched three years ago, hasn’t taken off.

“The market is not ready yet for the product even though all entertainment devices today come with a USB or card slot," said Singh. Media Magic had tied up with content providers such as Hungama Mobile, a division of Virtual Marketing India Pvt. Ltd, Star India Pvt. Ltd and Shemaroo Entertainment Pvt. Ltd for musical content.

Curbing piracy: A store selling CDs and DVDs in Bangalore. Retailers say there is little demand for USB drives and memory sticks of branded film music launched by companies a few months ago. Hemant Mishra / Mint

“The response to the MMX initiative has not been good. The concept is new to the Indian customer and the price is almost 40% higher than the grey market," said Sanjeev Mahajan, chief executive of Hotspot, a retail chain run by telecom service provider Spice Televentures Pvt. Ltd, which obtained 700 licences from MMX. “For it to be profitable for a retailer, volumes must grow so that content can be offered at a reasonable price," Mahajan said.

Efforts to curb piracy by providing music through legal digital platforms have not really taken off so far in the country. The local music industry loses Rs1,300 crore annually due to piracy, of which mobile chip piracy alone contributes Rs300 crore, according to Savio D’Souza, secretary general of lobby group Indian Music Industry (IMI).

IMI partnered Label Mobile on MMX and sold around 840 annual licences costing between Rs20,000 and Rs30,000 apiece, besides the 700 licences to Spice, D’Souza said. This enables licence holders to sell music downloads legally, and the price to customer is set by the retailer.

Many retailers also say there is little demand for USB drives and memory sticks of branded film music launched by music companies a few months ago.

Music label T-Series’ Arun Kumar, senior general manager, marketing, does not agree. “We sold 30,000 microSDs and 18,000 USB drives of Blue (a Hindi movie). Subsequently, we released about 24,000 microSD chips and 8,000-10,000 chips of films like All the Best and London Dreams," he said. (MicroSD and USB drives are removable memory devices.)

However, not many are upbeat about legal digital music. Pricing as well as availability are seen as major roadblocks.

Y.V. Narsimha Rao, an MMX licence-holder and owner of Pavani Mobiles store in Hyderabad, is one of the four licence holders among 40-odd shops in his vicinity.

He said that while selling legal software ensures peace of mind, “the end customer does not care if the product is licensed or not. Also, shopkeepers who don’t pay for the licence sell downloads at a much lower cost" since they don’t pay a fee.

Even branded USB drives and memory chips of film songs don’t come cheap. A USB drive could cost Rs525 while microSD is available for Rs450.

In the grey market, a consumer can access a song for barely Rs5 and gets a 1 GB (gigabyte) download on his mobile phone for Rs150.

Besides prices, the other big challenge is availability and accessibility of legal content, especially in the retail market where piracy is rampant, said Singh of Magic Media.

People won’t mind paying up for legal content if it’s easily available, he said. For instance, MMX is limited to three states—Andhra Pradesh, Punjab and West Bengal.

“It’s a question of availability and the ease of getting it." Singh said. “Look at the volumes that telecom operators generate selling ringtones and wallpapers. People are paying as high as Rs20 for one download."

Jehil Thakkar, executive director, media and entertainment, at audit and consulting firm KPMG, agrees. “To download legitimate content, the consumer has to go through additional steps like purchasing a coupon or going to a specific retail outlet that might not be easily accessible."

The way forward for legitimate digital music, especially on mobile phones, is bundling or giving it as part of the instrument, Thakkar said.