What’s the core issue with online music services in India? Labels and their License raj.
Online Music : The Past
The biggest revenue generator for music industry has been VAS (CRBT etc) and accounted for 60% of revenues. The revenue is now declining massively (thanks to TRAI regulations).
And to add to that, the cost of production has gone up.
Online Music : The Present
Music labels also own content copyright and can arm twist. For instance, when producers give rights for music, there are close to 65 types of commercial rights – right from satellite to online to mobile to operator billing etc.
Indian Music Labels Have Learnt A Lot From iTunes
Indian music labels have learnt a lot from iTunes success. They know that no matter what, they won’t create one big badass guy who will eventually dominate them. Apple iTunes is ruthless, thanks to its negotiating muscle vis-a-vis labels and that’s precisely why labels need Spotify.
Indian labels have ensured that no single entity gets all the rights (though copyright act doesn’t talk about this level of breakup that the music industry has resorted to).
And the bitter truth is :
The Consumers Experience IS BROKEN
Eat this :
– Ram Leela music wasn’t even available in any of the major music aggregator, except Shortformats.
– When Dhingana announced its partnership with Idea, there was no serious bollywood content available as part of the partnership. Why would consumers pay for “this” level of VAS?
Assuming you are the good guy (who wants to buy legal music), you need to buy subscription for all possible online services – right from Gaana to Hungama, Saavn, Dhingana, Shortformats etc.
How cool is that experience! Download all possible apps and buy subscription for all possible services, just because you want to buy legal music?
That too, when the next best option is just a street away!
That’s what consumers have resorted to – and not (just) because of money, but mainly because of access (to content).
What would consumers pay for?
Content? Not necessarily.
Experience? Well, yes. Only if you can make your app sticky enough for the switching cost to be too high.
What’s in for labels to partner with online music services?
Labels are losing the battle against piracy, but their short term attitude isn’t adding to their advantage.
The truth is that in the short run, nobody is making money. But if labels take a long term view, there is a high probability that sum will become bigger than parts.
Till then, let there be
[Image credit: shutterstock]