by : Business, Nov '10

The Promise of India

Bringing a new style of music into a market of over a billion people, and finding the right distribution channels for such a style, is anything but a simple task. Atul Churamani, a music producer considered to be one of the principal innovators of popular music in India, managed to achieve such a feat when he brought western popular music into the market. In 1988, Churamani joined Magnasound India, a production company that had just acquired the exclusive license for Warner Music in India.

A History

At the time, the music marketplace was suffering from two major problems, according to Churamani. The first was that music was only distributed on poor quality cassette tapes. The other problem was that India only received international albums months after they’d been released in their respective countries (mainly the United States and Britain). By the time the albums reached India, the market was already flooded with pirated copies, making it very difficult for international releases to sell successfully.

In order to fix these problems, Churamani took advantage of being the exclusive Indian licensee for Warner Music and began releasing international albums in attractive packaging, on higher quality cassettes, and at highly competitive prices. This in turn resulted in a substantial rise in the legitimate international music market. The demand for legitimate international music was quickly growing and in 1991, Star Network facilitated the launch of MTV into the marketplace. At the time though, MTV was only playing music videos from artists within the United States and Britain. However, according to Churamani, approximately 70% of the local music within India was coming from Bollywood, so he jumped at the opportunity to incorporate the local Bollywood music into MTV.

In 1992, Magnasound India produced two music videos by local artists, an English-singing female vocalist by the name of Jasmine Bharucha, and a Hindi rapper by the name of Baba Sehgal. Baba’s music videos became so popular that his album reached sales numbers unprecedented by any local pop artist before him. In essence, the Indian pop music market had been created thanks to Churamani’s way of distributing international music and the introduction of MTV into the marketplace. Star Network even went on to create their own version of MTV called Channel V.

The Future

Distribution for music in India has drastically changed since the turn of the 21st century. CD’s, and even more so MP3s, have replaced the cassette tape, and offer higher audio quality amongst other benefits. In particular, the format has proven extremely popular because of its ease of distribution via cell phones. There are 670 million wireless subscribers in India, out of which ringtones, and music already pre-loaded onto phones, account for 30% of the Indian music industry’s 7.5 billion rupees—or a revenue of $168 million. Only 7% of the population (81 million) uses the Internet on personal computers. It is clear that the emerging cellular market has a huge potential to bring all sorts of content, particularly music, to people all across the nation, including rural areas that would otherwise have no access to digital media. Although some people do use internet café’s for their internet browsing, rural folk, which account for around 73% of the population, do not access them. However, cell phones have become increasingly popular in the countryside. An additional benefit to the distribution of digital music via mobile phone networks is the fact that mobile phones are less vulnerable to digital piracy because wireless carriers have much more control over what content is available.

Mobile Music Is It

Bharti Airtel, the largest wireless carrier in India, reported in 2009 that their users completed over 200 million downloads of music content. Although the pricing for music is much lower in India than in the United States, approximately 33 cents for a ring tone, the market is still growing. Analysys Mason, a telecom and media-consulting firm, believes that the true potential of the music market, measured by mobile music penetration, has yet to be tapped. India is currently at around 30% penetration for mobile music services where China is currently over 80%. Once a faster 3G wireless network becomes available it can be speculated that the new network will also boost downloads of digital music in direct correlation with faster download speeds.

It is unclear how much the music industry is benefiting from the distribution of music via wireless mobile networks because telecom carriers don’t provide any information on what percentage of music sales they keep for themselves. However, professionals in the music industry have noted it is upwards of four-fifths. Regardless of the low cut given to labels, the distribution of music through telecom companies has definitely boosted the market for the music industry in India. Again, it definitely benefits the music industry that almost all the musical content provided through cell phone networks is legitimate and not pirated.

With a population of over a billion people–of which not even half have access to the Internet or mobile phones—there is a lot of optimism that the Indian music industry will grow. With the right distribution channel bringing an end to pirated music, one can hope that the record labels within India will begin receiving larger percentages of music sales from the cellular network providers, and continue providing music for the nation as digital content continues to spread.
By Sahil Mehrotra

Sources:

The Wall Street Journal Online – http://blogs.wsj.com/indiarealtime/2010/10/22/mobile-not-net-drives-indian-music-sales/ (Oct 2010)

http://www.wipo.int/wipo_magazine/en/2010/05/article_0003.html (Sept 2010)

Physorg.com – Mobile music a cell-out in India (2006)

India Technology Investments – “Magnasound India Ltd.” (2000)

Mobile internet in emerging markets – “How the mobile internet will transform the BRICI countries” (Sept 2010)

http://en.wikipedia.org/wiki/Demographics_of_India#CIA_World_Factbook_demographic_statistics

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Comments

  1. seema says:

    Informative, interesting and well written! Great job, Sahil!

  2. Jaideep says:

    Great job Sahil – Didn\’t realize you would look at the indian industry at all! have forwarded the article to bunch of indian friends in the industry. Keep well..

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