Digital impact on media and entertainment

Book Review: Back in the Spotlight.  

The arrival of 3G in telephony is a highly-awaited development and is expected to fuel a lot of innovation in the country, foresees ‘Back in the Spotlight,’ the FICCI-KPMG Indian media and entertainment industry report (

Following the falling revenues (ARPUs) from voice data, the industry is looking to content usage to boost its margins, the authors note. Inspired by the success of the Apple applications store (1.33 lakh third-party applications on Apple app stores with total downloads of over three billion), ‘many operators (Bharti Airtel, Reliance, etc.) are opening their own mobile apps shops where consumers can download the required application and the amount gets automatically calculated to the bill.’

On the flip side, however, many of the mobile software apps work on only one type of device or for one network operator, the report states. “Bringing in a common platform to hold programs/ applications from various operators would still take sometime in the future.”

Handset challenge

Among the recent developments, the report sees promise in the agreement among more than 20 global communication giants (including Airtel) to challenge the dominance of handset makers, especially Apple, in the mobile apps space.

“The rationale behind the 24 largest mobile operators joining hands on the apps space is that service providers have lost billions of dollars in revenues to handset makers which have allowed independent developers to access their platforms to build thousands of apps that have been monetised.” It is learnt that Airtel intends to add 200-250 applications per month, working in collaboration with both local and overseas mobile application developers.

Physical vs digital

A chapter on ‘music’ predicts a ‘degrowth’ of physical formats (such as audio cassettes and compact discs) at a CAGR of 6.8 per cent between 2009 and 20104. “While the actual degrowth of formats such as audio cassettes is expected to be much higher, this is likely to be partially offset by initiatives taken by some leading music companies such as Sony, T-Series and SaReGaMa to release MP3 music on compact discs at price points similar to that of the ubiquitous audio cassette.”

The digital arena is witnessing newer business models. For example, with new players encroaching on their turf, music recording labels that previously dominated the physical distribution chain are increasingly recognising the need to collaborate with members of the digital distribution value chain – digital music stores such as iTunes, mobile network operators, MP3 player and mobile-phone manufacturers, music distributors, platform software companies and other technology providers, the report elaborates.

The ‘freemium’ model

A rising trend in the international music space is the ‘freemium’ model, which offers basic services for free (with advertising to support it), and the premium version at a price. The Sweden-based Spotify has 7 million users in six European countries, while 2.5 million people use the UK-based we7’s free offering. “Most legal streaming services have agreements with major and independent record labels and pay royalties for each song paid.”

The challenges faced by the music industry include rampant piracy (‘consumers have become accustomed to free music, and even music tracks available at nominal rates have not been able to entice many consumers away from illegitimate music platforms’); and high acquisition cost (‘competition among existing players has driven the acquisition cost of music higher and constrained the profitability of music companies’).

Also, the revenue sharing agreements are a point of grumble. Although music companies are the content providers they are dependent on distribution channels such as the telecommunication companies and online aggregators to reach the end viewers. As a result, music companies earn only 25-30 per cent for supplying content, the report informs.

Music as a ‘service’

Given the forecast of a 12.5 per cent CAGR through 2014, music companies should think of evolving from the earlier perception of music as a product to music as a service, the authors recommend. Companies that can offer a complete music offering spanning physical distribution, radio, music television, mobile and internet digital downloads are those that are likely to emerge as strong players in the new environment, they advise.

“Consolidation is also one of the options that the players are likely to explore as a means to extend their reach to music related services and move up the value chain in areas such as content aggregation, live music, and artist management.”

Helpful reference.


“When Microsoft collaborates with Toshiba to develop advanced nuclear reactors…”

“We can be assured of the ‘ctrl-alt-del’ option to reset things?”

Our code of editorial values

This article is closed for comments.
Please Email the Editor

Printable version | Nov 29, 2021 5:20:58 AM |

Next Story