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Digital music powers another year of revenue growth for Indian recorded music

Revenues from digital music sales led the third successive year of growth for Indian recorded music in 2012, according to a report by International Federation of the Phonographic Industry (IFPI). The global report noted that revenues for recorded music rose for the first time in 13 years with digital music sales accelerating its growth for the second year running.

According to IFPI, which represents the recorded music industry globally, in some markets such as India, Norway, Sweden and the US, digital music has outstripped physical revenues. This has helped at least eight of the top 20 markets for music to see growth including Australia, Brazil, Canada, India, Japan, Mexico, Norway and Sweden.

Record companies' global digital revenues for 2012 are estimated at $5.6 billion, up 9 per cent over 2011 and accounting for more than a third of total industry revenues (34 per cent).

Although IFPI did not share specific numbers for India, it said digital growth in India has been predominantly through mobile channels, though streaming services too are beginning to take off.

"With 2012 revenues approaching an all-time high, some within the business believe India could become a top 10 global market. India's mobile phone market grew hugely in 2006 and has since gained more than half a billion subscribers, taking the total today to 900 million. Music plays a key role in mobile operators' customer acquisition, branding and engagement strategies, as smartphone adoption rises," it pointed out.

IFPI said telcos offer a range of music services including ringtones, ringback tones, downloads and mobile radio streaming services – which are usually bundled into subscription packages.

"Mobile radio services are evolving to offer multi-language stations and intelligent playlists. Streaming services such as Gaana, Dhingana and Saavn and download stores are beginning to emerge," said IFPI.

But it said unlike music offerings from mobile operators, independent services face some key challenges, such as establishing a billing relationship with customers as just 1per cent of the population has a credit card.

The industry body said piracy remains rampant and more than half of internet users access unlicensed services on a monthly basis in India – a huge market potential if some of them can be migrated to licensed services.

IFPI lauded some of the moves by Indian courts such as an injunction ordering 11 ISPs to block access to the infringing website songs.pk and another order for 387 ISPs to block access to 104 infringing websites. It said nearly 10 million internet users stopped accessing these sites.

The report cited names such as 7digital, Artist Aloud, Dhingana, Flyte (Flipkart's digital music store which just completed one year), Gaana, In, IndiaONE, iTunes, Meridhun, My Band, Nokia Music, Raaga, Saavn, Saregama, Smash Hits, TeluguOne as those offering digital music services in India.

This excludes many others including VC-backed internet radio venture Radiowalla, music store of Hungama as well as other music labels such as Saregama who also sell their own music online.

Here's a quick wrap of some global statistics:

Total music industry revenues rose by an estimated 0.3 per cent to $16.5 billion in 2012, the first year of industry growth since 1999. Digital revenues saw accelerating growth for the second year running, up 9 per cent, with most major digital revenue streams  -- downloads, subscription and advertising-supported -- on the rise.

Subscription services are now an integral part of the recorded music market, with 20 million paying subscribers globally in 2012 – an increase of 44 per cent on 2011. Subscription services are expected to have crossed the 10 per cent mark as a share of total digital music revenues in 2012 for the first time. This share is considerably higher in Europe -- around 20 per cent.

Download stores continue to see steadily growing sales and are spreading globally. They represent around 70 per cent of global digital revenues. Download sales increased by 12 per cent in 2012 to 4.3 billion units globally (combining digital singles and albums). Digital album sales grew at more than twice the pace of single tracks. There were 2.3 billion single track downloads worldwide, an increase of 8 per cent and 207 million digital albums sold, up 17 per cent on 2011, showing strong consumer demand for albums.

Also check out some of our previous reports related to digital music market in India:

Saregama India launches internet radio, activates digital music store

Apple's iTunes Store in India offering music & movies; will it pose a challenge to homegrown players?

Why Flipkart has not activated MP3 purchase on iOS app; A 6-month report card on Flyte

How do desi Spotifys stack up against each other & biz models behind free music streaming

(Edited by Prem Udayabhanu)

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