Make no mistake about it, 2007 was a b-a-a-a-d year for the industry.

That’s no doomsayer sounding the deathknell for the music industry, but one of the opening remarks of a series of year end insights put out on MTV.com. Globally, the biggies of the music industry have had to contend with dipping physical sales graphs, even as the indies and sharp eyed innovators in the digital world have been snapping up the advantages offered by the Internet, live performances and merchandise.

The low tide hit Indian shores too in 2007. Internet downloads however did not hit the Indian industry as hard as did the rapidly growing mobile phone industry, where music entertainment was one of the prime drivers of the value added services industry here. FM, which boomed this year, was one of the biggest applications utilised over the mobile phone, aided in no small measure by scaled down prices for FM enabled mobile phones.

Physical sales plummet…
Indians purchased more music on their mobile phones than they did physical music products like CDs and cassettes in 2007, says a Soundbuzz report. Mobile music products, in fact, will be purchased nine times more often than physical within the next 18-24 months, the report adds. One doesn’t need to look far for the reason. The region is experiencing an exploding mobile market, virtually dominated by consumers under the age of 30 who are generating and sharing content on a spectrum ranging from pure entertainment, to self projection, to self expression and self actualization.

While experts within the industry differed on the quantum of mobile music sold during the year, claiming that it could not have surpassed the Rs 600 crore worth of physical sales, most agreed that India is now part of the Asian juggernaut – 50 per cent of all music purchases in Asia in 2006 were digital – online or mobile, and the figures only spiralled in 2007.

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Hardly surprising, considering industry estimates that in the next 12 months, 12 per cent of the world’s population will comprise of young singles in Asia who will command a purchasing power of about US$150 billion.

The mobile industry taps into music to grow
Music in 2007 became one of the key value adds that helped the mobile phone industry to grow.

By the end of July 2007, India had 192.98 million wireless subscribers, a number expected to grow to 250 million handsets by the year end. As if the rapid penetration of the mobile in the country wasn’t enough, global companies like Nokia, Sony Ericsson, Motorola and Samsung strove neck-to-neck to come up with handsets loaded with FM radios, MP3 players and a good memory capacity.

Today, around 35 per cent of their Indian handset products feature downloadable music applications and Sony’s Walkman phone accounts for 65 per cent of total revenues. Sony is also toying with expanding its chain of Expression Stores, which feature phones and music download stations.

Nokia too set up college sponsorship deals and collaborated with music companies to buy the rights for free downloadable songs on some of their handsets to encourage the use of digital music. Some of Nokia’s N-series handsets, with a 3,000 song capacity, offer 100 preloaded songs free; just to make a mark, and money of course, in this segment. Most of the major handset makers have tie-ups with music content sites such as Soundbuzz.com and OnMobile.com as well as revenue-sharing deals with local telcos and music companies.

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VAS – the big deal
Mobile value added services (VAS) in India stood at Rs 2850 crore at the end of 2006, and according to a IAMAI and IMRB study, by end 2007 it stands at nearly Rs 4560 crore, a growth of 60 per cent. Ringtone downloads contribute over 35 per cent of the whole. These comprise the spectrum of mono and polyphonic ringtones, apart from caller ring back tones, true tones – all of which borrow heavily from either Bollywood, devotional or regional music.

The innovations
While the industry lamented the downward trend in sales, labels continued to innovate, expand and diversify, tapping into newer arenas.

Companies like Saregama introduced mobitune cards for ringtones, a pilot project across Bangalore, Chennai and Hyderabad, for music downloads at Nokia outlets. The company said there were 8000 music downloads against 4000 handsets sold at the 25 Nokia outlets during the trial period.

Companies also tried to expand by signing exclusive deals with mobile operators and others in this segment, with everyone realising that five years down the line, this segment will be a very important source of income and revenue.

Companies like T-Series and Yash Raj turned out to be key players in the digital music segment, with Yashraj beginning to offer music downloads online. Other music labels like Saregama also launched its own online music store. Others may follow suit in the coming year, although the domestic market for net downloads is still abysmal.
Regardless of the discovery of new artistes and tuneful Bollywood compositions that made their mark in 2007 – compilations of old Bollywood music continued to contribute significantly to companies’ bottomline. 2008 should see the witness the continued slow but steady rise of spiritual music, which many leading labels tried their hand at.

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The new launches
Despite sluggish revenues, the industry perceived enough to launch some new labels. Reliance’s Big Music and Home Entertainment was the first off the block early this year. Starting off with Bollywood music, Big Music now plans to reach into regional music in a big way next year. Regional music will also be the focus of Times Music’s new label, Junglee music that launched at the fag end of the year with the music of Nadiadwala’s Welcome. After a fallout with Big, UTV decided to go ahead and launch its own music label for its forthcoming production, Jodhaa Akbar.

Piracy – the demon’s talons refuse to get trimmed
Pirated music CDs and illegal Net downloads apart, mobile chip piracy became the latest demon to haunt the Indian music industry. The Indian Music Industry estimates that the size of the music market on mobile phones is around Rs four billion, including products like ring tones – monophonic and polyphonic; True Tones; Ring back Tones; Full song mobile downloads; Music videos.

Considering royalty, for the music industry, on products like full songs download at approximately Rs five per download and assuming one illegal transfer per phone per month, the loss amounts to Rs 12.5 million per month, says the IMI. Digitized music can be easily copied from any storage device like computer hard disc or USB drive, mobile phone with stored music etc. into the built in memory of a mobile phone or on memory cards or chips which can be further inserted into other mobile phones.

Individual companies like Shemaroo continued their own campaign against piracy, raiding illegal CD burning outfits and bringing culprits to book with the help of the police. The Phonographic Performance Limited, the licensing wing of the IMI, also did its bit by launching awareness campaigns about the need to procure licenses to play music at events and venues.

India – the new destination
The number of international artistes wanting to perform live in India continues to grow. Nelly Furtado kicked off the year’s musical proceedings by performing at the Nokia New Year’s Night eve in Mumbai. Shortly thereafter, Shakira, Aerosmith, Beyonce, 50 Cent, Iron Maiden, America and the Scorpions, among others, performed to packed crowds in venues as diverse as Shillong and Chennai. Obviously, the music lovers’ demand here is huge – Iron Maiden will start their ’08 world tour with a performance in Mumbai.

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The new tunes in ’08
Globally, music delivered to mobile phones via operators’ networks (mobile music) will jump from the current 13 per cent of global recorded music retail value to 30 per cent by 2011.

“Looking to emerging markets, mobile could become the number one platform for music, where packaged CDs haven’t gained traction due to piracy and lack of hardware ownership,” says a recently released report by Understanding & Solutions.

Experts say that in India, ringtones which are the dominant digital format, will continue to remain so till 2009. Mobile music growth will however be fuelled by additional formats, including ringback tones, caller id tones plus full track audio adn video downloads. These forms of mobile music will grow dramatically to achieve 3.9 billion USD in sales in Asia by 2009, up from 210 mn USD in 2005. Online sales will remain relatively static in the coming three years, point out experts.

Regional could well be the new flavour for music labels, that want to tap the huge interiors. They could well be wary of artistes and music directors, who are slowly taking the production route themselves – turning producers or launching their music directly on the Internet a la Radiohead. As technolgy advances by leaps and bounds, the sky’s the limit for the creators of music in the country.

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