<span class="htext1">Market Transformation:</span> Music (Digital)

The key driver behind growth of digital music sales was the increase in mobile and broadband penetration coupled with an increase in the proportion of youth logged on to the net

Number of users downloading music in 1999: Negligible

Number of users downloading music in 2009: 17.6 million

The popularity of internet applications started with a small trickle in 1999. There were only 1.5 million internet users, and they were taking tentative steps in learning and acquainting themselves with the use of internet applications.

But the last few years have seen a huge change as the number of internet users has shot up to 50 million. One of the most favourite activity for internet surfers has emerged to be music downloads. According to estimates provided by the internet research firm, JuxtConsult, there are 17.6 million individuals actively engaged in music downloads. Ten years ago, downloading music was a nearly non-existent activity with only a few hundred indulging in the exercise.

It has been a steady increase. The number of users downloading music in 2006 were 9.1 million moving up marginally to 9.2 million in 2007 and to 16.8 million in 2008. The key driver behind growth of digital sales is the increasing mobile and broadband penetration coupled with an increasing proportion of the youth logging on to the net. These users exhibit high entertainment needs. And entertainment in India is primarily music, more so Bollywood music. Seventy six per cent of the people who download music are male, while 44 per cent of the users downloading music are in the age group of 19-24 years. The second largest chunk - making up for another 38 per cent of users - is in the age-group of 25-35 years. The top five most visited websites for downloading music in the country are MP3, Raaga, Google, Yahoo and Music.

Falling computer hardware prices coupled with the popularity of devices such as MP3 players and pen drives has also led to the increase in music downloads. The shift from analog to digital has paved the way for more and more users storing and downloading music and carrying it in devices such as a pen drive or an iPod.

Other factors pushing the growth of digital music was the decline in sales of physical formats such as audio cassettes and compact discs, sideloading - loading portable storage devices with unlicensed, unauthorised music - and the widespread issue of piracy of physical music formats. Music companies, too, found it safer to sell on the net.

Leading music companies have recognised the need for digital strategies, and many are already taking initiatives in this direction. For example, the Saregama music catalogue is available on various digital platforms like iTunes, MSN Music, Napster, Real Networks, Musicmatch, Virgin Digital and eMusic Sound Buzz. Tips entered into a tie up with Handygo, under which the latter obtained worldwide copyright to develop ringtones, wallpapers, video clips, picture messages, logos and animated SMS for Tips' movies and music albums.

The paid online music download model is yet to pick up in India because of easy availability of free and illegal song downloads. Mobile music (with platforms like caller ring back tones, ringtones and music clips) is likely to be a key category going forward, given the rapid rise in cell phone penetration in India.