Music and IT majors play to Net audience

Krishna Gopalan in Mumbai

If Napster showed the Internet’s capability to deliver music to the masses free of cost, another American company RealNetworks is trying to bring semblance of order to the online music world via a fee model. Meant only for the American market, at less than $10 a month, Seattle-based RealNetworks just a few days ago launched an online subscription service, by which one can access major record labels. In the face of freely available MP3 file providers, illegal as they may be, RealNetworks’ MusicNet project offers 75,000 tunes, legitimately, from 10,000 recording artists.

So, much action is online when it comes to demand for music. Some of these figures speak for themselves. For instance, the audience for streaming radio stations trebled between January and October this year, according to a survey. And, the number of US consumers who bought music online—including both downloadable titles and packaged CDs—has skyrocketed to 30 million this year, up from 21 million last year and a mere 2 million in 1997, according to a research firm. Also, it predicts that the number of domestic paying consumers of online music will rise to 40 million next year, 62 million in 2004, and 82 million in 2006.

But even as global audience for online music is growing despite Napster’s demise, the Internet music industry, like other dotcom businesses, is shrinking. In this US-dominated industry, while biggies such as AOL Time Warner, Microsoft and IBM continue to invest in music initiatives, smaller music and IT companies are struggling for survival. Stumbling block: Copyright issues, general ad slump and Internet economy meltdown.

As the wait for a coherent investment scenario is on around the world, Indian music industry appears to be part of that groove, particularly where technology is concerned. Even as an Indian musician talks critically of how some new-gen pop artists “with absolutely flat voice are churning out albums in a jiffy due to all the magical software available to them”, the positive impact of hardware, even in the Indian music industry, cannot be ignored.

The various formats from CD to computer music, for instance, are making music ever so accessible. From making of music to cleaning it up, from offering accessibility to managing businesses effectively, information technology seems to be an inherent part of the music industry. Business Head and Senior Vice-President of Zee Records Ashish Chakravorty says that music labels worldwide have invested huge amounts of money in streamlining and IT enabling their enterprise. “Almost all music labels in the West today rely totally on IT-based platforms to manage their entire business operations,” Mr Chakravorty says. This includes music software development, research and marketing, hardware production, inventories and supply chain management, accounting & finance and retailing.

According to Mr Chakravorty, companies like BMG have invested huge amounts of money in setting up e-tailing ventures like click2music.com, which offer online purchases in the form of conventional cassettes, CDs and secure digital downloads. Most of the Indian labels, however, have set up websites that do not offer any e-tailing or e-commerce opportunities, barring a few. But marketing is hot business on the Net. An online music venture Dhadkan.com, for instance, predominantly uses the portal to market its products. Says Dhadkan chief executive officer Siddharth Taparia: “Through our portal, we aggregate active music consumers and have created a database of their music preferences and buying patterns.”

Giving an example, Mr Taparia says: “Today in our database we exactly know people who like Pt Vishwa Mohan Bhatt. We know this through a registration process and also traffic monitoring on the articles we have on our website.”

Talking about the other aspects of IT in the music industry, Mr Chakravorty says most of the music software today is created in a computerised environment. “The PC has revolutionised the way music can be created, improved, processed and stored. This has also considerably brought down the cost of the software acquisition in a big way,” he adds. Another advantage of technology is that the cost of connecting with different centres and suppliers has reduced considerably.

Companies are also employing the latest technologies to integrate the complete supply chain, by IT enabling their different points of transactions from sourcing to manufacturing and the sales levels. The move has been very steady towards increasing precise and timely flow of logistical information through different levels of the supply chain, suggest industry sources.

Finally, the bottomline. As Mr Chakravorty puts it: “Profitability today is a derivative of cost savings and speedy information delivery.” And as a musician describes the phenomenon, if it’s music to technology, it’s wonderful. If it’s technology to music, it’s terrible.

— With Nivedita Mookerji in New Delhi