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Tuesday 10 May 2011

Global online distribution just got easier for independent labels, music groups

This story first appeared in DNA Money edition on Tuesday May 10, 2011.

Indian independent record labels and artists facing significant challenges with online distribution of their content overseas have a big reason to rejoice. A new service in the offing is all set to revolutionise monetising opportunities for independent content owners allowing them to sell globally through over 600 online retailers including the likes of iTunes, Amazon etc.

That’s not all. The content owner gets to keep a significant share of the selling price of the song/album unlike the mobile distribution (download) space where the network operator (mobile company) takes the giant’s share. Facilitating this service in India is Sony Music Entertainment India in partnership with Independent Online Distribution Alliance (IODA).

Shridhar Subramaniam, president-India and Middle East, Sony said, “This platform will offer a whole new digital landscape to access a seamless distribution network across audio and video digital retailers. The content owner gets to keep a significant percentage of the sales translating into earnings for independent artists, which was not possible earlier.”

The process basically involves independent content owners to fill up an online application with IODA (www.iodalliance.com) which is then scrutinised by Sony Music officials across various parameters. Once short listed, the content owner is required to submit sound tracks that are then processed by Sony to meet online download formats and quality standards before being hosted on the web. The distribution network, Sony said, includes all major services like iTunes, Amazon, Spotify, Netflix, Unbox, CinemaNow and mobile carriers such as Verizon Wireless, Sprint and Vodafone.

While exact revenue sharing ratios differ from content to content, Subramaniam said content owner will get anywhere between 45% to 50% of the gross download cost. “For instance, if iTunes is selling a soundtrack for 99 cents, it will keep 30 cents. Sony-IODA’s share will be 20% of the remaining 69 cents while the content owner keeps the rest,” he said.

Large music companies operating in India, such as Universal, Saregama and T-Series, generally have their own mechanism (in the form of Tunecore, The Orchard, Hungama.com, respectively) to monetise online distribution of music overseas. However, the independent content owner had very limited avenues to monetise the intellectual property rights (IPR). And with no backing from big record labels, these creative professionals are left with not many options to effectively capitalise the legitimate online download market.

Neeraj Roy’s Hungama.com had initiated a similar model (for independent artists) through its www.artistaloud.com platform two years ago. The management claims their new vertical is working well but refrained from sharing any statistical data on downloads and related earnings. Industry experts, however, said their business model still requires a lot of fine-tuning.

As for competition in the form of Sony-IODA, Soumini Sridhara Paul, general manager, ArtistAloud.com, said, “We never expected to be the only player in the market. Now that they are entering the space, we’ll re-strategise our approach to business, exercise more caution in dealing with the independent content owners and sell innovatively.”

Kanwal Kohli, founder of the two year old independent label Indya Records, feels this initiative by Sony-IODA is a very timely platform especially for music professionals and entrepreneurs like him given the significance of online downloads and revenue generation opportunity it offers.

“Legitimate online downloads is still nascent in India, but it’s a huge phenomenon globally. This (Sony-IODA) platform will play a crucial role by helping independent content owners make decent money from their IPR which otherwise was getting downloaded free or was falling prey to piracy,” Kohli said.

Kohli’s Indya Records along with another independent label Frankfinn Music are among the first few to have already registered with Sony-IODA for online distribution.

Industry experts feel that though service providers like iTunes allow independent content owners to directly upload their IPR for legitimate downloads, they don’t offer flexibility, real time monitoring, control on distribution and marketing and promotional support. “This is where the Sony-IODA platform has an upper-hand,” said a senior official from one of India’s largest music companies.

To elucidate the point, the Sony-IODA platform allows creating an online dashboard for the independent content owners enabling them to access real-time download sales data of their music and videos globally. The platform allows independent content owners to control the distribution by choosing specific retailers and geographies, option of internet and mobile downloads or a combination thereof.

“Transparency has been addressed very effectively with this platform. Besides, there is no exclusivity arrangement between the two parties so the content owners continue to enjoy full control of their IPR. Content owners get promotional support and the revenue share ratio is also fairly skewed in their favour. The most important of it all is the brand pull Sony Music offers globally which is a huge plus for independent content owners trying to establish a foothold in the market place,” said an industry expert, consulting with a leading digital media company.

The platform has put in place an online promotional system called Promonet to help potential customers / music fans discover and share music from thousands of top independent artists and labels. “It also offers a unique opportunity for artists and labels to connect through over 3,000 blogs, podcasts, internet radio stations, social networking and music websites,” Subramaniam said.

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