How Would You Bring Digital Music Sales to Indonesia?

3 mins read
December 16, 2011

20111216-181914.jpgIndonesia’s music industry at the moment is beholden to ringback tones, the audio replacements that you hear when you make a phone call to a mobile number. While sales of physical albums have deteriorated over the last decade, ringback tones have become highly popular since its introduction in the mid 2000s. These can come in the form of song snippets, quotes, chants, or just about any sound.

Ringback tone is a premium service made possible through content providers who offer these audio snippets through the use of premium SMS service. Mobile subscribers can request to change their tones to one of many selections from their respective network operators.

While there are plenty of snippets available, the most popular of these ringback tones are songs. This means content providers must work with music labels to make these songs available as short 30 second tones.

The advantage for labels is that this enables them to leverage their content libraries which span decades and contain tens of thousands of songs. It also means that popularity of songs no longer depend largely on radio airplays.

Fall of album sales and ringback tones
Given the decline of albums and the rise of piracy which accounts for around 80% of music sales in the country, the popularity of ringback tones give labels a breathe of fresh air and a new revenue source.

The majority of revenue at Warner Music Indonesia has been generated through the subscription of these ringback tones, apparently up to 90% according to its managing director Jusak Irwan Sutiono, as quoted by Detik. Sutiono also happens to be the head of Indonesia’s sound recording industry association, ASIRI.

Ringback tones however have suffered a severe drop in adoption due to the clamping down on premium SMS services which had been abused by various content providers looking to make a quick buck. Sutiono said that subscriber number has dropped from 25 million to just three million following the suspension of premium SMS in October.

Music labels had been seeking for alternative revenue sources even prior to this suspension to reduce the dependence on just one distribution method, without much success, unfortunately.

Digital downloads difficulties
The digital download model popularized by iTunes since 2003 is not actually feasible for Indonesia since it heavily relies on credit card ownership. Out of 240 million Indonesians, only six or so million have credit cards and not all of them are Internet savvy and for the moment, Apple doesn’t seem to be interested in running its gift card program in Asia aside from Japan.

Additionally local music labels are still strongly in favor of the heavily protected model, meaning content or songs would be wrapped up in some sort of a rights management scheme. This scheme restricts what could be done with the downloaded file despite iTunes and Amazon, two of the largest music stores in the world, having done away with or diminished DRM restrictions in the songs sold from their respective stores.

Seeking for alternatives
So what would be the most feasible way for Indonesian musicians and labels to embrace the digital world?

Numerous efforts have been made to bring Indonesian musicians to accept the post-Napster world but almost all of them have either failed or yet to find success despite heavy investments.

Understanding the behavior of Indonesian music consumers is essential to discovering a workable model to distribute music in digital form in the country which can be beneficial to all parties concerned.

The popularity of ringback tones actually reveals that Indonesians may not be that resistant towards a rental or subscription model in which they pay a set amount of money for a particular period to enjoy a song or collection of songs. That is exactly how a ringback tone scheme works.

The difference though, is that ringback tones are heard by people who make phone calls while they wait for the call to be picked up. It serves as an identity mark of some sort for the person who is paying for that tone.

Whether a streaming music scheme like Spotify and Deezer would work in this country remains to be seen but it looks like at the moment nobody in the local scene is willing to give it a shot just yet. With Spotify setting up an office in Hong Kong for its Asia Pacific expansion and Deezer announcing plans to enter the country, it’s looking like Indonesians might get a taste of streaming music services soon enough.

We’re hearing that Telkom and its mobile subsidiary Telkomsel might bring together their MelOn and LangitMusik services under one umbrella and offer a new service, the details of which has yet to be revealed. The existing form of both services are far from popular among the companies’ subscriber bases. What the new incarnation will bring and how it will be received by the Indonesian audience still obviously remain in question.

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