Monthly Archives: February 2012

Flipkart’s Flyte: A Digital Aggregator Can Revolutionize Music

A couple of days back, one of the leading Indian e-commerce stores, Flipkart launched its digital music store, called Flyte. Flipkart has clearly stood out in the nascent e-commerce market in India, with its quality of services—be it in terms of online experience or more importantly, fulfilment.

The launch of the digital music store, that would enable buyers to download MP3s of albums or individual songs, has the potential to transform the music industry in India, if the company plays it well.

The fact that digital music is increasingly replacing physical media sales is no secret. According to the FICCI-KPMG Indian Media and Entertainment Industry Report 2011, in 2010, digital music sales in India, with an estimated value of Rs 4.2 billion overtook the physical sales, that recorded a total sales of Rs 3.2 billion. Larger companies like Saregama have also witnessed the trend. In FY 11, more than 60% of Saregama revenues came from digital music sales. In fact, two years back, Saregama revamped its e-commerce site and a lot of its tracks are now available for online purchase, with good searchability functions.

So, what does Flyte bring in to the table, when the music labels already make it available on their site? On the face of it, it is the same thing that Amazon brings to the table, even though many publishers sell their books online. It aggregates music from different labels; gives a much better experience to the customers and offers far more interesting pricing models—combining individual track sales, full album sales and some amount of bundling. The fact that many small music publishers as well as some big labels do not have e-coommerce sites of their own only adds to the need of an aggregator like this, Surprising it may sound, Sony Music India does not have a dedicated web site and Universal Music India’s site is not e-commerce enabled!

But that is not the point. When the FICCI-KPMG research points out that digital music will grow more than four fold between 2010 too 2015, clocking Rs 14.8 billion in 2015 or that it will account for 79 percent of total sales by 2015 as opposed to 14 percent in 2006, they have taken business as usual growth—maybe taking into account the growth in digital device usage.

But there is far more that a strong independent digital music aggregator can do. In fact, it can not just disrupt the way music is sold, it can change the way music is published and distributed. There is hardly a better market than music where the Long Tail effect can be more true. For the uninitiated, the Long Tail principle is where the businesses do not need to spend a lot of time and energy in choosing what would be a blockbuster. The cost of storing and delivering is low/almost nil. So, they can virtually sell list anything for selling even if it interests a handful of buyers. The idea was popularized by Chris Anderson, the editor in chief of Wired magazine in his 2006 classic book, The Long Tail: Why the Future of Business is Selling Less of More. 

In some cases, people may actually end up choosing a blockbuster. Today, large music publishers do not touch new and upcoming artistes, unless someone somewhere is convinced about their ability to become big hits. So, many good artistes wait for ever for the “opportunity”. In some cases, their work is released by small/local labels, which do not have the muscle and wherewithal to market. Strong digital aggregators give both the enterprising artistes and the niche/small labels to publish their music. The only judge would  be the ultimate judge: the public. The role of filters is getting minimized in many areas and music is just fit for that.

In fact, there are some instances of such efforts already happening. Noted singer, Shubha Mudgal and her husband, popular Tablist Aneesh Pradhan, have established a label called Underscore Records and have released works of many upcoming artistes, a lot of which are sold in digital format in their website. It is an effort that is much admired within a small community, but how many of us know about some of the excellent music they have released? Similarly, in Odisha, noted administrator, educationist and popular lyricist Devdas Chhotray has started a new experimentation of setting some of the best poetry to music, with a young but talented composer and singer duo. The market for such work is worldwide where discerning Odias are, and not necessarily in a locality in Bhubaneswar, where you can find it. Digital music—more specifically, an independent digital music aggregator—can take it to Odias in Ohio or Oslo or Ooty, wherever they are. That is nothing short of a revolution.

A strong digital music aggregator like Flyte should be able to help a lot in making this possible. It has already impressed in the way it is designed, presented and the way it has priced. Though some of the problems—such as putting a picture of a Bengali movie poster in an Odia light songs album—that are imported from the original music label remain, those are small problems you can live with for some time.

In fact, one expects that in due time, it would add small films and documentaries too, some of which are never seen by anyone other than the jury of film festivals. The digital aggregator is the perfect medium to make them reach the public. But that is another task, maybe for another day.

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Technology & The Three Paths

In the midst of jargon, numbers, and tools, we often overlook a basic truth—that business is about people. It is for the people (customers), of the people (shareholders) and by the people (employees and partners). Not that we do not know it; not that the business schools don’t teach it. But when it comes to taking decisions, often this common sense takes a backseat.

That is where most of the problems of business start and/or become complicated. Technology, which is today an essential enabler of business, by extension, suffers from the same problem. It is important to get sensitized about this, if we have to get better value from technology—especially now as, for the first time, it looks like we can get far more than what we are getting from it.

The Bhagvadgita talks of three paths for human beings: that of bhakti, jnana, and karma. In the Western philosophy, that translates to emotion, knowledge, and action, which is well recognized now. Management thinkers have, of late, been recognizing this. While business at one time was associated primarily with action, the role of knowledge became evident with the advent of technology—to some extent during industrial revolution, and then most definitely during the information revolution of the later part of the 20th century. The evolution of management as a science, itself was a manifestation of this growing realization by businesses that some specific intellectual thinking and reflections could surely add value to business. But this knowledge was pursued outside the domain of action and was injected to the businesses. That, has been changing, of late.

In the mid-80s, the term emotional intelligence came into the lexicon to stress the role of emotion in decision making and soon started making impact on management thinking. Today, though it is still not widely practiced, there is recognition that emotion has a role to play in business.

But information technology, so far, has still focused on just one of the aspects: action. This is a hangover of the industrial revolution. The catch phrase in the industrial revolution was automation. Many human functions were automated resulting in much better efficiency. When computers came, they were expected to automate some of the back office work such as accounting, information storage and retrieval. And they did that very well. While theoretical computer science, which in a sense, was an outgrowth of mathematics, did ask if it could take cae of more of the intellectual/decision making work, some early adopters in business found that it was easy to apply computers to automate some of the processes in business and make those processes far more efficient, making the entire business far more efficient. In my previous post, Why Information Technology is A Misnomer, I wrote about that. This quick resulted made computers—by now called IT—to focus completely on this aspect of business. Efficiency became the buzzword. This was improvement but the path was still the traditional path of action.

Of late, there is a realization that applying technology to do analysis of information and simulate some intelligence is probably possible. And those are catchwords in IT today. That is appplying technology along the path of knowledge. I am sure in the next few years we will see a lot of progress along this line.

One area that still remains largely untouched is emotion, despite the fact that marketers and advertisers have long played on emotions to sell consumer goods and services. But technology has played little role there. With the rising popularity of social networks and their power, however, there is a hope that probably—and I emphasize on that word—it is time to explore if technology can do something there.

Can IT?

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Why Information Technology is a Misnomer

It may sound blasphemous to many. But the more I think about it, the more I get uncomfortable with the phrase information technology. The fact that it has taken me more than two decades (that is from my first year engineering to now) to muster up enough courage to put it straight should not be held against the argument that I am making. And that is: information technology—for all its seemingly magical prowess and overwhelming impact on our lives—is a misnomer. Technology, it is; information technology, it is not.

One can go back to the classical distinction between “information” and “data” to appreciate what I am saying. As any student is taught when he is introduced to computers, data (actually the plural of datum) is pieces of facts. When, it is processed, organized, structured and interpreted, so that it becomes meaningful, it is called information. Today’s technology does a great job of processing, organizing, and structuring data. But interpreting to make it meaningful? Despite all the craze about BI and analytics of late, technology still lacks the ability to add the value of context and hence interpret it meaningfully. So, while sometimes based on matching strings of alphabets and mapping that to a predefined “meaning”, it tries to present the result as meaningful interpretation, we all know that it is not. Much of the current buzzwords such as analytics and BI are examples of this kind of exprimentation. That is clearly not “understanding the context.”

However, very recently, context has generated a lot of interest among the businesses, thanks to the surging popularity of social media, that is generating huge amount of content, much of which is available publicly.

While scores of boutique social media tracking firms have mushroomed and have been helping consumer companies “understand” the customers thinking, they too are working with basic technology that relies on the above mentioned technique. But that itself is a great leap and marketers are lapping that up. Interestingly, in most businesses, they have been working with the marketing and customer service teams, with little or no interaction with the enterprise IT departments.

I am not sure if and when the twain will meet. That anyway is not of too much consequence to this discussion. I return to my basic point that information technology really is not.

But I must point out that it was not really this way always. One of the major areas of interest within theoretical computer science in the 70s and 80s—and to some extent in early 90s—was artificial intelligence. Artificial Intelligence actually wanted to cross this frontier by trying to make computer systems intelligent enough to “understand” natural language, learn by experience and so on. So hot was the area that between 1969 and 1994, it won four Turing awards, arguably the biggest recognition in computer science. In my college days (late 80s-early 90s), AI was the buzzword and we were completely enticed by it, so much so that I remember having fought with my professor for not allowing us to opt for AI as an elective in the final year—citing lack of teachers as the reason—and forcing on us “computer networks”!

While AI still continues in some high-end labs, it faded from mainstream focus of technology industry in the mid 90s, often facing criticism, among others, that it was too philosophical a concept. And this is also when, I would like to argue, information technology lost its way.

It fell to the temptation of impressing the businesses with immediate, tangible results by automating a lot of business processes. It was a Godsend for businesses—American primarily but Western European and Japanese to some extent—that were already witnessing sluggish growth and were badly in need for something that would boost bottomline by cutting cost. The technology—what we call IT today—could do that fairly well and businesses started seeing it as the next big value creator. Soon the entire focus of technology shifted to creating newer ways and means of enhancing business efficiency. ERP and outsourcing were two major milestones in that journey. All of it was internal focused.

These low hanging fruits made the technology industry almost abandon areas that requires longer term commitment (such as AI), and technology reached where it is today. Information technology was happy playing the role of automation technology and data technology. And that is what it absolutely became.

However, what makes me hopeful are two developments. One, the Internet has emerged as a big social platform and there is an opportunity to really understand the customer. Businesses would have to now differentiate themselves on this plane, as efficiency has been done to death. Two, and this is equally important, emerging economies are now becoming the focus of most large global corporations. In these new markets—often with very different social and economic structures than the West—reaching out and reaching out effectively through whatever means possible would become key. Topline will again drive businesses and that would require knowledge of customer as a differentiator. Some businesses have already seen the danger of trying to do business in the new markets with business models of the mature markets!

Whether that will result in a serious effort by technology fraternity to make the customer instead of internal processes their core focus is something that remains to be seen.

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