Monthly Archives: April 2012

Crackdown on Illegal Music Sites: The Solution is Not So Simple

In a well-coordinated move, the Indian Music Industry (IMI), a consortium of more than 100 music companies, recently managed to get an order from Calcutta High court directing ISPs in India to block 104 music sites on charges of piracy. Some of these sites such as songs.pk, musicindiaonline.com, dishant.com, and smashits.com are extremely popular destinations for music lovers. Medianama.com, one of the top websites focusing on business related to digital media and entertainment, said that the IMI had made a case against each website, quoting Apurv Nagpal, CEO of Saregama, one of India’s largest and oldest music company. Medianama further said that the court orders were obtained on different dates and the first order was against songs.pk.

The order against songs.pk was widely reported in media and we had even discussed it in our editorial meeting in Dataquest. But I came to know about the blocking of the other sites when, while searching for the lyricist of a 60s Hindi film song, in the third week of March, I clicked on a Google link and found the message that the site has been blocked because of orders from DoT. It is only when I did a couple of more queries that I saw a few write-ups (none in the traditional media) about the sites being blocked because of the orders from Calcutta High Court. Medianama even gave a list of all the sites. I found that many of the sites that I often visited to find/confirm info about songs (esp the year of a film/lyricist etc) are in the list. Most of them are music streaming sites.

According to IMI, these are illegal sites while there are a few sites such as raaga.com, gaana.com, in.com, and dhingana.com that have legally obtained licence to stream music. The average user of the sites, however, have no way of knowing which one is legal and which one is not. Most of the people I know who use these sites are heavy purchasers of legal music. When I asked a few of them, most of them said they choose these sites because of ease of navigation/look and feel. I agree with that but have one more parameter: accuracy of information about songs. This, because, there is little to choose when it comes to the quality of sound or speed between one site and another. The Saregama site scores heavily on the accuracy-of-information front while it is poor when it comes to presentation and does not work quite often. Flipkart’s Flyte—though much better in terms of presentation and navigation—has quite a few mistakes when it comes to information on songs—one common and frequent error being combining films of the same name (one released in 40s and another in 90s, for example) to a single album.

So, while feeling good about the success of the anti-piracy moves, I was a little sad that these sites—to which I often trurned for a quick check-up of info—would not be accessible any more. But as feared by many analysts and legal experts, they resurfaced under different names. Songs.pk became songspk.pk; musicindiaonline.com became musicindiaonline.co; and dishant.com became dishant.co and so on. So, while the music industry may have won a battle—that too partially, what with all the resurfacing of some of the sites—the war is still far from being over.

But what is this war all about? On the face of it, it is piracy and loss of revenue to the music industry. From a moral and legal point of view, the IMI action looks plausible. But when you look at it practically, it is bound to fail because of two reasons. One, well discussed by many bloggers, is technical: it is virtually impossible to completely ban sites. In any case, restricting through ISPs would work only in India.

But the other reason—and I think it is far more important—is that the music industry is not yet prepared to embrace the change that would actually give them back the power. We have come to a situation like this because the music industry has been lax in moving with the times. People’s unwillingness to pay is only part of the reason for piracy. An equally strong reason is access to music. In my school/college days, for example, there was virtually no way to “get a song” without “recording it (read piracy)” till Gulshan Kumar exploited a loophole in the law to re-record many of the yesteryear’s hits in newer singers’ voice and offer an alternative. And even though these songs stood nowhere in comparison to the original, people lapped them up because they were affordable and more importantly, they were widely available. In fact, many people in my generation might have first listened to a song in Babla Mehta’s voice before listening to the the Mukesh original! Kumar created a few star singers such as Kumar Sanu and Sonu Nigam in the process! And brought about the first big change in the industry.

While Kumar’s method and today’s illegal websites’ methods vary in terms of their legal status, their basic raison d’ etre is the same. T Series under Gulshan Kumar and many sites of today were created to make music reach people in a music-hungry nation in an easier, friendlier and cheaper manner.

Today, the users of those sites, if asked to pay some money, could actually end up paying, provided pricing is right and paying is trouble-free. After all, they have been paying for things like caller tunes amounts which are often 20-30% of their montly spend on mobile!

My argument is not meant to justify illegal streaming, but to point out that the music industry is as much responsible for the problem as anyone else. And it cannot fight the disease by trying to cure the symptom.

A look at the table here would tell the story. The data is from Google AdPlanner and may not be 100% accurate. But even if you take 30% error margin, you get to see the point. Why should an obscure name like song.pk would get millions of pageviews while India’s best known music brand—which also has a vast collection available in its site for downlaod—can muster only a few thousands? Yes, the fact that they are free could be a big reason; but you will be fooling yourself to argue that it is the only reason.

And yes, these traffic figures are for Marh 2012, which for the blocked sites, are a mere fraction of what they used to get before the ban. As one can see, the loss of these sites has translated to gain for some legal streaming sites and not for Saregama.com.

Traffic: Music Sites in India

SITE TYPE UV (India) PV (India) COMMENT
Songs.pk Illegal/blocked 5.6M 23M Dropped by almost 2/3rd between Jan-Mar
Smashits.com Illegal/blocked 830K 8.3M Dropped significantly between Jan-Mar
Dishant.com Illegal/blocked 570K 2.2M Dropped significantly between Jan-Mar
Musicindiaonline.com Illegal/blocked 320K 3.8M Dropped by almost 3/4th between Jan-Mar
Hummaa.com Legal 680K 2.6M No major gain between Jan-Mar
Gaana.com Legal 2.9M 16M Significantly moved up between Jan-Mar
Raaga.com Legal 2.2M 9.8M No major gain between Jan-Mar
Saavn.com Legal 1.1M 70M Significantly moved up between Jan-Mar
Dhingana.com Legal 1.6M 7.5M Actually dropped between Jan-Mar
Saregama.com Music Label 130K 230K No major gain between Jan-Mar

Source: DoubleClick AdPlanner by Google. All figures for March 2012 and for India traffic. K stands for thousands and M for millions. UV: Unique visitors. PV: pageviews

Most music companies believe that they can continue to do what they have been doing so far—recording the music, owning the copyright, and revenue should come to them automatically, even from newer channels. Legally, it is a valid stance. Practically, it is not.

So, what is the solution? It surely is not rocket science. Most of them know the answer; it lies in mainstreaming these sites and not excluding them. Medianama has carried an interview with Saregama CEO, who admitted as much.

We don’t want these sites to be shut down, we want them to pay a license fee and flourish as a business. There are legitimate businesses in operation too. The scope is there, and we want these sites to be legal.

But they must act. It should be right approach; right and transparent pricing. In another story, Medianama said that IMI was unwilling to share pricing. While sharing any exact pricing may be tough, it should reach out with a rough idea, because many of these sites are run by young kids in their 20s. They will not come running to get into sophisticated discussions.

It is not really lack of intention that is the problem with the industry. It is the discomfort with the disruptive changes. Take Saregama for example. It takes one step at a time. As a buyer of legal music all through, I have tried everything and can say with some authority how it has evolved. First came hamaracd but not with mp3. So, you could get around 10-12 tracks for Rs 300 or so. It won’t work half the time. Then came their current website with provision to download mp3s for a price. Then came a set of MP3 CDs—really beautiful compilations of old Indian light music—film, bhajans, ghazals—priced for Rs 75 for 40 songs. Almost all of them are gems. But try to look for them in any big store—Landmark, MusicWorld, Planet M—you will never find too many of those titles. The company site is silent about this series. Then came Flipkart’s Flyte, which made the downloads far easier and friendlier. Yet, unlike books, music is a mass market product and e-commerce with credit card/online banking is still pretty unreachable for many. Not surprisingly, cash on delivery has been the preferred mode for most e-commerce buyers in India. That is not an option in downloads.

With always connected devices, the future is clearly streaming. My own experience says that 80% of the music that I buy, I do not listen for more than 2-3 times. So, I will not mind if I can pay a very small price per listening a song. That requires a completely different kind of pricing. So, any song that costs Rs 6 at Flipkart Flyte should probably cost no more than 30 paise for listening once. This is not a suggestion by me based on any calculations, but just an illustration. The actual calculations may show even more dramatic pricing. What I want to point out is that it requires disruptive thinking.

But I must reiterate the point I made earlier. The bigger issue is ease of paying and not pricing. Even if it is 30 paise, a user with no credit card or online banking can do precious little. If, on the othe hand, the payment is through, say, a mobile, it is absolutely possible to target a much biggger base of users. It can be really simple. An SMS goes out with a code. Once the user enters the code, he can stream/download the music and it gets debited from his mobile balance. Yes, it requires talking to a couple of players—an operator/an independent payment gateway etc—but it is not impossible. And I am not stupid enough to believe that these ideas are my original and have not occurred to the bright guys who run the music business. Or for that matter, this is the only way it can be done!

The problem is not lack of ideas; it is not even lack of intention. It is just lack of strong will to disrupt a model that has been in place for so long. If the music industry does not do it, someone else will do it. Apple has already done it to a great extent, creating value for itself but making the music companies a little richer, which they seem . But as Apple without Jobs is beginning to face the possibility of an anti-trust trial in case of e-books, the closed model is being threatened.

As of now, the illegal web sites may be getting a few ads, which makes them sustain the business. But if they have to be in this business, they will have to charge the consumers or get targeted ads. These sites have to be convinced that they have to walk half way. The music industry must walk the other half. But as big boys, the onus is on the music industry to drive the change. Else, change will just happen—to them.

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Sorry Amazon, You Are Not Welcome

Today, the government notified what it calls the circular 1 of 2012, its fifth six-monthly update on Consolidated FDI Policy, since it began doing so in March 2010.

In one of the major clarifications that will impact e-commerce in India, the policy has clarified that “existing restrictions on FDI in domestic trading would be applicable to e-commerce as well.” Which means a foreign company cannot take either the automatic or government route to invest directly in a retail e-commerce venture in India. However, like in offline retail, it allows FDI B2B e-commerce. In short, all the rules of FDI that apply to offline retail would apply to e-commerce as well.

This is the first time that the government has clarified its stance on e-commerce. Earlier this year, in a column that I wrote in Dataquest, titled, Stoped FDI in Retail? Here Comes E-commerce, I wrote about this anomaly. “Online retail is not defined as retail by today’s government definition,” I pointed out that time.

Most of the e-commerce ventures, though, will not be affected, as few, if at anyone at all, has FDI investment. In fact, Amazon, which has been eyeing Indian market for a long time was not taking the big step anticipating this policy stance. So, it entered with junglee.com, a sort of marketplace, in the likes of eBay but targets different kind of sellers, mostly the e-commerce service providers. This India-specific services serves as an aggregator platform.

However, the market was rife with speculation that Amazon wanted to buy out Flipkart. It was even speculated that the two parties were in negotiation but there was valuation mismatch.

With this clarification, though, for the time being, any plan of Amazon to enter Indian market directly selling to consumers, has to be shelved.

 

 

 

 

 

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The Not-so-new Arguments of Protectionists

Politicians everywhere are the same. Many a times they are really ignorant. And many times, they just act ignorant. Then, there are the classic fundamentalists in a debate, who are dogmatic, and no logic would convince them. The most dangerous, however, are those who take help of logic and selective facts to argue their point. In reality, they are as dogmatic, but they use logic to project themselves as liberal rationalists because few know the facts and sources that they quote. They often shift the debate to a completely different point in which they may be on stronger wickets but that is of little relevance to the original debate. Apart from some politicians, many in this category happen to be from my profession: media.

I came across this post in ComputerWorld Blog, called Clueless in White House. The whole piece, taken on its face value, argues that the US Vice president Joe Biden “doesn’t know a thing about H1-B visa” and the president Barack Obama was evasive about a question related to US job loss and probably he is also ignorant. So what? Didn’t Michael Moore write about this long back? But that is not the point. What is it that the author is actually hinting at?

You get the answer to that when you read this other piece of his, Indian IT firms heading for a fall. It starts with the sentence, “Indian IT firms understand software but not America.”

And you know what to expect.

The piece cites a few lawsuits that have been filed against Infosys, TCS and L&T Infotech to argue that these lawsuits are the results of the Indian companies’  lack of understanding of America, American spirit and so on, with a conclusion that they are heading for a fall, which comes right on the headline.

It goes on…

The lawsuits are a problem for each of the companies. But taken together, the cases are a major threat to the Indian IT industry in America.

India’s IT firms are dependent on American businesses for about half of their revenue. They can’t operate in this country without work visas, such as H-1B and L-1 visas.

Indian IT firms are dependent on American business. That is a fact. But it is time to put the other side of the story as well: The American businesses are equally dependent on Indian IT workers.  

Anyone who follows the outsourcing trends knows that the share of US revenue as a percentage of overall revenue is falling for most Indian IT companies. The share of offshoring to India as a percentage of total outsourcing contracts in the US is on the rise year after year. Ten years back, Indian companies would not have survived without American business. Ten years hence, American business would not survive without Indian workers.

As Tom Friedman put it so well in his 2005 book, The World is Flat: America must choose the future and not the past.

But let us even forget all that for a moment. Let us go back to the original debate. What is it about? Is it about H1-B visas and L-1 visas? Well, that may the most immediate issue, but the actual debate is whether you need people from outside America to do some of the IT work more efficiently or not?

And let us, for sake of argument, assume that the US government decides it does not need foreign workers. In that case, it must say so rather than creating hurdles in the visa process.

And who is saying that? It is not just Infosys, TCS and L&T Infotech but Accenture, eBay, Microsoft, and GE as well. The letter that the industry sent to the president on this issue is signed by more American companies than Indian companies.

Protectionism is not about politics. It is about fear. America is still the most open society, the most innovative among large nations, and of course, still the biggest economic and military power globally. It may get concerned about employment levels but there is no reason to panic.

 

 

 

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Infosys: Its Real Contribution

Recently, Fortune magazine listed Infosys founder N R Narayana Murthy among the The 12 Greatest Entrepreneurs of Our Times. The list, dominated by Americans, has only two people outside the US. Interestingly, both of them happen to be from the subcontinent, Muhammed Yunus of Grameen Bank, Bangladesh being the other.

The piece on Narayana Murthy—like most of the other profiles—does not substantiate  too well why he is in the list. This is what the magazine says

He proved that India could compete with the world by taking on the software development work that had long been the province of the West. As one of six co-founders of Infosys and the CEO for 21 years, Murthy helped spark the outsourcing revolution that has brought billions of dollars in wealth into the Indian economy and transformed his country into the world’s back office.

Well, with all respect to Fortune and Murthy, I do not think this can actually be the reason bestowing the honor  on him. For Murthy was neither a pioneer nor an innovator as far as offshoring per se goes. Nor is Infosys, the company he co-founded, the largest among the lot. So, while he/Infosys could still be acknowledged  as one of the major forces that shaped this phenomenon, it is unfair on others to single him out for this.

The West, though, has always seen Infosys as the most important symbol of offshoring phenomenon. In his 2005 book, The World is Flat, Thomas Friedman wrote that the two biggest challenges to America were Infosys, which was “taking away” the American jobs and Al Qaeda, which wanted to destroy America. He portrayed Infosys as the symbol of the pro-globalization forces.

In fact, if anything, that is a lasting contribution of Infosys to Corporate India. It taught Indians how to market globally. Just when the world was waking up to the “The Rise of  PR” wave, Infosys taught the world in general and B2B companies in India in particular how to use PR effectively.

But again, the idea of the piece is not to suggest that it is PR that has made it what it is. For that matter, that is not the greatest contribution of Infosys to India, Indian business and the society in general, which is what I want to discuss here.

But before that, I would like to bust some of the myths that exist about Infosys.  I would like to reiterate that

  • Infosys is not the pioneer in offshoring per se
  • Infosys has not even pioneered any particular trend within offshoring industry (such as moving up the value chain by doing different things, globalizing delivery, movement to smaller locations, targeting newer markets, service lines etc)
  • Infosys is not particularly more innovative or disruptive than its peers
  • Infosys is driven by a good set of values but it is not among India’s top few companies when it comes to social responsibility
  • Infosys is no more one of the preferred employers among IT employees, as many best employer surveys show
  • Infosys, as the company is not hesitant to admit, is not particularly risk taking
On the other hand, Infosys’ contribution to Indian IT, Indian business, Indian economy, and Indian collective psyche are much more than these business parameters. Here is what I feel Infosys brought to us/changed in us.
  • The belief that middle class Indian values can be successful business mantras globally.  I think this is the single biggest contribution of Infosys and Murthy. In my college days (88-92), we had one of our batchmates who came from a business family. He always silenced us by saying that you cannot succeed in business by following the so-called ethics. Though he did grudgingly admit that Tatas and a few others are exceptions, he always pointed out that the formative years of all those companies were much older. In independent India, it was not possible. Most of us fumed but had no answer for him. Infosys single-handedly changed that perception. By doing so, it gave hope to millions of middle class youth that you could still stick to a set of values and be successful in business. What is more, you do not need to come from a “business background”.
  •  Transparency in business. Ethics and transparency are related but they are not the same. Transparency requires a proactive approach of sharing information with stakeholders, be in clients, investors, employees or partners. One of the classic statements of Murthy is, “When in doubt, declare.” That has been the guiding principles of its investor strategy. And many newer second generation companies have tried to follow that approach.
  • Setting new benchmarks in employee care.  As is rightly believed, Infosys created new standards with its approach to employee care. Its employee care strategy looked beyond the traditional HR parameters of pay, job satisfaction, growth etc to actually proactively make  the lives of its employees smoother so that their minds are not pre-occupied with too many issues. What Infosys did became the standards for the entire IT industry. Be it IBM or Acccenture or Indian companies, whoever wanted to be a player in the Indian offshore industry, had to play by the HR rules created by Infosys. Though it has been criticized—I myself have done that—for not changing with the time when the IT labor market became more like any other labor market anywhere else, with employees turning to more professional parameters than feel-good parameters, it had already raised the bar for ever. The feel-good HR may not be a differentiator for anyone anymore, but it is a filter, a bare minimum that you cannot ignore.
  • Sharing of wealth with employees. While Dhirubhai is credited with popularizing the stock market phenomenon in India, it is Infosys which can be credited for pioneering the concept of sharing wealth with a large set of employees through its ESOP. Though this is not really a pure innovation—it is the norm in many places—in India, Infosys can surely take the credit for this practice.
  • Making traditional Indian parents proud about their chilldren’s work and organization. One of the things that Infosys understood that parents and elders in India are actively involved in decisions about their children’s job choices. And it knew that the “secure” government job and a few in the private sector such as “Tatas” are always the first choice, it actively wooed the parents with proactively communicating what it stood for. Its great concern for employees, its sprawling campus (to which many parents come to see as if it is a pilgrimage spot), active communication of values that it stands for (which would appeal to any traditional parent in India) were all targeted at the parents. It did it for itself but that became a benchmark for most of the new companies that entered IT business.
  • Beating Americans at their own game. When Friedman wrote Infosys stands for the pro-globalization forces, he meant Infosys as a symbol of the offshoring wave. But Infosys is much more than that. While Tatas and Wipro are often hyphenated with Infosys, none of them comes anywhere close to Infosys when it comes to marketing and PR. HCL too is seen as too aggressive and sales-driven. While Wipro and TCS traditionally would not mind their sales people doing cold calling, Infosys ensures that the name itself does the trick in most cases. Whether it is Friedman or Fortune, the first name that they turn to is Infosys/Murthy. That is not a mean achievement for a company with headquarters in India, that too South India, where talking about oneself positively is often frowned upon. Unless of course, you know how to do it without sounding arrogant or verbose. Infosys has mastered that art. That too is a lesson for corporate India.

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