Economically active South African have cellphones, which are increasingly being used to take photos, and listen to music, instead of just sending messages or making calls.
Arthur Goldstuck, MD of research company World Wide Worx, expects that cellphones will become the primary music access device in the next decade. He says the music industry internationally has almost collapsed as downloads replace purchases.
Between 70% and 75% of the South African population are connected via cellphones, but less than 10% have access to the internet. “Cellphones are pervasive, the internet is still the province of the privileged,” Goldstuck says.
Locally, the music industry “is still trying to hold off the tide of technology”.
If digital music rights fall away — Vodafone has said it would drop the limitation — the industry will see more mobile uptake as people can backup songs as many times as they wish.
One company that sees a future in music via cellphones is Nokia, which will be launching Nokia's Music Store in SA. Earlier this month, Jo Harlow, head of devices at Nokia, said the company has sold more than 425-million devices with a digital music player and more than 700-million devices with an FM radio.
Jake Larsen, head of music for Nokia in the Middle East and Africa, says the global music industry is in the early stages of accepting that the digital distribution channel is the way forward.
“Big music groups, including Universal Music Group, Sony Corporation's Sony Music, Warner Music Group, EMI and thousands of independent labels are opting to sell songs and albums electronically with global giants including Nokia,” he says.
Keith Lister, CEO of Sony BMG Music Entertainment Africa, says music will not become exclusively mobile, although it is, and will increasingly be, an important technology. “It's not going to wipe out the rest of the music industry.”
CDs — a highly successful consumer products — are a tangible, emotional expression of who a person is, he says. He doesn't think CDs are losing out to downloads and mobile, but rather to the copying frenzy that had resulted from the iPod culture.
Musica MD Ralph Lorenz says the company has launched a mobile site, but CDs are still the biggest selling form of music. He says downloads through computers would only increase when the cost of broadband decreases and the quality and speed of internet connections improve.
Musica accounts for 41% of the CD market, 22% of the DVD market and 9% of the gaming software market.
Lorenz says there will still be a large portion of consumers that enjoys the physical shopping experience and tangible products. He says this has already been seen in the UK, where CDs have a strong physical presence despite cheap broadband.
While its web-based download site has been temporarily suspended, the Musica mobile download site has been launched and the company is in talks with local vendors on how best to market this offering, Lorenz says.
Lister says the industry is constantly working on finding new ways of making money off the music for which it is responsible. “Music has never been more accessible … we just don't get paid as much for it as we used to.”
Universal Music Publishing MD John Fishlock says the music industry needs to move with changing times, but people are still likely to browse in music stores.
“There are a lot of people who love the idea of sifting through music.”
The internet is a “major” worry, but its effect on the South African market has not been as dramatic as internationally, where internet penetration is much higher.
However, the cost of music, which has become cheaper in the past five years, will not become drastically cheaper if it moves to a medium that does not require a physical CD.
He says while a CD costs about R3,50 and recording about R100,000 to R500,000, a television campaign costs R500,000 to R1m and a video between R40,000 and R100,000. Music stores then add a markup to the discs of about 40% which includes their costs.
Moving online, or mobile, would still require that the track be converted to a digital format.
Larsen says there is resistance to change. “Some labels don't see the immediate need, nor do they want to relax controls on the distribution of their artists' music in order to explore the new digital world, because to do so would mean they would have to accept the need to change their own business models.”
But, a digital distribution channel offers a huge opportunity for local artists opting to distribute music digitally in SA and across Africa. “The real opportunity is selling music via the mobile device.”
Source: Business Day
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