The Hindu Business Line : Mobile ringtone biz goes off tune as piracy creeps in

PIRACY is almost synonymous with the music industry and now it is creeping into the flourishing mobile ringtone segment. Chartbusting music downloads may be bringing in lots of moolah for mobile operators. However, the music industry is now crying foul over the growing number of illegitimate downloads and under-reporting at various levels in the chain of content owners, aggregators, handset dealers and operators.

Highlighting the menace, Mr Vipul Pradhan, Chief Executive Officer, Phonographic Performance Ltd (PPL) — the licensing arm of the Indian music industry with 127 member companies, told Business Line, "Until now, the telecom industry has been legitimately paying for the music offered in the form of ringtones and caller tunes.

"But in recent months, piracy has crept into this business as well.

There is copyright violation with shops selling high-end phones with bundled content. Some of this content is illegal as neither permission is taken nor royalty paid."

Mobile operators, however, said that piracy is not happening at their end.

"There can be no way that any illegal downloads are happening from our servers as we keep an account for billing purposes. But there could be leaks at other levels in the chain," said a Delhi-based operator.

Forward-lock: Royalty is paid for the first download of ringtone, which is then passed on to other users free of cost. Mr Pradhan said, "Operators must device a method to lock forwarding on ringtones."

PPL has found out that piracy is also happening at the handset retailers' end.

These retailers offer free ringtones bundled with the phone without paying any royalty. Similarly, some pre-loaded micro-chips have also entered the market.

Under-reporting: Mr Pradhan said the quantum of music downloads is also being under-reported. Ringtone royalties are actually collected by companies known as aggregators such as Yahoo and Indiatimes. They convert songs into digital formats for playing on mobile phones and charge a fee. They give the royalties to the music companies and the performing rights society for distribution.

According to PPL, mobile operators in India are retaining a higher share of the revenues from music downloads.

While in some countries, operators keep only 10 per cent of the revenue, in India, it is as high as 50-60 per cent.

Music in telecom is estimated to be a Rs 150-crore market in India.

The global ringtone market is forecast to grow to $5.2 billion in 2006, and ringtones now account for over 10 per cent of the $32.3-billion worldwide music market.

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Mobile ringtone biz goes off tune as piracy creeps in