Sony Music buys 26% stake in Infibeam unit

Sony Music has taken a 26 per cent stake in e-commerce player Infibeam's digital entertainment technology company, Indent (Infibeam Digital Entertainment), the companies said in a statement on Tuesday.

The companies, which did not quote an amount for the transaction, said that they would invest Rs 100 crore over the next three years and expect to post revenues of $3 to $5 million in fiscal year 2013/14.

Indent, with which Sony Music has been associated since its launch about a year back, allows large and medium music labels in India and Internationally to engage customers and monetize by distributing digital as well as physical content under their own brand.

"The deal will help us give inputs and provide direction to the company," says Sridhar Subramaniam, President India and Middle East,Sony Music and Entertainment who says the music industry is a minefield of activities. About 800 companies operate and it is fraught with piracy and consumers who are not willing to pay, among other things.

In the past two to three years, there has been a prevalence of smartphones, pickup of data plans and a tremendous interest in streaming music or viewing videos, says Subramaniam, adding: "Now there is a landscape where without depending on telcos a lot of labels and a lot of companies can build their own products and services."

The music industry in India, hurt by piracy and lack of suitable alternatives, is only about Rs 1,000 crore currently, a much smaller portion of the revenues for operators that they get from music sales. "Consumers are ready to spend that kind of money," says Subramaniam.

However, as the music industry develops with instances such as the rumoured acquisition of Beats Electronics by Apple Inc, and Google's new music streaming service, along with several other players entering the market, the company expects people to move towards a subscription model from a download model.

"Earlier it was one device for a family, while now it is two-three devices per person and as accessibility becomes more important than ownership, people will move towards streaming," says Sachin Oswal COO & Co-Founder Infibeam.com. "As telcos evolve, people would increasingly switch to streaming, also intelligent streaming (cached music which would not need to be streamed again)."

Indent currently offers its service to Sony Music with its Jive software on its Xperia range of mobile phones, which the company has also launched in several Middle East countries and Indonesia. "We intend to launch into more middle-east and African countries over the next six months," said Oswal.

It also works with INRECO (The Indian Record Manufacturing Company Ltd) and is in talks with a couple of other companies for which announcements would likely be made in the next couple of months.

"The mobile ecosystem is evolving and soon music companies would start monitising from the consumers directly," says Oswal adding that the company's platform can be easily used to build different kinds of streaming and download services. "Be it some kind of an embedded service such as Jive, or applications like the ones available on app stores or branded products," says Subramaniam. "Infibeam can enable and empower these companies to build services by bringing a technology layer to their content."