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After big year, streaming tipped for new markets

California-based Music provider sees growth potential in Egypt along with other emerging markets

AFP , Friday 12 Dec 2014
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Streaming has rapidly transformed pop music's landscape but even more dramatic changes could be in store as companies eye the vast, barely touched markets of the developing world.

Spotify and its rivals were among the biggest music headlines in 2014 as streaming services quickly pick up new customers and also face intense criticism -- most famously from pop star Taylor Swift, who was the year's top artist on the US charts.

Swift and other detractors accuse the services -- which allow customers to listen to as much music as they want at the touch of a phone or computer -- of poorly compensating artists and hastening the death of the album.

But the debate may soon change markedly as streaming grows in emerging economies such as China, India and Indonesia -- where album sales have never been a major revenue source for the world's record labels.

Streaming could instead become a "leapfrog" technology like cellular phones -- finding its way into the hands of a burgeoning middle class that never had a tradition of keeping recorded music, -- in vinyl, CD or any other form.

Sensing the market changes ahead, Warner Music last month reached a deal with China's Tencent that includes streaming in the first such agreement for one of the three major record label conglomerates in the world's most populous nation.

One company that has noticed the rapid changes over the past year is Vuclip, a California-based company founded in 2008 that provides music videos and other content.

Vuclip leads the market for on-demand video in emerging markets.

"We've been around for seven years and we have seen an absolute shift in momentum," said Nickhil Jakatdar, Vuclip's chief executive officer.

"It's the Wild West out there. A year and a half back, we barely saw any competitors, but now every day I wake up in the morning and see that a new competitor has launched," Jakatdar told AFP.

The most significant reason, he said, was that mobile Internet access was quickly becoming faster and more affordable, making it feasible for a consumer of limited means to watch entertainment on his or her phone.

Vuclip predicted a growing market for videos that last between five and 10 minutes, an ideal size to watch during a commute.

Vuclip, which says it has 120 million users, has also put an emphasis on making billing simple for customers who may be unaccustomed to credit cards or complicated monthly plans.

Vuclip, which is not present in China, sees particularly strong growth in India, Indonesia, Malaysia and Thailand, as well as Egypt, Saudi Arabia and the United Arab Emirates.

But one challenge in emerging markets is the diversity of tastes, with Hollywood fare -- or, for music streaming, Western pop -- unlikely to meet consumer demand. As a result, companies have to approach each market separately for content licensing.

"The content that consumers care about is typically very, very regional in nature. A person in India cares about Indian content, and each state has its own market," Jakatdar said.

In contrast to Asia, Latin American nations share more tastes in common and music streaming services including Spotify, Deezer and Rhapsody have been quick to form commercial alliances.

The music industry's digital revenue from Latin America jumped 124 percent from 2010 to 2013, well above the global average, according to the International Federation of the Phonographic Industry.

Spotify has entered 58 countries or territories but not several big Asian nations, where local services have sprouted up.

Gaana.com -- operated by Times Internet which is India's biggest digital network and owned by The Times of India newspaper group -- lets listeners browse through thousands of playlists, listen to radio stations and features offerings from the top-20 Hindi songs to classical music.

India, set to surpass the United States as the world's second largest Internet population, can expect growth in digital consumption of music by some 22 percent each year until 2016, according to services company KPMG.

New Delhi entrepreneur Ravish Chawla, 28, said that streaming saved him space.

"Ever since Internet speeds improved, I've removed all digital music files from my devices. Whatever the number of music files in your phone, it can never match streaming services' archives," he said.

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