Around Asia'a Key Markets: Music Industry Overview

MUSIC IN

INDONESIA TODAY

Presented By : Gumilang

Ramadhan PT. Musica Studio’s

Physical Sales 1996

2010

2011

2012

2013 Until April

77 Millions

11 Millions

15 Millions

15 Millions

3 Millions

RBT Era

•  September 2004 to October 2011, Indonesia manage to gather 25 Mio Subscribers across all telcos

Digital RBT Sales

RBT Subscriber

2005

2010

Current

5 Millions

25 Millions

5 Millions

Details 1996 2010 2012

1.   Mobile Phone User 40 millions 180 millions 240 millions

2. Total Music Store/Chain +/- 400 +/- 300 +/- 200

3. Total Physical Distributor

26 26 18

4. Total Live Music (Tour) Top 10 Local & Int’l Artist

- More than 3000 gigs

More than 4000 gigs

5. Total Physical Bundling - +/- 4 millions +/- 9,5 millions

Details 2005 2010 2011 (until Oct)

2012

1. Total iTunes Indonesia Store

- - - Just started

2. Other Digital - - +/- 10 % of Total Market

+/- 10 % of Total Market

•  Local Music : 80 % •  Int’l Music : 20 %

International vs Local Repertoire

1. 360º Deal a. Artist Management b. Recording c. Publishing

Unique Market

2. Bundling a. Physical Bundling b. Digital Bundling

1.   To Minimize Digital and Physical Piracy 2.   To Panetrate a new Niche Market 3.   To Panetrate New Bundling Partners 4.   To Maximize ExisLng New Digital PlaMorms 5.   Start to Collect ReproducLon Rights From Karaoke Lounge

(more than 1000 outlets with min 10 karaoke rooms) 6.   We Need To Persue On Sound Recording Performing Rights

Law

Challenges

Thank You

India Music Update Mandar Thakur COO Times Music

•  Industry consolida8on as players come together for common physical distribu8on networks

•  Digital revenues contribute between 60% – 80% in most labels today (up from 50 % about 3 years ago)

•  Sheer nature of top selling content like Bollywood Film music (already in a audio visual consump8on format – necessitates video plaLorms and their rise)

•  Growth of smart devices: already 30% of all devices are internet enabled & growing at CAGR 34%-‐ which effec8vely means consump8on paUerns of music will change from IVR based to digital streaming and subscrip8on services

•  iTunes launched in India in December 2012 at a price point of US 20-‐25 cents per song – lowest price point in the world

•  Local streaming services Gaana, Dhingana and Saavn are seeing strong growth and à-‐la-‐carte download services are beginning to emerge. Youtube viewership gaining trac8on (aided by portable mobile devices) – Music is one of the largest drivers

4G/LTE to be launched in 2013 end (with expected adop8on of 4G users reaching 5 million by 2014). What this means is that all the dots in the Indian ecosystem to foster high speed streaming music/video consump8on are now in place namely: ü Smartphones (sub 30 US$); ü High speed LTE connec8vity (120,000 KM); ü Content availability with a very simple licensing structure; ü Major global music services present and entering; ü A high spending middle class

India – Music/Entertainment Landscape

India – Music/Entertainment Landscape

•  Size of recorded music market in US$ –  The Indian music industry is projected to achieve revenues of INR 1,160 Cr.(US$215mm)

in 2013, registering a growth of 9%+ over 2012. –  In India, film music (both Bollywood and regional film music) con8nues to be the mainstay

of the music industry, contribu8ng approximately 70% (depending on topicality) of the industry’s revenues

–  However, what is extremely important is -‐ with the emergence of digital streaming/subscripDon plaEorms and greater channels of music discovery, consumers are now being exposed to newer genres, leading to a growing demand for non-‐film music and consumpDon outside Telco dominated ‘walled gardens‘. These include a higher poten2al for Interna2onal music sales in India.

–  IFPI-‐2013 report : India moved up to #14 on IFPI Music Sales ranking by country •  Physical/digital split

–  Physical: 30%; Digital: 70% •  Domes8c/Interna8onal as % of respec8ve plaLorms:

–  Physical: 5.5%, –  Mobile -‐RBT primarily: 1.5%, –  Digital -‐led by itunes: 25%+ (also includes subscripLon/ streaming, others)

New Film55%

Old Film30%

Non-‐Film & All Else15%

Mobile Music

New + Old Film66%

Devotional / Classical / Non Film22%

Intl7%

Regional5%

Physical Music

Bollywood60%

Non Film25%

Intl15%

Digital MusicCross Medium Genre-‐wise Breakup

US$ 1.1~1.8 (MVAS ARPU) – TRAI AR FY12 The rapid growth in smart

phone ownership, growing 3G access, launch of 4G and rising household broadband adop8on, are opening doors to new business models.

Major legi8mate services (web-‐based): iTunes, Nokia Music Ovi, Gaana, Saavn, Dhingana

List in order of Revenue generated: • Telco based music subscrip8on services (RBT subscrip8ons and mobile radio) • Music streaming & subscrip8on services viz. Saavn, Dhingana, Gaana etc. • Video streaming/subscrip8on services – YouTube, DailyMo8on, BoxTV • A la carte downloads (iTunes, Nokia Ovi, Flyte)

Digital Landscape

Mobile95%

Internet5%

Digital Sales Breakup -‐ 10-‐11

Mobile80%

Internet20%

Digital Sales Breakup -‐ 11-‐12

CRBT60%

Mobile Radio20%

Downloads & Streaming

20%

Digital Sales & Product Breakdown

Punjabi40%

South Indian 36%

Bengali16%

Rest8%

Regional Content share breakdown

Ringback tone70%

Mobile Radio12%

Ring tones & images5%

Full track downloads &

services13%

Product based breakup of mobile music

Digital Landscape

Live Business Overview ü 2012 had been a big year for Live music industry in India with around 17 Interna8onal acts performed. ü The Indian Live Industry comprises broadly of Brand Ac8va8ons (26%), Managed Events (72%) & Owned IPs (2%). It is es8mated to grow to US$ 900mm in 2013-‐14 growing at Y-‐o-‐Y 20%. 2013 has seen a Y-‐o-‐Y growth of 28% ü Labels and event organizers are seeking to build enduring brands around music plaLorms, events and services. ü Several lifestyles brands are associa8ng themselves with live music events and concerts in order to engage with target audiences and create an experien8al property, e.g.

• Eristoff Invasion, Bacardi NH7 Weekender, The Great Indian Oktoberfest, and Percept’s Sunburn, Universal Music Group has started a ‘music launcher project’ for HP, Coca Cola India’s Coke Studio@MTV, Bacardi India’s Dewarist

24.0%19.0%

14.0%16.0%

14.0%14.0%

19.0%17.0%17.5%

13.0%13.0%

Digital activationsSports

Corporate eventsExhibitions

B2C awards, ContestsBrand events

WeddingsActivation campaigns

Industry AverageB2B awards

TV game show production

Expected category growth rate

•  The past year has seen a phenomenal explosion in the Indian independent music , art and culture ecosystem

•  This industry has seen a financial year on year growth of 28%

(Source : Events and Entertainment Management Associa8on, Ernst & Young)

From a paltry number of 9 in 2010, the number of art/music/lit fes8vals in the country has grown to 75 + this year.

From an average aUendance of 700 people in 2010, alterna8ve music concerts /fes8vals in India register an average aUendance of 7500+

audience of high spending Urban Youth

An average weekend spend at a music fes8val stands at Rs 20,000 (US$400)+ per person

(Data gleaned from OML fes8vals over the past 3 years)

Publishing Business Overview

•  Presence of Interna8onal publishers from 2006/7 •  Warner Chappell Music Publishing (represented by Times Music) •  Universal Publishing India (fully owned en8ty) •  Sony ATV Music Publishing (joint venture with Sony Music India) •  The Copyright (Amendment) Bill, 2012 has been passed in May 2012. This has been

welcomed by writers and composers of music as it gives them ownership rights for their works and recognizes mechnicals

•  India is incorpora8ng interna8onal and WIPO (World Intellectual Property Organiza8on) norms into exis8ng laws. The new act specifies that the authors (lyricists, composers etc.) of underlying works and assignees (publishers) are each en8tled to equal shares of royal8es received.

2012 Taiwan Pop Music Industry Market Survey

Pop Music Industry-‐ Na8on-‐wide Value Es8ma8on

•  According to this research, Taiwan’s popular music industry is valued at 3.49 hundred of million US dollars. (This excludes fiscal income from travel, transporta8on, adver8sement, and entertainment industry and other addi8onal values from transna8onal or cross-‐industry coopera8on.)

Profit From 2009 (Million USD) 2010 (Million USD) 2011 (Million USD)

Record Company 109 115 102

Digital Music/ Media Service Provider 32 39 55

Live Performance 59 62 123

Music Copyright (Corporate Sales) 11 15 13

Music Copyright (Karaoke and Videos) 28 58 56

Total (Pop Music Value) 239 289 349

170

71

25 37

27

9 19

51

12

109

148

121

103

41

0

17

56

264

0 0.7

23

0

45

274

0

49

15

160

141

0

38

0

50

100

150

200

250

300

Albu

m Sales (P

rodu

c8on

Costs includ

ed)

Copyrig

ht Autho

ri8za8o

n

Ar8st R

epresenta8

on

Live Perform

ances

Digital M

usic

Others (Project reven

ue etc.)

Music Dow

nloads

Mob

ile Service (R

ington

es)

Mob

ile Sub

scrip

8on

Broadb

and Stream

ing

Others (Internet M

ainten

ance etc.)

Ticket Sales

Venu

e Re

ntal

Merchandise

Corporate Spon

sor

Music Edu

ca8o

n

Others

Ticket Sales

Venu

e Re

ntal

Merchandise

Corporate Spon

sor

Music Edu

ca8o

n

Others

KTV (Cop

yright Royal8e

s)

Dining

Karaoke Re

cordings Ren

tal

Others (Karaoke Machine

Sales etc.)

KTV (Cop

yright Royal8e

s)

Dining

Karaoke Re

cordings Ren

tal

Others (Re

tail prod

ucts, m

isc. )

Record Company Live House Promoter KTV Distributor KTV Venue Digital Service

Pop Music Industry-‐ Profit Dynamic Breakdown Million US do

llars

Pop Music Industry-‐ Opera8on Gross Profit Analysis

102

55

123

13

294

90

54 59

6

213

12.24%

0.31%

51.92% 50.13%

27.7%

0

10

20

30

40

50

60

0

50

100

150

200

250

300

350

Record Company Digital Music Service PlaLorm Promoter Copyright Management Associa8on KTV Business

Gross Profit % Million USD

2011 Pop Music Industry Gross Profit Analysis

Input Output Gross Profit

Through observa8on and comparison, we can see that Promoters share the highest gross profit at 52.92%. Copyright Management AssociaLons follow secondly at 50.13%. KTV business (venue and distributors) hits 27.70%. On the other end, Digital Music Service PlaMorms has the lowest gross profit of 0.31%.

Pop Music Consump8on Characteris8cs

Subject Album Live Performance

Digital KTV

Average amount (USD)/ per year

$63.49 $81.45 $64.20 $103.33

Consump8on Frequency

2-‐3 8mes a year

2-‐3 8mes a year

Pay by monthly 2-‐3 8mes a year

Consumer Feature

Income and consump8on are directly propor8onal

-‐  Northern Taiwan avg. USD$129.16

-‐  Southern Taiwan avg. USD$93.57

The most popular service is KKBOX

-‐  Male -‐  Higher-‐income

35% of the naLonal populaLon regularly consumes pop music products: In 2011, the other 65% does not purchase music products.

SINGTEL INNOV8 China Music Market May 23, 2013

China Music Market

1.1 Consumer usage trends

27 Source: CNNC, iResearch June 2012

Service No. of Users (Millions) Usage ProporLon (%) 6-‐Month

Growth Rate (%)

Instant messaging 445 82.8 7.2

Search 428 79.7 5.2

Music 410 76.4 6.4

News 392 73 6.9

Personal sites/Social 353 65.7 10.9

Videos 349 65.1 7.6

Games 331 61.6 2.1

China Music Market

1.2 Market Trends •  Physical – immaterial

–  “The physical market has prac8cally disappeared” China Record Working CommiUee

•  Digital – a lot of units, not a lot of money –  China digital market is US$205m in revenue (2011) –  280 billion units downloaded/streamed (2011) –  Pay model vs adver8sing

•  Video – the new fron8er

28

China Music Market

1.3 InternaLonal vs. Local Repertoire •  LiUle interna8onal influence but growing

–  Live performances by interna8onal acts are notoriously difficult to organize

–  Taiwan, Korea, Hong Kong and Japan

29

China Music Market

1.4 Recent industry moves • MP3 Search licensing deals

–  Labels and internet players come to the table

•  Sites gain trac8on by offering free music to users – Unable to mone8ze current music services offered –  Instead pay one-‐8me/annual licensing fee to labels

30

China Music Market

1.6.1 Growth OpportuniLes •  July 1st, 2013

–  95% of the China digital music market will begin charging for quality copyrighted music downloads

–  Streaming remains free

•  Digital Music / Hardware partnerships –  Ex: Tencent QQ Music / Sonos partnership

•  Tencent’s digital music team has partnered with over 10 Audio / TV manufacturers since 2012

31

China Music Market

1.7 Trends •  Digital Na8ves versus Mobile Na8ves •  China coming out • Mobile video

– Online video 10% of views in the US and China versus 50% of views in Japan and over 70% in Korea

• Mul8channel Networks/Audience Aggregators •  An adver8ng model that works for music

32

Confiden8al and Proprietary 33

Korea: Music Industry Overview"

May 23, 2013 / Singapore"Q Chung"

Managing Director / Sony Music Korea Entertainment Inc."


"• Digital: 10th"

• Physical: 11th""• Synchronization: 23rd"

"• Performance rights: 29th"""

Total market: 11th""

Korea World Ranking in Recorded Music Market"

(Source: IFPI)


Digital Sales vs. Physical in Korea"

(Source: IFPI)

0"

50"

100"

150"

200"

2008" 2009" 2010" 2011" 2012"

Physical"Digital"

52%

45% 45%

45%

56%

48%

55% 55% 55%

44%

(US$ Million, Trade Value)

'Korea was the 1st music market in the world where digital surpassed physical sales in 2007'


International pop vs. Domestic pop (%) in Korea"

(Source: IFPI)

2008 2012

International"30%" Domestic"

70%"

International"16%"

Domestic"84%"


韓流 K-pop goes Global"

Billboard Magazine │ January 19, 2013"


"• Most advanced wired and wireless country in the world"

"• Korea is one of the top 4 net export music countries in the world"

• Open dialogue with and strong support from the Korean government"

• Local digital music portals dominate the local music market

• Local music market driven by artist management companies and local " conglomerates"

Unique market characteristics and strengths"


Korean Digital Music Business"

40%"48%"

53%"43%"

16%"

23%"

20%"

22%"37%"

74%"

14%"10%"

8%"

23%" 22%"17%" 20%"

10%"

0%"

20%"

40%"

60%"

80%"

100%"

2008" 2009" 2010" 2011" 2012"

Other"Ad-supported"Subscriptions"Downloads"

(Source: IFPI)


"• How to maintain the overseas K-Pop boom"""• Lack of industry standards : Awards, Charts and ISRC"

• Digital Pricing not appealing to RO and Artists"""• No global digital music stores/services in local market"""

Challenges"


Growth opportunities ""

• Advanced Digital Infrastructure"

• Potential of International Digital Services launching in Korea"

"• Massive Growth in Live and Artist management business"

• Stronger Copyright Protections"

• Diverse and Dynamic K-pop repertoire""


PSY"

•  Release ‘GENTLEMAN’ (Apr. 12th)"•  Seoul concert at World Cup Stadium" (Apr. 13th)"•  Currently promo tour in North America"


Cho Yong Phil"

•  Legendary K-pop Artist"•  Release his 19th album ‘Hello’ (Apr. 23rd) "•  Dominate every K-pop chart"


2PM"

•  Tokyo Dome Concert"•  Apr. 20th ~21st "


Super Junior"

• Latin America tour "• Apr. 21st ~ 27th"• São Paulo, Buenos Aires, Santiago, Lima


Yiruma"

• K-pop Producer & Pianist"

• Germany Tour" : Berlin (Apr. 5th) ""• Australia Tour" : Sydney & Melbourne " (May 2nd ~ 8th)"


G-Dragon (Big Bang)"

•  Hong Kong Concert"•  May 17th"


Jason Mraz & Kim Jong-un (North Korea Leader)""• SNL Korea "• Last Saturday "

JAPANESE MARKET OVERVIEW

Ken Ohtake Music Publishers Association of Japan

Physical vs Digital

85% : 15%

$3.6 billion

Local vs International

87% : 13%

$468million

Uniqueness

Artist Fans≫ Music Fans

Opportunities

Streaming(Challenge?)

Vibrant Live Music Scene

Music Export