Middle East arm has entered into sales agreement with souq.com to combat illegal file sharing
If you can't beat them, join them. Well, not exactly.
The Middle East operations of the music label EMI have decided to sell its CDs through an online presence. To do so, it has entered an agreement with Souq.com, a portal which has built up a fairly sizable following in these markets.
This comes at a time when illegal downloads of music files in the region have reached menacing proportions for the leading labels. No sooner does an artist release a new album than it will show up on some illegal file-sharing site. This is coupled with a significant drop in sales of music CDs at the brick-and-mortar stores in the region, putting many of the retailers at risk of closure.
So there is a lot riding for EMI in its need to make a full-on impact through its presence on Souq.com. Abhijit Mitra, managing director of EMI Music Arabia, puts his points across forcefully on the rationale.
GULF NEWS: It's being said that store-led sales of music CDs are virtually non-existent in the Gulf after getting hit by illegal downloads. Is the creation of the EMI Music Store on a portal a response to that?
ABHIJIT MITRA: Global sales of music are currently close to $16 billion (Dh58.72 billion) of which physical album sales account for more than 71 per cent. Surveys indicate that 11 per cent represent CDs purchased through online retailers.
Hence we are simply filling a niche in the local market. This reflects the global trend and complements other channels of distribution and offers more choice to consumers. The launch on Souq.com is more of a recognition that physical music sales still remains a substantial part of the music market.
We also found a lot of consumers in this region are already purchasing music from similar global suppliers of music and have this delivered to locations across the Middle East. We believe that providing a more convenient regional service is what the market is looking for right now.
Unless there's a value proposition, music buyers still might find it difficult to sign up with what you are offering. So, what's your value proposition?
We think customers will choose to shop on the EMI Music Store on Souq.com for a number of reasons. Firstly, we have developed an Arabic interface which is essential for customers' convenience in this region.
We believe the site will be very popular with a large section of residents because the range that will be available on the EMI Music Store will include a vast selection of Arabic artists apart from a huge bouquet of international acts available for the first time online in the Middle East.
With various methods of payment, including cash on delivery, it will be easily accessible to everybody and especially to those who do not have access to credit cards or who live in more remote areas of the UAE.
Thousands of albums will be available initially with all genres of music catered to. The collection will include a selection of music that may not normally be available in-store and will include rare merchandise and album selections.
Furthermore, the core catalogue of music that is available on Souq.com will be delivered to the customer on an average of three to four days, if albums are in stock.
It is a convenient and cheaper way to shop for music when you take into account international shipping times and costs from other suppliers.
Lastly, the EMI Music Store on Souq.com is easy to use and navigate through and is a very convenient way to shop from your home.
At stores, music CD prices are still stuck in the Dh45 and Dh55 range. Do you feel there's a chance it could drop in the near future?
Most of EMI Music CDs come at different price points, from international artists, to local music which includes Arabic, Levant and Khaliji genres. With local music we have more control on the operating costs and we have seen the prices drop in the past few years. With international music our pricing has been stable for years despite increased operating costs to our business model.
At some point, would you look to offer shoppers a chance to pay and download individual songs of their choice? Why haven't you considered such a delivery model even now? Has it to do with the regulatory environment?
Offering customers a service for digital music is a key priority and we are already working with partners to provide this service. Moving to growing non-physical is a normal progression across the world and while currently this region is lagging behind some other parts of the world, we expect to move fast down this road and play catch up within the next couple of years.
The recent recession and unrest in the region did slow down the process. With the launch of the EMI Music Store on Souq.com we are one step closer to providing more choice and access to music for our customers.
Will delivery take place to any mailing address in the region? Are you subsidising the logistics costs?
The regular catalogue music available in stock will be delivered to customers on an average in three to four working days, if available in stock. Souq.com's ‘Safe Pay' service guarantees customers secure transactions.
Customers will benefit from reduced logistical costs and lower overall cost, especially when purchasing multiple CDs. We are launching the service to customers in the UAE initially and plan on developing our channels across the GCC and Egypt during 2011.
Any plans to recreate the concept on other regional online portals? Or is the deal with Souq.com an exclusive one?
Our objective is to provide more choice for customers to purchase safe and legal music. So, while we have launched the EMI Music Store with Souq.com we cannot rule out the potential of working with other partners in the future.
Going forward, would you lessen your dependence on CD sales through brick-and-mortar retail stores?
Our main focus over the following year is to give customers more access to our music and our artists. We are working with various partners to make this happen, including telcos, online digital stores and brick and mortar stores. Each medium has a role to play and each remains important for us.
We know our customers like owning physical music collections, but we recognise there is an insatiable appetite for digital music and we need to move with consumer demands. We will have lots of developments in the pipeline during 2011.
Will your collection feature only international artists or offer a more eclectic mix?
The EMI Music Store on Souq.com will provide every type of music from jazz to classical, funk, rock and even Disney CDs will be available through the store. Initially when we launch the store over 6,000 albums will be available which will keep growing.
EMI Music Arabia is one of the leading licensees of local Arabic content for the Middle East and North Africa and passionate about supporting emerging artists in this region.
In overseas markets, has this kind of delivery model helped CD sales?
Yes, you only need to look at Amazon.com to see how successful this model has been for consumers in Europe and the US. We believe that the EMI Music Store on Souq.com will be suited to customers who like shopping online and those who are looking for value and convenience at the touch of a button and those who are interested in specific genres of music.
Do you feel the tide can ever turn against illegal music downloads?
It is without question a difficult time for the music industry globally and is not restricted to this region. Illegal downloading of music has changed the very nature of way the industry operates, our business model, how we provide support for unsigned and emerging artists to the loss of jobs and loss of revenue for artists.
It has been proven that consumers will migrate to consumer friendly legal services such as Spotify or iTunes if they have the opportunity.
We believe that in order to tackle this issue the industry needs to work together with the authorities to educate consumers while also discouraging illegal music websites and downloading of music.
In addition we need to deliver more touch points for the consumer so they can access our music easily, quickly and conveniently. Once this point is achieved we will be able to reduce the cost to the consumer and provide more choice.
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