{"id":1936,"date":"2013-05-31T23:09:31","date_gmt":"2013-05-31T17:39:31","guid":{"rendered":"http:\/\/teekhapan.wordpress.com\/?p=1936"},"modified":"2013-05-31T23:09:31","modified_gmt":"2013-05-31T17:39:31","slug":"why-flipkarts-flyte-is-shutting-down-and-apples-itunes-wont","status":"publish","type":"post","link":"https:\/\/vivekkaul.com\/2013\/05\/31\/why-flipkarts-flyte-is-shutting-down-and-apples-itunes-wont\/","title":{"rendered":"Why Flipkart\u2019s Flyte is shutting down and Apple\u2019s iTunes won\u2019t"},"content":{"rendered":"

\"flipkart-flyte\"<\/a>
\nVivek Kaul\u00a0<\/span><\/span><\/span>
\nFlipkart is shutting down its digital music store Flyte. The company announced this in an email to its customers on May 29, 2013. For music lovers, Flyte was a one stop shop for almost all kinds of music. From Runa Laila singing Bangla folk to\u00a0Ilaiyaraaja’s soulful Tamil melodies from the 70s and the 80s. And of course it also had the most obscure Hindi film songs (This writer even managed to locate songs of a film called\u00a0<\/span><\/span><\/span>Shabash Daddy<\/i><\/span><\/span><\/span>, made by Kishore Kumar, which has some really soulful songs sung by his son Amit Kumar). It did not just cater to connoisseurs. All the latest music was available as well.
\nAt a price ranging from Rs 6 to Rs 15 per song, a lot of good music was available at one place. A winning proposition one would have thought. But things did not turn out as they would have been originally envisaged. And the digital music store is being shut down nearly 15 months after it was launched.
\nSeveral questions crop up here. Why did Flipkart shut down Flyte so quickly? How does Flyte compare to Apple iTunes which is more than a decade old and still going strong?
\nThe quick answer is that Flipkart is shutting down Flyte because it was a loss making proposition. And it was a loss making proposition because Indians do not like to pay for their music anymore. Everyone wants to download music for free. Or buy pirated stuff which comes very cheap.
\n<\/span><\/span><\/span>As Nikhil Pahwa writes on www.medianama.com\u00a0<\/span><\/span><\/span><\/span><\/a>\u201cFlyte Music had struck deals for India based music downloads on web and app by paying music labels an aggregate minimum guarantee (MG) of around $1 million (Rs 5.5-6 crores) for the year, multiple sources told MediaNama. Given the advent of music streaming services like Gaana*, Saavn and Dhingana, where users could stream music for free, but more importantly, the prevalence of piracy, the number of users willing to pay for a-la-carte music was fairly limited. Revenues from song downloads were fairly low \u2013 not even 50% of the minimum guarantee amount (only around Rs 2-3 crore is what we heard).\u201d
\nAnd if this wasn’t enough the revenues from this business were not growing as fast as from other businesses that Flipkart runs. \u201cMore importantly, revenues from Flyte Music grew in a linear manner, unlike Flipkart\u2019s physical goods business, which was growing exponentially, month-on-month. Flyte, with low revenues and low growth,\u201d writes Pahwa.
\nThen there were other issues. Many people now listen to music on their phones. And a lot of new phones came with songs inbuilt into them.\u00a0<\/span><\/span><\/span>As a report in The Times of India points out\u00a0<\/span><\/span><\/span><\/span><\/a>\u201cA service like Flyte also faces challenge from companies like Nokia and Sony that allow people who buy their smartphones to download millions of songs for free or at very nominal cost. Though these songs can be played only on specific devices.\u201d
\nSo this was the quick answer to why Flipkart shut down Flyte. Now to answer the second question as to how does Flyte compare to Apple iTunes. Why has iTunes been a viable proposition and Flyte was not? The easy answer here is that Apple is a great company and whatever they do has to turn out to be successful. But this answer is basically unfair to Flipkart, which has literally changed the way Indians shop. We need to get into little more detail.
\nThe need for Apple iTunes came up after Apple iPod was launched in Ocotober 2001. The iPod had two godfathers: the Sony Walkman and the Napster website.
\nAs John Mullins and Randy Komisar write in\u00a0<\/span><\/span><\/span>Getting to Plan B – Breaking Through To a Better Business Model\u00a0<\/i><\/span><\/span><\/span>\u201cFor Apple, there were some analogues to light the way, starting with Sony\u2019s Walkman\u2026 Further, some 26 million Napster users worldwide, sitting around in their jeans and t-shirts sharing their music files, made it clear that individual songs were just as much, if not more, appealing to music consumers than complete albums.\u201d
\nNapster was a peer to peer website from which music could be downloaded for free. It soon ran into copyright infringement as music companies got their act together and sued Napster and it had to shutdown.
\nSo the Apple iPod had a problem. Like Napster, it could also get into trouble if the music companies decided to sue it, for encouraging the proliferation of pirated music. As Mullins and Komisar write \u201cApple had officially entered the consumer electronics industry. But to complete the picture, Jobs (then Apple CEO Steve Jobs) needed a way to sell music as well. Let\u2019s use Gillette as an analogue: Apple was already selling razors (the iPod), but Jobs wanted to sell the razor blades (music), too.\u201d
\nAnd unlike Napster, Apple needed to do this legally. It needed to create some sort of a digital service, from which those who bought the iPod could download their music legally.
\n<\/span><\/span><\/span>\u201c<\/span><\/span><\/span>Jobs personally called individual artists\u2026 to persuade them to make their music available on the service. Apple was the first to negotiate and reach agreement with five record companies, allowing Apple to sell hundreds of thousands of songs from artists\u2026 In a revolutionary move Apple worked out a deal to sell (not rent) each song for 99 cents. Once they shelled out the cash, Apple\u2019s customers could keep their songs indefinitely, share them on as many as three Macintosh computers, burn them to an unlimited number of CDs, and transfer them to any number of iPod portable music players,\u201d write Mullins and Komistar.
\nThe iTunes website launched in April 2003, caught the fancy of people, and on its first day, sold a million downloads. But it barely contributed to the revenues of Apple. On a standalone basis iTunes wasn’t probably worth the effort. As the authors write, \u201cOf course, no one was really going to fill an iPod with thousands of songs at 99 cents each. Sure enough, by 2007, only about 3% of music on iPods was downloaded or copied from the iTunes music store. The rest was downloaded from other places and was therefore, unprotected and playable on any device. But Apple didn\u2019t care.\u201d
\nSo on its own Apple iTunes did not probably make sense but Apple still persisted with it due to various other reasons. \u201cThe iTunes music store completed the user experience, and as long as the critical mass of people bought at least some of their music from iTunes site, Apple could keep itself out of trouble with the Recording Industry Association of America (RIAA). Shrewdly, Apple had turned the traditional \u201crazor and razor blades model\u201d on its head: Apple could make its money selling razors \u2014 the growing assortment of iPods \u2014 even if customers continued to steal most of the blades,\u201d write Mullins and Komistar.
\nCut to 2013, how do things look for iTunes now?.\u00a0<\/span><\/span><\/span>For the period of three months ending March 30, 2013<\/span><\/span><\/span><\/span><\/a>, Apple posted a revenue of $43.6 billion.\u00a0<\/span><\/span><\/span>Of this nearly $4.1 billion or almost 9.4% came from iTunes<\/span><\/span><\/span><\/span><\/a>\u00a0and other software services. So the share of iTunes in the total revenue posted by Apple has gone up from 3% in 2007 to nearly 9.4% now. If we look at the period of three months ending March 30, 2012, Apple posted a revenue of $39.1 billion. Of this nearly $3.2 billion or around 8.2% of the revenue came from iTunes and other software services.
\nThe contribution of iTunes in the overall Apple business has gone up in the decade since it was launched. What does this tell us? Well people are still listening to a lot of pirated music but a whole lot of people are buying music as well. This may be due to the convenience of finding different kinds of music at one place. Also while downloading from iTunes one is assured of the quality of the song and there are no risks that one might face on peer to peer networks or websites that let users download music for free. Or for the fact that people genuinely want to pay because if they don’t, how are those creating music expected to make a living. If people can pay for books, why can’t they pay for music as well?
\nApple iTunes took nearly a decade to start making a substantial contribution to the total revenues of Apple. But during that period it supported the other business streams of Apple. And even though it may not have made sense for Apple to run the business on a standalone basis, it did save them a whole lot of trouble they could have otherwise faced from the music industry. Flipkart’s Flyte did not have the same kind of luck. Neither could it supported by the other divisions.
\nAlso, all new concepts don’t catch on automatically. Some concepts take time to mature. And during that time need to be supported by the company. Of course, that is easier said than done. In case of Apple iTunes that had been possible, but in case of Flipkart’s Flyte it was not. Flyte had to be revenue spinner on its own and if not that at least show some growth potential, which it did not.
\nHaving said that, if Flipkart had found some way of keeping Flyte going, it could have been a potential money spinner in the years to come. Because Flyte is an idea, whose time will come.
\nThe article<\/a> originally appeared on www.firstpost.com on May 31, 2013<\/span><\/span><\/span>
\n(Vivek Kaul is a writer. He tweets @kaul_vivek)<\/b><\/i><\/span><\/span><\/span>
\n\u00a0<\/span>
\n\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Vivek Kaul\u00a0 Flipkart is shutting down its digital music store Flyte. The company announced this in an email to its customers on May 29, 2013. For music lovers, Flyte was a one stop shop for almost all kinds of music. From Runa Laila singing Bangla folk to\u00a0Ilaiyaraaja’s soulful Tamil melodies from the 70s and the … <\/p>\n

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