Sony Music India: E-Commerce Strategy and Digital Adaptation

Introduction

Sony Music India (SMI) is a wholly retained subsidiary of Sony Music Entertainment (SME). The company established operations in India between 1996 and 1997 to market both international and national music titles throughout the country. Because of its success and use of state-of-the-art technologies, SMI has become one of the most advanced music companies in India. Customers value the added services SMI offers, especially when they decide to launch a digital platform for their music and other projects.

India has experienced a significant boost in music sales thanks to growing e-commerce adoption. The international music industry, through platforms like iTunes and SoundCloud, provides consumers with diverse choices for music consumption, making companies like SMI feel compelled to compete by generating their own presence within the digital music space. In response, SMI launched an "e-initiative" that enabled music lovers and other users to visit www.sonymusicindia.com to access information, interact with customer service, and purchase music online. Essentially, SMI created a platform for personnel to manage the cyber-mall through an internet-based management system.

SMI began developing its e-commerce application using Microsoft Commerce Server 2000. According to the company's technical documentation, "The architecture incorporates the 'n-tier' technology which enables the system to seamlessly integrate and interoperate between heterogeneous systems" (Sony Music India, 2014). This technological approach made the design reliable, scalable, and entirely automated, enabling smooth and seamless order processing. The e-commerce initiative was further supported by ASP with SQL Server 2000.

E-Commerce Application and Technology

The e-commerce initiative offered several key features: secured online buying, order processing and management, catalog management, site administration, and a listening post. Secured online buying meant that customers could safely use their credit cards online as a form of payment through integration of secure payment access. Order processing and management was integrated within the site through a third-party agency to assist in order fulfillment. As documented, "All orders placed on the website are routed to the order fulfillment agency and once the orders have been dispatched the same is updated on the website" (Sony Music India, 2014).

The catalog management system allowed SMI to continually update their catalog of music and entertainment titles in real time. The system was designed so SMI could update according to inventory availability through batch upload using a flat file. The administration module checked stock availability, processed orders, and tracked all activity on the site. Examples included determining "the albums that should be displayed on the Home Page and the priority of these items, the banners that should be displayed, etc." (Sony Music India, 2014).

Integration of listening posts assisted users by offering them the opportunity to preview music before purchase in both Hindi and international languages. This feature helped consumers make informed decisions when purchasing music while preventing piracy—the site did not allow downloads of the music users previewed. It was a simple yet effective means of controlling information displayed on the website while serving customers interested in discovering new titles.

Although an e-commerce website had been integrated into SMI's operations for several years by the time of this case study, significant hurdles remained. To match the advanced customer service and order processing capabilities of overseas competitors, SMI would need to expand beyond music. iTunes, one of the leading digital entertainment platforms, had long satisfied customer needs by expanding into television programs and movies. If SMI could integrate additional content types into their e-commerce platform, they could potentially develop greater demand among Indian consumers and reach international customers.

Technology in recent years has created a significant shift in the music industry, particularly visible in India, where music was traditionally bought and sold without digital platforms. Physical media sales—CDs and tapes—have declined while digital platform sales have increased. The primary digital platform operating in India historically ran through the telecom business, but Indian consumers have increasingly begun accessing music through tablets, smartphones, and mobile devices, prompting companies like SMI to reconsider how they sell and market music.

Economics of the Indian Music Industry

Alongside mobile device access, artist business models have transformed, with independent artist models gaining prominence and resulting in increased market fragmentation. Fragmentation has reduced the roles of traditional recording companies and created distribution challenges. Music streaming and e-commerce sites fundamentally changed how consumers purchase and consume music and entertainment. Sony, which owns approximately one-quarter to one-third of the mobile music market segment, identified a major opportunity to construct the next stage in its international music business. According to industry analysis, "It appeared that the best way to shape the highly fragmented market was to create a compelling product strategy and develop the business" (Mani, 2013, p. 1).

Indian music has a rich history spanning hundreds of years. The first instance of recorded music in India began in 1901. EMI Music, a London-based company, entered the Indian market by founding the Gramophone Company of India Limited, which still exists today under a new name, Saregama. Within 15 years, the company had grown to manage over 75 brands and record labels within the Indian market. Presently, very few survived the onslaught of new technology, music-centered monopolies, and digital platforms.

The Indian music scene in the 1960s was dominated by a monopoly generated through mergers involving GCI (Gramophone Company of India). Nearly all music available in India at that time came from Hindi cinema, records, and radio. Hindi films became the primary platform to sell and distribute music. In fact, the recording industry purchased movie rights from film producers to control record sales throughout the country. In the 1970s, control intensified further, allowing formation of a business oligopoly consisting of prominent music film directors and GCI. This dominance changed in the 1980s with financial liberalization policies first introduced in 1978.

Evolution of the Music Industry and Sony's Response

Indian music experienced increased competition as the cost of producing music decreased. With low production costs, many new players entered the market, and piracy became widespread. Although the power of GCI and other major players decreased, piracy affected the level of profits within the Indian music industry to some extent. To compete and increase sales during the 1980s, use of television and radio to market music became dominant marketing platforms.

The 1990s brought compact discs (CDs) and increased promotion through television. The new millennium and its ever-expanding online platform enabled digital music libraries, e-commerce websites, and online stores from which consumers could purchase songs from any artist or genre. To compete with existing digital platforms of competitors, SMI had to create its own e-commerce website.

Sony Music India, much like its predecessors, had to redevelop and strategize to meet the needs of its newest consumers. Using a website to preview and make available national and international titles was a significant step for SMI in branching into new music distribution forms. With this platform, the company could appeal to contemporary consumers while providing revenue for existing artists and music.

Rather than opposing the new wave of online music and digital platforms, SMI chose to embrace them. The company adopted strategies similar to its Western parent company to avoid piracy, appeal to new customers, and continue Sony Music's expansion in India. Digital music consumption was being monetized using two main models: ownership and access. As documented, "Digital music was being monetized using two main consumption models: ownership and access. In the ownership or download environment, consumers purchased an album or a track that could be downloaded a limited number of times and stored..." (Mani, 2013, p. 4).

However, SMI needed to compete not merely in the e-commerce sense but also make music more readily available through mobile applications. Smartphones had become the latest medium through which people accessed music, downloading and streaming through tablets and mobile devices. For SMI to truly compete with Western counterparts, the company required technological upgrades in distribution to avoid external competition from independent artists. "It has become so much cheaper and easier for independent artists to record and release their own material out of their garage. The marginal cost of producing a song is almost negligible, which is why a lot of independent artists today give their music out for free" (Mani, 2013, p. 8).

Conclusion

While SMI's response is moving in the right direction, it still lags behind its Western counterparts. Creating a separate sub-organization dedicated to application development would greatly benefit SMI and advance the company to the next competitive level. SMI could also attempt to recruit independent artists under this organization, allowing them to market their music under the Sony label. This approach would reduce competition while providing customers with new and diverse music options.

SMI is transforming the way it produces and distributes music. Creating services comparable to Spotify could increase digital music sales, which comprise a large portion of global music sales overall. Thanks to recent innovations in technology, smartphones, tablets, and mobile devices have become the primary means to store, purchase, and listen to music and other entertainment. If SMI wants to compete and match its Western counterparts, the company must adapt and increase productivity and strategic focus within the digital music sector.