Infocomm Indonesia

Digital technology had changed Indonesian music industry, notably with the emergence of music download service retailer, including Tarra Group and Digital Beat Store. They are not an online service yet -like Apple’s iTunes or Rhapsody, but it’s a real breakthrough.

Tarra Group is one of the major player in Indonesia music industry, they core business has been music production (recording) and distribution. Currently the company manages 78 outlets under the “Disctarra” brand throughout Indonesia. Their inventories (music and movies) reach more than 50,000 items, mostly in analogue format.

Then digital technology came in with the rise of MP3 and other formats. Digital technology enables music to be played and stored in a more flexible way. Consumers can arrange play list from different albums and shuffle songs, without the hassle of changing CD’s or cassette. Music can now be stored in PC or gadgets such as mobile phones or specially designed digital music players.

Mobile phones are one of the most popular devices to store and play digital music. Most mobile phones in the market have the capacity of 64MB - 512MB. Newest models can store up to 4 GB of data, equal to 1,000 songs. Vendors such as Sony Ericsson and Nokia had launched models specifically designed as music mobile phone. It is clear mobile phones are more popular than MP3 players as mobile subscribers in Indonesia achieved 63 million in 2006 and projected to reach 75, 6 million by the end of this year.

Fantastic growth in cellular industry is the main reason for Tarra Group in expanding to digital music distribution. By the end of this year, Tarra Group plans to open up to 100 digital music kiosks in Jakarta, Bandung, Surabaya, Semarang and Medan. Digital music is the main product but the kiosk will also sell video clip, wallpaper and game. Each kiosk sells up to 400.000 songs local and international, both under major and independent labels. Digital music and other content will be priced in two schemes: per-download basis and monthly subscription.

Another digital music provider is Digital Beat Store (DB Store) a startup business specializing in digital music distribution. Today DB Store opens up a kiosk in hang out places in Jakarta and Bandung. Apparently, location is the key for DB Store to grab young market segment. Their kiosk in Jakarta is situated in Blitz Megaplex -the biggest Cineplex in Indonesia with 12 screens. Other kiosk in Bandung is located in Paris van Java Mall, another entertainment landmark in Bandung.

Both Tarra Group and DB Store deliver music digital solely via kiosk; it is not an online service like Apple’s iTune or Rhapsody. The two companies had not mentioned any plans to go online. Well, there are two inhibitor for them to provide online service: first, the low Internet penetration; second and the most important, there is no e-payment infrastructure in the country.

The challenges

Amalia Maulana, ethnography marketing researcher from Bina Nusantara University elaborates the challenges faced by digital music retailer in MIX Magazine. Price is among the list. A lot of consumers consider the price of Rp5, 000 per song (US$0.5) expensive. Why is that? It’s because they compare it to pirated products. With the same price, you can buy a CD with hundreds of pirated music in MP3 format -of course the quality between pirated MP3 and MP3 sold in digital kiosk is incomparable. But quality is not in top of most consumer’s mind, it’s enough as long as you can sing along.

Other challenge is downloading MP3 from kiosk in Indonesia is still in relatively new amongst young people. The most common way to obtain MP3 is through downloading from Internet via PC. However it may seem easier to download MP3 from MP3, most people, Amalia wrote, “considered as something high tech and people are reluctant to try something they didn’t use to do.” So there is a psychological barrier.

Finally, Amalia noted that digital music kiosks should appear as music store with signs that explicitly explains music download service. Most consumers mistakenly see digital music store as common gadget store or ringtone stand.

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