[Music Monday] Actually, Music Startups In Indonesia Have Been Around For A While (Part 2)

Last week, I wrote a basic introduction of the unsung music startup in Indonesia, the content providers. This week I want to write a bit more about how they came into being and how they make money from digital music. Of course, any industry that makes tons of money is not without controversy, so I'll also touch on that. But on the whole, the ringtone market in Indonesia actually was born from what we now call crowdsourcing - as back then it was easy to make monophonic ringtones, with your PC or even with your phone, people made and shared their creations through online forums. Then somebody had the idea to sell these homemade ringtones to others. Eventually, they started hiring people to make these ringtones themselves.

In the early 2000s, companies wanting to capitalize on the ringtone business had to use  a premium 0809 number through a landline number - the same prefix used for premium sex calls - where a user would select a ringtone via the Interactive Voice Response system, and then the ringtone would be sent directly to the mobile phone. Early players were PT Katagiprima (now Iguana Technology), and Klub Mobile. Klub Mobile was notable since they were shut down by a lawsuit from the song publishers in 2003, who sued because Klub Mobile was selling their intellectual property - songs - without permission and without any royalty payments.

Around the same time, the telco operators were learning on how to deliver ringtones directly on their own network, and charge the user using a premium-priced SMS through a specially-assigned short number (also known as a telco shortcode). This was the start of the second "gold rush" for digital music - companies flocked to the telcos to register for their own shortcodes, to try to sell wallpapers, screensavers, and yes, ringtones.

Companies like Jatis Mobile, Iguana Technology, Boleh.net, Triyakom, Plasma, and mTouche, who were probably the largest content providers among the hundreds of companies around while the industry was at its peak, advertised downloadable content through magazines, newspapers and websites. These ads would literally be lists and lists of content and their unique download code, usually downloaded by sending that unique code to the company's shortcode.

By this time, these content provider companies - well most of them, anyway -  had 'cleaned up' their act and paid licenses for  using the copyrighted songs as ringtones to the publishers, and even paying a public performance royalty to KCI. Since these royalties were paid for each ringtone, it represented hundreds of millions of rupiah income for the song publishers, KCI, and the songwriters they represent.

But technology moved on, and the elaborate production methods needed to make monophonic ringtones and polyphonic ringtones were gradually not needed, as many phones already supported MP3 ringtones. So the content provider companies also adjusted themselves to sell these MP3 ringtones - some simply took MP3 files and cut them into 30" snippets to sell, and some others worked directly with the music labels to obtain their content. But the income from these downloadable contents were very small compared to the product about to splash the digital music scene - the ringbacktone. The ringbacktone, however, deserves its own article, so stay tuned for Part 3!

Ario worked in the digital music industry in Indonesia from 2003 to 2010, and recently worked in the movie and TV industry in Vietnam. Keep up with him on Twitter at @barijoe or his blog on http://barijoe.wordpress.com