How Much Revenue Flipkart Is Generating From MP3 Downloads & What Next Under Flyte

21 Mar, 2012

It has been a little less than a month since Flipkart launched its online digital music store Flyte. However, it is already getting good traction with around 8,000 downloads (including both single tracks and albums) daily, Sameer Nigam, VP – Digital at Flipkart informed us.

If you would recall, Nigam was the founder & CEO of Mime360.com (run by Mallers Inc), a firm acquired by Flipkart last October and currently powers Flyte's MP3 store as its backend for the last mile delivery of content to users.

Maybe Flipkart could have done better than what it has achieved in its early days with Flyte but then again it is trying to get people to pay for things they stole earlier!

Having crossed 1 lakh downloads last week, Flyte is currently doing an average of 8,000 downloads daily, with single tracks doing slightly better, according to Nigam.

Techcircle.in wracked brains to come out with a ballpark figure (these are approx values and not exact numbers) on how much Flyte would be churning out in terms of revenues.

Single tracks come with average price of Rs 12 (Rs 9 to Rs 15) while the average price of albums is Rs 100 (Rs 50 to Rs 150 in general with exceptions of very cheap at Rs 28 and very costly at Rs 770 per album). Single tracks are faring slightly better so we assume around 60 percent of downloads are tracks in comparison to 40 per cent for albums.

In this case, the daily revenues would amount to around Rs 57,600 (for singles) + Rs 3.2 lakh (for albums) = Rs 3.77 lakh, which roughly translates into Rs 1.1 crore in revenues per month (not bad). But, this is a tiny amount (just about 1 per cent) compared to an estimated Rs 2.5-3 crore daily revenues that Flipkart as a company is clocking currently.

Here's some more information nuggets from what Flipkart shared with us:

At present, most of the traffic on Flyte is coming from metros (which is understandable) but the company expects non-metro traffic to go up in the near future. The service is popular among all age groups and as far as categories are concerned, Bollywood has seen a lot of traction, followed by older classics (both Indian and western).

The other categories that are also doing well are international content and regional languages, particularly Tamil.

While checking the store, we found out that the prices of the CDs and DVDs of the same albums were higher on Flipkart in comparison to their price in the Flyte store, so we asked Flipkart about it and Nigam replied: "The supply-chain processes for handling physical stores are entirely different from online content. The added cost of warehousing, logistics, product handling, among others, gets reflected in the higher cost of physical music formats. There are certain supply chain savings associated with digital media distribution and we have collaborated with the music industry to transfer these savings to the end customer in terms of lower priced music downloads."

Besides, the regular payments options (plastic money and net banking), Flipkart is also offering an online wallet option (basically a prepaid option), which allows customers to load a certain amount on the wallet and then keep using it to pay for their downloads. This option helps customers avoid the entire payment process for smaller amounts (like Rs 10 for an individual track) and it also does away with payment gateway failures.

In terms of future plans, the company is tying up with more labels in order to increase the inventory of song titles. Also, as of now, the Flyte download manager (which lets you download multiple tracks at one go) is available only for Mac and Windows operating systems but the company is working on launching a Linux version.

According to the company, its primary challenges are to educate people on the damage that piracy does (and so buy legal music online) and to maintain and expand the quality and range of music available in the store.