Making Music

In today’s digital age, music is big business. The industry in India alone is expected to grow by 13.2 per cent to Rs 1,780 crore in 2018.

Published: 13th July 2014 06:00 AM  |   Last Updated: 12th July 2014 04:39 PM   |  A+A-

M is for music. M is for money. The music is growing louder as labels big and small in the country rake in the moolah, all the while turning established marketing strategies on their heads. Under the leadership of unconventional CEOs, the music industry worth Rs. 960 crore in 2013 continues to burgeon crore by crore, tapping undiscovered talents ready to be groomed into stars, repackaging golden oldies, exploring regional tastes and thinking out of the box. And the listener only emerges richer from the experience.

Old Wine In New Bottle

1.jpgSwitch on the TV and chances are that you will hear an old Hindi song in a commercial. Yes, songs of the 50s, 60s and 70s—from Hum Jab Honge Saath Saal Ke for SBI Life to Gaadi Bula Rahi Hai for Bajaj Bikes to Jata Kahan Hai Deewane and Aaj Ki Raat Koi Aane Ko Hai for Coke, to name but a few.

Not only are they music to the ears of a generation that’s grown up with these songs, but GenNext is getting to know them too. And in the coming months we are likely to see more such renditions of old songs in different forms, thanks to RPG Group’s Saregama, one of the oldest music companies, which owns 300,000 priceless tracks.

The company is one of the biggest players in re-interpretation of music. In fact, it’s understood that the company is in the process of launching a TV reality show based on re-interpretation and a large production house has been roped in for the purpose.

“Saregama is the largest reservoir of the best music content in India. We have works from 1902 and everything from classical to films. We are finding innovative ways to monetise our assets in the best possible manner,” says Adarsh Gupta, Business Head-Music, Saregama India, who other than running six days a week, also plays the guitar.

Until three years ago, Saregama was a content company dependent on external agencies to monetise content. Today, it’s a full-fledged digital major. The real value of the catalogue worked when the company went digital. The company currently offers music through various digital channels like CRBT, WAP, web and devices. Saregama is also innovating in the direct-to-consumer play arena. To this effect, it is working on one of the biggest musical mobile games, which will be available across all digital platforms.

Recently, the company entered into a partnership with UK-based distribution firm Believe Digital to enhance the reach of its repertoire across the globe. “This association is intended to herald SIL’s digital distribution capabilities in international markets to the next generation. We believe with this arrangement we are all set to ensure a delightful music experience for the Indian diaspora,” says Gupta. With these plans underway, the company’s target is to clock revenues to the tune of Rs. 150 crore in the coming year.   

Sa-re-sa-ma.jpgWithout a doubt digital is headed to becoming the mainstay of the music business, thanks to changing consumption patterns. In 2013, the consumption of music was increasingly ‘on the go’. Key drivers were the growth in mobile devices, particularly smartphones, more affordable data plans, and the popularity of streaming services and mobile applications.

Saregama is not alone, the top music companies are evolving and innovating on a daily basis to stay afloat. Today, more people listen to music than say three decades ago in India; and more importantly, more people now are open to listening to different kinds of music. From the physical model of CDs and cassettes, the industry has come a long way in the last 10 years.

So music companies are evolving from the earlier perception of music as a product to music as a service. They are evolving to accommodate the needs of consumers. Companies offering a complete experience spanning physical distribution, radio, music television, mobile and internet digital downloads are those

that are likely to emerge strongest in the new environment. Technology is playing the stellar role in transforming the way music is produced, distributed, discovered and monetised. In 2013 while the music industry saw a 9.6 per cent decline in revenues to Rs. 960 crore from 2012’s Rs. 1,060 crore, the revenue from digital medium contributed 53 per cent of the total, according to the FICCI-KPMG industry report on media and entertainment titled The Stage is Set. Digital’s contribution is expected to touch 62 per cent by 2018.

Currently, top company heads say music in India is working on several viable business models. Each company is doing something different in terms of monetising music. The only common factor is that they are in the labels business.

“I think it’s different stokes for different people and hence every label (especially in India) has a different future. Some will specialise in films, some in other genres, some in digital, some will play well in a 360 degree approach and what have you. What is clear is that the future of every label is definitely not the same,” says Mandar Thakur, COO of Times Music.

Moving Beyond Labels

The music business is all about focusing on core values—which are about creating great music, marketing and distributing it however commercially possible.

6.jpg“Music business is more than just a label,” says Devraj Sanyal, Managing Director–South Asia, Universal Music (UMG) & EMI Music, and founder front man of Brahma, one of India’s oldest metal acts now 20 and active. “At Universal, we treat South Asia as an important market where we no longer see ourselves as just a record label. Yes fundamentally we are the label business like every other music company, but what sets us apart is that for us at UMG the Label is at the centre and the other unique music related businesses around it.”

Sanyal likes to think of UMG as a full-service branded entertainment company than just a music company that represents dozens of A-list entertainment properties around the world.

“We have different verticals—it’s more about getting the music out there be it in the form of artist-led live gigs or merchandise or new business deals or Syncads,” Sanyal who eats, breathes and sleeps music, says. A musician himself, he knows the pulse.

UM India has four business verticals. It is the only company that does original music merchandise of international artists and bands. Bravado is the merchandise arm of UMG. Bravado has the rights of most international artists today. Apart from this, UMG also does live music gigs. Live gigs are a big money spinner both for musicians and the companies. A big star singer can earn up to `30 lakh per show. The next set of singers who have not yet made it big in playback but have cracked the live show business earn anywhere between Rs. 3 to 5 lakh per show. And they do a minimum 2 to 3 shows a month.

UMI’s third vertical is a digital agency that makes music for brands, creating ad jingles. The new business development vertical works on brand and asset partnership and lastly, it is in the process of launching a fourth vertical called Intellectual Property Rights (IPR) vertical wherein UMI will import or create its own IPRs in the music space.

Refusing to divulge revenue numbers, all that Sanyal is willing to say is that India is an important and significant market for Universal globally. But, currently in terms of revenues, South Asia is just a drop in the ocean but slowly beginning to count in the global stage, especially since the mother company is super focused on emerging markets and India is in the spotlight as a high growth market.

So while Universal which also has EMI in its stable has taken a 360 degree approach to the music business, Sony Music India has chosen to walk the path differently. It’s a music company which in the last three years has laid more focus on Bollywood music acquisitions. Sridhar Subramaniam, President India and Middle East, Sony Music Entertainment India, claims it has an overall market share of 22 per cent, a strong no.2 after T Series, which controls 26 per cent.

8.jpg“We have been able to achieve this growth purely on the back on Bollywood music. In 2010 we barely had a market share of 10 per cent,” says Subramaniam, who has been with Sony Music India since its inception in 1996 and has been instrumental in driving the brand to achieve the leader status in India. He joined as Marketing Director and was part of the team identified to develop and deliver an effective entry strategy for Sony Music in India and since then there has been no looking back.

His immediate vision for the company is to have a 25 per cent market share in the next 24 months. Sony Music India is also strong in the regional space especially in the South after acquiring 146 catalogues of leading Tamil music label Think Music.

Subramaniam’s approach is clear—“To be in this Indian market for the long haul you have to crack the local market. Otherwise you will never grow,” he says. Sony Music’s current revenues mix is 75:35 local and international in that order. Of the 75 per cent, currently Bollywood accounts for 35 per cent, Tamil is 30 per cent, 5-7 per cent is Punjabi and the balance is non-film music. Since the company is privately held, only segment shares were divulged.

It’s understood from sources that it costs a minimum of Rs. 3 to 4 crore to market a Bollywood album.  And a non-film album of an A grade artist cost just Rs. 10-20 lakh.

Talking of Bollywood, we cannot miss the undisputed leader, T Series.  Bhushan Kumar, chairman and managing director of T Series is the Badshah of Bollywood music with an annual business of approximately Rs. 1,000 crore. He has the largest catalogue of over 200,000 film songs in India from the 90s onwards and over 35,000 music videos in all genres. More recently, T Series has delivered three consecutive musical hits with Aashiqui 2, Yaariyaan and Bhootnath Returns.

Kumar inherited a music empire that made its money on budget recordings and a huge base of devotional music when he was just 19. In the last 15 years he has diversified successfully, making not just music for films but also producing films. Kumar’s take on producing films is that it will increase T-Series’ success rate in choosing the right music and have better control over it. Also the idea to become a producer works because many large film studios hold back music rights.

T Series controls about 55 per cent of the Bollywood market. T Series’ closest rival in the business is Sony Music, which from 1,500 song titles three years ago today has a 15,000 song titles in its kitty thanks to acquisition of Magnasound. In the digital space it has a Youtube Channel with 47,46,547 subscribers.

The other area T Series is strong is in devotional music. Kumar, however, is concentrating largely on film music. It is understood that he plans to invest close to Rs. 150 crore every year in acquiring or making good film music. Films add approximately Rs. 150 crore to his annual turnover.  

T-series.jpgKumar, too, refuses to divulge performance figures. However, he acknowledges that the company is performing well and witnessing healthy growth year-on-year. Sources indicate the company has an annual turnover of over Rs. 450 crore with a profit margin of 20 per cent. Of this turnover, Bollywood accounts for 50 per cent, while regional and devotional account for 40 per cent.

When asked how he has managed to take the company to such great heights, Kumar attributes his success to his father Gulshan Kumar. “I have just followed by father’s footsteps of making melodious songs. I have borrowed his principle of giving the public the music they like. My father always said choose music according to what the public is listening to and not what you like. And I am precisely following that,” he says.

Kumar senior had shaken the industry in the 80s by selling cover versions of popular film music sung by new artists then at dirt cheap prices. T Series’ main business in Mumbai is related to music acquisition and Bhushan Kumar and his team meet music directors and film producers to listen to new songs. Kumar is said to listen to close to 550 to 600 songs a year. His vision for the company is to bank on films with good music. “We will only buy quality music and we want to become a production house that makes quality films. My aim is to make 6-7 quality films with good music every year,” says Kumar.

Apart from music, Kumar has an obsession for fast cars. He owns a Ferrari 458 Italia Spider, a Rolls Royce, Bentley and an Audi. He loves his cars and drives each one of them regularly.

"The entrant that’s creating waves in the industry and standing sturdy even in tough time is 17-year-old Times Music." Times Music was a pure play boutique record label until 2010 with some basic level of business when Mandar Thakur took over as COO. “It seemed like I was joining a start up again” he says. Today, Times Music concentrates on non-film and traditional Indian music. They do a bit of film music under Junglee Music, a small division. Then there is Times Wellness and Times Spiritual Discourses. Time Music’s focus is IP creation, distribution and exploitation via Times Music in the global marketplace.

Thakur’s claim to fame is that he launched, India’s largest online and mobile music company at a time when one hadn’t even heard of online music. Soundbuzz was acquired by Motorola in 2008.

At the helm in Times Music, Thakur says, “I love doing what I am doing—creating gravity defining businesses and business models around the larger music/entertainment/content/technology industry. Times has a global distribution platform to monetize IP works. My biggest learning is that India is not an artist-led market, it is a track-led market.”

Over the last three years, Times Music has created a phenomenal global publishing administration and digital distribution network with wide repertoire in regional languages. Thakur is clear about wanting to be globally present.

Refusing to talk revenues, Thakur says: “We are a profitable company. We are probably the only second company which has huge international revenues.” He claims a 400 per cent increase in the last 3.5 years.

Search for more

There seems to be lot of experimentation and innovation among the companies and search for newer revenue streams. “The biggest change in the music industry is a clear realisation that there is no longer a business model for monetising content, rather, each piece of content needs to have a different business model to be effectively monetised,” explains Sanyal. “For us, business development and digital are the equivalent of a lab; we are constantly experimenting and trying to innovate to capitalise on this realisation. Our goal is to not only incubate path breaking thoughts within our system, but also support external innovations with our content and marketing wrap around,” he adds.

Innovation is key. Consumers in India do not pay for music but brands pay. Unlike Western companies where only basic service is provided free, Indian companies offer everything free. Indian consumers have got used to not paying the right price for good content.

So the best is to bundle the music with a product and give it to consumers and it’s a win-win for all. Like UMG is doing with HP. The computer major has tied up with Universal and to launch a subscription based service called HP Connected Music that offers more than a million songs across genres. The service is available on select HP notebooks and users can download free music for a year.

Within the digital space, streaming is being seen a good revenue stream for industry and companies such as Youtube, Saavan to name a few.

7.jpgBut, like every other industry, the music industry is also not free of challenges and problems. While piracy and the latest copyright act is one of the biggest issues, the industry and companies are also currently facing issues on the digital front as most companies are very dependent on telecom companies. The ringtones market, a significant revenue earner, has seen a significant decline in 2013, on the back of the TRAI directives to get consumer confirmations for activation and renewal of value added services. Across the industry, players have seen a fall in CRBT revenues ranging from 30-50 per cent.

According to the industry men, the way forward is by remaining a music company. For this, the companies need to be operating in the current music scenario, by being engaged in music, owning, buying and retaining music. There is a need to be constantly engaged in working with producers, talent and creating, owning and encouraging new music. There is an urgent need for good song writers and hit making strategy and mainstream marketing. The key for all companies is to find a balance as to how to grow in the eco-system yet stay in the game.

logo-1.jpgAdarsh Gupta Business Head-Music, Saregama India
From consumer goods to consumer electronics to music in markets as diverse as India, Russia, England, Poland and Fiji.

logo8.jpgBhushan Kumar CMD, T Series
Inherited a music empire in T Series that made its money on budget recordings and a huge base of devotional music when he was just 19.

logo2.jpgDevraj Sanyal, MD-South Asia, Universal Music Group
From being a musician to  an entrepreneur owning his own event marketing and sponsorship management company in the early 1990’s.

logo3.jpgMandar Thakur, COO, Times Music
Ranges from managing bands in the early ’90s to working with a concert promoter in Hong Kong to being part of the early creation of the music television business in India.

logo4.jpgSridhar Subramaniam, President, India and Middle East, Sony Music Entertainment India
Has been with Sony Music India since its inception in 1996 and has been instrumental in driving the brand to achieve the leader status in India.

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