Indian music industry debates potential for paid music subs

MCAI - 03 Sep 2019


“For us to get to the top ten, we’ve got to double our revenues, we’re at $150 million, we’ve got to get to $300 million,” Fernandes told moderator, Outdustry’s Ed Peto at a panel entitled ‘Musicnomics: Making Sense Of Money In The Music Business’.

Among the drivers that Fernandes said would help India in reaching its destination, is an “underexploited” public performance market; the estimated 830 million smartphone users the country is expected to have by 2020; and a “$2.5 billion digital advertising market” owing to which “you’re going to see a lot sync opportunities”.

Other factors he attributed to everybody being so bullish about India right now: that the nation will be home to 120 million people in the age of group of 25-29 by 2020 – “that’s a huge earning population” – and a study jointly conducted by the IFPI and IMI as per which they found that Indians spend “21.5 hours per week on music consumption across all platforms”.

The challenge though will be getting people to pay for that consumption, something that Fernandes believes will eventually happen, based on observations of the movie business. He said that the “290 million admissions at an average of $3 a pop declared by the multiplex association of India” shows that “there is the potential to pay”. “The old adage if you build they will come applies to if you charge they will pay,” claimed Fernandes.

His co-panelists however were more skeptical. “Today, there are less people paying subscription for an audio service than people who have paid for Carvaan, which is [priced at] $100 per unit,” said Vikram Mehra, the managing director of Saregama India, which sells the digital music player that comes pre-loaded with over 5,000 retro Hindi film songs, mostly from the 1950s to the 1990s.

The label has sold 1.5 million Carvaan units of since 2017; the number of paying subscribers across audio-streaming platforms remains a low single-digit percentage of the total market, currently said to be around 300 million MAUs.

At the same time, Mehra cautioned that “we should be very, very aware that we don’t push people back to the pirated world” crediting streaming services for bringing consumers into “the legal world”.

On the plus side, India seems to be slowly but surely growing out of its “MG culture”. While Anurag Bedi, the business head of the label Zee Music Company said “we’re to two to three years away from that”, his counterpart, Mandar Thakur, the COO of record company Times Music added that “we’re seeing that MGs are being recouped”.

This prevalence of minimum guarantees, the label reps at the session, said is on account of the practice of them having to buy Bollywood soundtracks at exorbitant rates from movie producers with the success of the music often dependent on the fate of the film. If the film flops, then the music isn’t likely to stick on in public consciousness either.

Bedi said that it takes “between three and seven years” to recover the investment on a Bollywood soundtrack except in the case of “a monster album that just fires [for which] you could recover as soon as two and half to three years”. On the other hand, Devraj Sanyal, the MD and CEO of Universal Music, which has recently shifted its focus primarily to non-film music said they are “probably looking at two to three year horizon” for their releases.

Peto touched upon the costs of promoting repertoire by asking the panelists about the widespread phenomenon of buying “fake views” on YouTube, which was recently brought into the spotlight after Sony Music claimed the video for their artist, rapper Badshah’s “Paagal” broke the all-time record for the most views in 24 hours.

“The whole f***ing industry does paid views,” said Thakur. Fernandes countered “that it’s a global phenomenon” and that “the IFPI is working with the stakeholders across the industry to come up with a template, which is globally accepted in terms of filters, ensuring there are standard operating practices”. “This is a work in progress,” he said.




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