Musicnomics: Making Sense Of Money In The Indian Music Business
Ed Peto (MD — Outdustry), Mandar Thakur (COO — Times Music), Devraj Sanyal (MD & CEO — Universal Music Group India & South Asia), Anurag Bedi (EVP & Business Head — Zee Music), Vikram Mehra (MD — Saregama India Ltd.), Blaise Fernandes (President & CEO — IMI) / Credit — All About Music.
On market demographics and market data
Ed Peto: I want to start by going straight past the biggest number in this market — and that’s the population number — and go to the first number that I think is really significant to this room and that’s by the end of this year (2019), the concept of 500 million mobile data subscribers [in India]. It’s the cheapest data in the world at roughly 11 Rs per GB (which is 15 cents per GB vs what is 5 to 10 Dollars per GB in the western markets), and that’s also led to the highest data consumption of any market in the world, but at the same time yielding the lowest per capita revenue of any market being tracked by the IFPI at the moment, just 11 cents per year. The stage is set for probably the most exciting music market in the world right now, but with huge challenges to overcome. ‘Musicnomics’, the name of this panel today, the combination of music, economics and I think demography as well, is an interesting point to start at. When we look at 500 million people, that actually captures the roughly 450 million people in cities in India, it also captures the approximately 400 million middle class of India. When you look at 500 million mobile data subscribers, is there a way that you approach that? How can we start tackling that number? How can we segment that number, if possible, from a music marketing perspective, or a music perspective?
Mandar Thakur: Thank you, like we were talking backstage, the first 500 million… Everyone’s waiting for the next 500 million, but what’s important is to actually harness the first 500 million itself. When we talk about data and demographics, what we get as the record industry is broadly high level data just in terms of music genre, listenership, and movement of consumers. What we would welcome is deep down data from the streaming services (whether it’s Gaana, Saavn, YouTube) — for us to harness that database, and also to work our A&R, our music and our signings accordingly. The second thing that is important to note here is [that] everyone is shooting blind. I will say [this] with full vigor that whilst it’s great to have these [high level] numbers, it’ll be even greater to be able to do a little micro-targeting. The data that exists today within the system is really transitionary data. It’s like fish moving in a stream — are they going left or are they going right — but if you knew what kind of fish eats what kind of food it would help the fisherman to be a little bit more accurate about it.
EP: Thank you for the first metaphor of the conference Mandar, excellent work.
Blaise Fernandes: I’ll add something here — what’s attracting people to the Indian market (as per statistics available by the government) is [there will be] 120 million people by 2020 in the age group of 25–29. That’s a huge earning population! If you want to take a qualitative view, this is a market growing at 7% GDP per annum. Everybody’s migrating to the middle class. As per a survey by CISCO, [by the year] 2024, 900 million people will have smartphones. That’s the pot of gold at the end of the rainbow. These are two very important figures that are out there in the public domain. And lastly as per the IFPI-IMI report, 21.5 hours per week [is spent] on music consumption across all platforms. These are three big numbers to keep in mind [in terms of] what’s making India an attractive market, why are there so many investments coming in, why there are so many services being started, and I think that’s important to set the context.
On the value proposition for the Indian consumer and tech platforms
EP: Absolutely. So when we look at the next 100 million [mobile data subscribers], let’s say — and that usually comments that’s made or a headline that’s made by the DSPs because for them their metric of success is user acquisition at this point, and the valuation of their business — from a socio-economic perspective, the 500 million already captures (for want of a better phrase) the ‘high-value’ audience of India. Let’s look at that from an industry perspective — Vikram, you’ve got a really strong background in the subscription model and monetizing an audience. How do you see where we’re at right now in terms of actually monetizing that 500 million?
Vikram Mehra: Let’s be clear about what is this 500 million — there’s a lot of vanities, we all can feel very good about it. But at the end of the day that 500 million has to result in revenue for us [labels], and hence for the artists and film producers. There are only two ways you can monetize this right now directly. Apart from the valuation, it gives to the platforms, which is all with them, it does not come back into the industry. The industry benefits only if there is advertising revenue coming in behind these 500 million streams [referring to mobile data subscribers], or there’s subscription revenue coming in. I refuse to believe right now (and I’ve always stated this), that consumers in India are not ready to pay. Who is this consumer? The consumer is someone like us only. We were paying for cassettes and CDs at one time. We are not paying for music, but are still paying a little additional money to go to a multiplex and watch a movie, we are paying a hundred bucks [Indian Rupees] for a cup of tea or coffee and we can very easily have the same thing right now at home for 3 or 4 Rupees. We are ready to pay. There is a disposable income. Somewhere the value equation seems to be going wrong. People are not seeing enough value when you offer to them, the same app where the content is similar across both advertising and subscription. That’s a free tier as well as a paid tier. Somewhere we all — and I think the labels have [to take] blame for that, I think platforms have to take some blame for that — need to understand, where do we see this revenue coming in. Because today the only beneficiary is the platform, in terms of valuation. Even they are feeling the pinch and they want to make money. I think going forward we need to mull about this a little more — what value do we add to the paid part of these platforms so that the consumer is ready to put bucks out there? Can you believe right now there are fewer people paying [for a] subscription in India for an audio service than people who have paid for Carvaan, which is a hundred Dollars a unit right now? I refuse to believe this theory that there is an affordability problem, or people are not willing to pay. I don’t think we have got our value proposition right.
Devraj Sanyal: I agree. I think Mandar set the context correctly and Vikram is absolutely right. We’re a market that’s used to paying for a very, very long time. At the peak of the CRBT [caller ring-back tunes] days, there were 88 million or so people paying 15 Rupees a month for music that they themselves weren’t consuming. That’s [an] almost 20% paying population out of the 500 today [referring to 500 million mobile data subscribers]. Back then there weren’t 500 million to start with. Vikram’s point about kids going to Starbucks and paying 129 Rs for a cup of coffee (and that’s the cheap one) or 199 Rs like our kid’s drink — for a single coffee on a single day versus a 99 rupee average [referring to the monthly subscription on audio streaming services] where you get all the music in the world, licensed and legitimate. So it is a question of the value gap. My point is this — it’s a bit of a controversial point but this is what I believe — I believe the platforms are right in going wide, because in the consumption economy unless you go really wide, you can’t go deep. I made this point in my opening speech: for any big economy to unlock and unfold you first need to go really wide. So the platforms are not wrong in going after the hundreds of millions [users] and that is absolutely right. To Vikram’s point, the platforms aren’t stupid either. It takes a lot of money to fuel this economy. So we have to start going deep. To the consumer, who is the eventual guy who’s going to pay the money, they need to be in a position — and we’ve always said this — adoption and habit formation. Adoption is happening over the last 3–4 years. Habit formation is beginning to happen now. There will come a time. As a market, we’re used to paying whether it was CD, cassette, vinyl [or] CRBT. There will come a time in the next couple of years whereas the platforms start going deep, as we start looking at our own data (not just industry data) to go deep, people will realize the value in paying money for music, whether its video [or] audio. Look at the next generation. They don’t believe in piracy… It’s just scratching the surface but I think a market like India which has moved from 2G to 4G and will probably move to six and a half G [jokes], we skip generations — I think we’ll hit the monetization curve faster than people give us credit for. To Vikram’s point, it is our job to educate. It is the government’s job to support our educating [the market] — which they are [doing] and Blaise is at the forefront of it — that there is value in music, not just because it’s music to be consumed, but there is a food chain sitting within the ecosystem. There are artists who are busting their entire lives creating content for the people to consume. They need to get paid, the creators need to get paid, the composers need to get paid, and I think it’s a matter of time before that happens. I’m very bullish.
On video OTT platforms and the need for advertising
EP: Can we take any lessons from the visual space here in terms of the OTT video platforms and the drive for a subscription there? There does seem to be the beginnings of appetite and the ability to pay. Netflix, for example, is Rs 500–800 a month [US$7–11]. It’s the beginnings of something interesting — Can the music industry learn anything from that evolution?
Anurag Bedi: Ed, I think the video business with regard to the OTT or the YouTube model as such, it is an advertising model. I think with volumes of consumption that we see, the advertising model on YouTube is a robust model and I think that’s set to grow at a very healthy pace and we can see the trends there. So it’s just not about subscription only, I think it needs to be balanced out well with advertising, and if YouTube as a platform can build the advertising model that it’s done so far in the years of existence within this country, I think it’s a great start for monetization of those customers that are not ready to pay the subscription. It’s exactly like the TV model. TV is free, there are ads that give you the content free, and then, of course, you pay your cable operator. I think that needs to be balanced out well and we see video effectively doing that. I think it’s a matter of time [before] the audio streaming services manage to filter down their paid subscribers. But don’t forget that please do not encourage your subscribers to go back to the piracy model. Keep giving the ease of consumption via streaming and let it grow with the years coming ahead.
On the freemium economy
BF: I’ll just chime in here. In the terms of the subscription economy, these statistics are out in the public domain — 290 million admissions at an average of $3 a pop were declared by the multiplex association of India. There is the potential to pay. The old adage ‘If you build, they will come’ applies to this also — ‘If you charge, they will pay’. Do you know this myth that the Indian consumer [only] looks at the free model? They’re paying an average of $3 a pop and 290 million admissions to the multiplex ecosystem of India, just to add to [the] statistics.
EP: I guess the issue there is scarcity — the scarcity of the theatre, the box office environment [and the] exclusivity of that. In the digital space now everything is available for free, and there’s perhaps less value proposition behind the paywall, the kind of exclusive space if you like. It feels like everyone here is very bullish about the future of subscriptions. Is it going to take the idea of depressing the value of the free space and increase the value behind the paywall to create that sea change, do you think?
VM: Philosophically yes. While at the same time as Anurag said we should be very, very aware that we don’t push people back to the pirated world. If I go by government data, piracy rates have fallen down from 88% to 78–79%. Full credit to the platforms. They are the guys that have been able to move people from the pirated world to [the] legal world, but now we need to build a clear value difference between the free tier and the paid tier. A number of skips may not be the thing right now which is going to go back and do it. I think Netflix has done it, they have understood it. They also came back here thinking they would charge $10-$11 and they’re realizing in developing nations it’s difficult to get that kind of money. They changed the value proposition, got it down to $2-$3 right now, allowed it only on a small screen. We may have to have a similar call taken at a platform level. Devraj and I don’t agree on this 99 bucks [Indian Rupees] ever. We always have disagreements on this. If [it were] left to me right now I think we should get down to 29 bucks [Rupees], add more value to the subscription tier, and consciously work towards moving people from the free tier to the paid tier.
EP: Is there an issue to do with the historical use of music as promotion for a film, where the point of particular releases is about maximizing exposure and promotion for a film? The idea that the music, in and of itself, should be valuable and therefore needs to be monetized as much as possible — “let’s put it behind a paywall”…is there an issue there, structurally, about how music is used in India?
AB: I don’t think that’s an issue, in fact [for] marketing film music initially, the focus and the target should be reaching maximum people to sample new music, [even if it is] free. And that’s a period of about two months before it moves into monetization. I don’t think that’s an issue for anybody to worry about at this stage. The challenge is to market the music.
EP: If most of the A-list material that is being put out at great expense is only ever destined for the free tier because it has to be mass-audience straight away, how much value are you actually able to put behind a paywall, ultimately, to drive that subscription?
AB: If you put that behind a paywall I don’t think that consumption will change. The consumer will move. He will move to the free platforms. Again, the idea is — get the content to be popular, get the content to be consumed, and then worry about monetizing.
EP: So you window it in a way?
On the Indian consumer’s willingness to pay
EP: Blaise you mentioned the other day the idea that we’ve gone through the bundling period now — the ‘feels like free’ approach to introducing charging for products. You mentioned you don’t feel the audience has been tested on its willingness or ability to pay for subscriptions in this space. Do you feel that test is about to come?
BF: It’s high time it comes because I think the investments that are being put in need to be monetized. Right now it’s a land grab. Based on various financial reports this land grab is going to come to an end, and I think by the end of this fiscal year we will probably see a subscription model. There’s no option because I think a lot of them are over-leveraged, a lot of them are hemorrhaging, they have to move into the subscription model.
MT: Whilst I agree with everyone here, I think this is really a content question more than anything else. If you look at the OTT services — I think the OTT services are doing a damn good job — even whether it’s Netflix looking at different pricing models. Eventually whoever wants to watch Sacred Games will watch Sacred Games and pay money to watch it. The unfortunate problem that we have today in the industry from a creative standpoint I think is a lot of material [is] sounding the same: everyone wants that X amount of views, everyone wants a Twitter trend and what that does is for a consumer to pay he’s got to have value, beyond the monetary value as well. It’s about how many timeless classics are we actually putting out when we put material out today? So today, if I have to pay for a Gaana and I’m going to get the same stuff [for] free on Saavn, I will actually go off to Saavn and not pay for it. I think that’s a very burning question as a creative industry we need to address — is what are we doing to differentiate platforms, platform sensibilities, and things like that.
AB: Let’s not forget, even if all streaming platforms decide to go paid, there is a very sizeable amount of downloads that are happening on illegal sites. The music is available [for] free, whether it’s [on] songs.pk or the other torrent services.
On the minimum guarantee (MG) culture
EP: I want to touch on the MG culture [awkward laughter from panelists], for anyone who feels comfortable talking about it. Just to set it up, I guess historically, let’s say, it’s fair to say that there has been an MG culture in India: the idea that you take a catalog to a platform, you negotiate based on market share (or clout) and you get a lump of money guaranteed, regardless, from that platform. And…feel free to jump in whenever…but, the idea now is that we’ve largely moved beyond that. Those MGs are recouped, or overflowed if you like, and we’re moving into an era of a ‘transactional’ relationship with the platforms, where there is a per-stream rate, every stream triggers that, it builds up into royalties and data that comes back to you as a rights owner. It becomes a healthy back and forth of data and transactional value. Is it fair to say we’ve crossed into that transactional space, and away from that historical MG space? Open to anyone to answer that.
VM: Let’s please understand why this MG culture is there. The business objectives of platforms in the past, and labels in the past, were different. Platform’s business objective always was to increase valuation, which goes up right now if you have [a] higher number of monthly active users. And they were ready to burn cash to do it. [There is] nothing wrong with it, that’s their business model. The business objective for labels was just sheer bottom line (and nothing else). We as labels, if we get equity in each of these platforms, and instead of paying us they will give us a percentage of the company, and if their valuation goes up to our value also goes up, we are more than happy, we’re putting that offer out there on the table. When the objectives were different, labels had to protect their interests with this clear cut path [that] there should be an MG because if we get a percentage of advertising share and a percentage of subscription share, and we don’t see enough focus on growing that we have to protect our downside also. Remember we pay [a] serious amount of monies to get the new content of the films that are being released in this country. We need to protect our side too. But the good part is, I think both the labels and platforms are slowly starting to move in the same direction now. Some of the deals that needed to happen in the Indian market have happened. We believe, going forward, I think both these parties are going to be aligned just to a single objective which is bottom-line production.
EP: Anyone else?
AB: As Vikram said, [and] I agree with him — the cost of acquisition of new soundtracks is very expensive, and it’s an insight into 12–24 months. If I have to buy a catalogue or if I have to buy albums I do need to cough [up] a lot of money, which means the MG plays a very vital role. Of course, the valuation game is a different game that platforms may be building on. So I guess once the industry is up and running to a robust revenue earning model is when your question might make more sense as to why are labels not partnering on a lesser MG and a more return per-stream basis, and I guess we are maybe 2–4 years away from that.
MT: I’m going to give a very Indian twist to this MG thing — If you go to buy a product, as a vendor, the guy who owns the product doesn’t know you. He’s made the product, he’s invested money in the product, he’s always going to ask for a deposit. It’s a very simple thing. Because tomorrow, if you fold up, I’m also at a loss. Does the film producer actually pay us back if the film flops? No. Will anybody compensate the creators and the labels if the product doesn’t work? No. So, to that, there is a logic of saying yes, we need to have a balanced minimum guarantee. Yes, there is a lot of science behind it, but there is also ambiguity because if you add up the MGs on market shares of everyone we’ll come to a 200% market share! So we need to be a little balanced in our approach, that’s for certain. Today we are actually witnessing the fact that MGs are being recouped. I think that is the overall positive sign. The next logical step — going back to our first discussion, which is if the MGs are being recouped — [is to] experiment and offer more value to the user, which is ideally the subscriptions, at whatever price point — either its Devraj’s price point or Vikram’s price point!
EP: I guess the point of wanting to move past just the pure conversation of — “This is how much we want for our catalog” — kind of the idea of saying, “actually what we want is data and reporting and the ability to have a granular look at how our catalog is doing” — Devraj, we’ll come on to Vyrl a bit more later, but just from a data perspective, you develop content, you develop an artist, you put it out across certain channels, you get feedback from the market about how it works and you make more informed decisions the next time. That’s building something very very valuable there. You were describing something quite data-driven, right? That has to come from the idea that it’s not just about a block of money, it’s about the granular use of that catalog.
On the ability of labels to make data-driven decisions
DS: — Absolutely. I think this is a global semantic, is that there is market data. And it may not be all you need it to be, to Mandar’s point. Just early in our lifecycle, we realized that just being able to look at peripheral data wasn’t enough. So we created very specific data teams to actually scrub the streamscape in a way that wasn’t being done before. To actually go into not just the granular, but the micro-granular bits of what’s being consumed [and] were. The truth of the matter [is] I only have my data and I have industry data. I don’t have his data [points to a fellow panelist]. He only has his data and industry data. But that is enough, given all the other kinds of data that we get, if you’re clever, [you can] extrapolate how your content is doing. We’ve used that not only for being able to forecast how much music, what kind of artist, what kind of music. Because unlike others we are not consumed by multiple things. We do one thing and we do one thing only. [Correction:] We do various things, but our mainstay is to create non-film domestic music. It may be hip-hop through another label. It may be domestic content through Vyrl and so on and so forth but we are not easily distracted by OST buys or some of the other problems that some of my colleagues here have. Data is very very crucial. To your earlier question, which I’m not allowed to answer and I won’t, but even in that I’ll just tell you from the outside, post everything that’s happened, we probably have the most data-centric approach to even coming to those numbers. To me, it’s never been a guarantee. It’s a fair assessment of what your content is worth, what it’s doing, how it’s performing and how likely it is to perform as an aggregate given a certain fixed amount of stuff that you’re putting back into the ecosystem. If you approach it like that, I think the partners to are very receptive to the fact that: here is the new breed of companies who are now using data as a measuring tool rather than saying “I am a creative guy and I want so much [X amount of] money”. That happens too — let’s be clear, this is India — to Mandar’s point it’s not about the deposit, they want the family heirlooms and the gold as well! But data, to your point, is absolutely the key metric in being able to decipher how and what the future is going to do.
EP: I’m going to throw some broad hypothetical [numbers] out here and say there are approximately 7 billion streams taking place per month in the Indian streaming space. Are we generally okay with that number? [nods from panelists]. Also, broadly speaking we are looking at something like 7–10 paise per stream. If you take the upper end of that, 10 paise is 0.1 Rupees, which is 0.0014 [US] Dollars per stream. That’s 70 crore Rupees a month, which is about 10 million [US] dollars a month, still theoretical, that’s purely a transactional use of catalogs in the marketplace. My [question] is how far has India come in being able to get granular, or even micro-granular data out of the market across 7 billion streams? What kind of visibility are you getting for how your catalog is being used at that kind of level?
VM: I think all the labels will be in the same boat right now, we get limited data from the platforms. This question is better answered by the platforms who have the granular data. All we know is the number of songs, and the number of streams for that song for the month or for the day. We can benchmark our song against the other, but we don’t know larger trends, we don’t know who’s listening to that. We can keep on wishing and praying and hoping that platforms share it. No platform globally shares it. I think they should share, but [it’s] unlikely.
EP: Some platforms globally do share that kind of information and to me, it seems there’s like there’s [a] huge amount of progress in India, but clearly not enough at this point?
VM: No, that’s the only data we all get.
AB: While you mention the number of [Indian Rupees] 70 crores per month — that’s not the number the consumer is paying.
EP: That’s the trade revenue, that’s the per-stream minimum.
AB: Absolutely — Is the consumer paying that money? No, he’s not. So that’s the biggest question for us, going back to our [earlier] discussion. We’re still far away from that. That’s what we hope to get to in the next few years. Data is probably going to help us assess what’s right, what’s been working and it gives you an insight into trends, but generally, from my experience, there’s nothing that you can predict [in relation to] what’s going to work. We follow the heart, and that’s what we tell our artists and our producers as well.
On timelines in relation to investments made by labels
EP: [Considering] all of this new wave of data and monetization, and the digital economy. On this platform here today there’s a huge amount of investment going into the creation of content, the buying of content, investing in IP. There’s the really bullish sentiment on this platform here today. At this point, I don’t necessarily want to talk about profitability, but everyone here is taking a huge risk at this point based on the premise that this is a really exciting upward curve in this market. What kind of time horizon do you look at when you make investments into buying a film soundtrack or investing in developing a new artist? Anurag, [could you share your thoughts] from a film soundtrack perspective?
AB: [From past trends] The timeline is between three to seven years for recovery [of a soundtrack]. If you have a monster album, which just fires, you can recover as soon as probably two and a half to three years as well. And, if you have one out of five as a success ratio, obviously the returns are going to be slightly longer. In the long run, we plot it between three and seven years for recovery.
EP: Do you want to answer as well Devraj?
DS: Because we’ve stayed away from film OST, and our entire business model is based on emerging, semi-emerged, and superstar artists, our game is not a few soundtracks or many soundtracks as the case may be. We’re a portfolio. It’s like a portfolio management game. Some are going to win, some are going to badly lose, some are going to middle out, and some will super-perform. We’ve seen that. We started our proper Vyrl Originals run on Jan 1st, 2018. We were very selective about the way we did it. We did 12 singles in year one — one per month, just as a barometer check. We’ve tripled that in this year . And we are poised to triple that for 2020. So we are talking about north of 100 singles planned for the coming year. Of course that comes from Mass Appeal and hip-hop, that comes from Vyrl Originals, [and] that comes from other regional stuff that we’re doing. Just from data that we have is enough to be able to plot and see what it’s going to do at a portfolio level. We certainly don’t look at 3–7 years. It’s probably on the 2–3-year horizon. We are already seeing (on the back of 2018 and 2019) success enough, monetization enough, where we’re getting more and more bullish by the quarter to do more and more. The fact that we’ve created a global imprint for Indian music which made global headlines a couple of days ago only goes to show (apart from the hype), is we genuinely believe our music is beginning to get consumed. Let me give you an example — A Bollywood OST, what Anurag would consider a massive hit, or what he would consider the level to where you have many (because you won’t have so many — we do a thousand songs a year in this trade). We’re already seeing more than 30% of just Vyrl [Originals] stuff which are already doing between 25% and 50% of the second layer, which is enormously encouraging for us to see, that if that part of your portfolio is performing at that kind of asset return ratio, we’re only going to do more and more. The advantage of the new streamscape in the world is that it’s so wide, that different people are consuming different things. Are you able to tap them exactly? No. But do you have a fair idea of what’s going to work? Absolutely. If you’re able to pitch the right food to the right fish, to Mandar’s excellent analogy when we started — is it an exacting science with data? Absolutely not. To Anurag’s point, it’s a lot of gut, but it is a humongous amount of science with that gut. We are no longer in an industry where we say, “great song, let’s do it” — they [the songs] are being worked to death. Today I can proudly say that a Vyrl Originals song is being worked with the same amount of resource, love, marketing, respect, radio, TV, digital [and] social as a mainstream Bollywood song. Two years ago I was sitting over here I would not have believed myself if I said it. I would have sat in the audience, laughed and said “Dude what are you smoking?”. Today grade-A artists in non-film are getting the same degree of love, let’s say money, as Bollywood does. The industry is also evolving to an ecosystem where the sum of all parts need to do well for the eventual market to succeed. For the first time we are now seeing that happen.
EP: We’ll come onto the non-film space in a minute. Blaise, from your position as the apex body in the Indian market [referring to IMI], in terms of appetite for risk across all the labels, in terms of people taking bets on the value of IP in the market, what’s your temperature check of where the market is at right now? Bullish as well?
BF: Year-on-year growth of 30% for 3 years is enough indication to show that this market is growing. This is just on streaming services. This market is growing because there are more investments coming in, that’s a cycle that’s happening. We’ll probably get into [at a later stage] how we’re going to get into the top 10 markets, but certainly based on just year-on-year growth of 30% for streaming is a classic example of a vibrant market.
On Section 31D of the Indian Copyright Act
EP: That’s a very positive moment in this panel. I want to bring it down just a little bit [laughs]. There are issues at this point with the 31D scenario [referring to Section 31D of the Indian Copyright Act]. The jury is quite literally still out. Who wants to tackle this question? There is something here that is an existential threat to the value of music IP in the market.
BF: The jury is not out — the matter is sub judice. What’s out is the last judgment that came from the Bombay High Court, and if that is anything to go by I think it is a positive sign. Given the fact that the matter is sub judice we won’t get into the merits of it but based on the Bombay High Court judgment I think its an indicator of things to come.
EP: The original judgment itself is highly positive. There’s now an appeal which isn’t being seen as being particularly serious –
VM: Let’s not get into the specifics of it. Let’s talk about it philosophically. In a capitalist world, how can you control output pricing, when the input pricing is not controlled? That’s my simple question for everyone. Either you go back and control my input pricing, that means you regulate at what price a film producer is going to sell his music or an artist is going to sell his music to us. Why should they? Should the government do that? Unless they do that they cannot control the output pricing. I think it’s unfair.
EP: Agreed. Anurag, do you want to touch on that?
AB: I’m with Vikram on that.
On collection societies
EP: Is anyone not with Vikram on that? Mandar you’re very quiet [laughs]. On a positive note about the [copyright] society improvement at this point, across IPRS & PPL, etc. could you comment on that?
MT: When we spoke about the industry doing well, one of the big things to note is that the second-largest driver of growth outside of streaming is actually public performance. Yesterday we had the PPL board meeting where we announced that PPL has just crossed the hundred crore revenue mark [~US$14m], and that’s a significantly large number, for one particular reason that, if you look at this whole thing globally…We have to ask ourselves, what is a ‘hit’? Is that ‘hit’ a number, which is probably fake? Is that ‘hit’ some Twitter trend? Is that ‘hit’ how many videos you have on TikTok? No. The ‘hit’ ought to be a hit when people on the streets are doing it, when weddings are playing it, or whatever it is. And that is what causes the timelessness of our music. Today very proudly (also wearing a separate hat as the chairman of the board of PPL), PPL has actually crossed that mark where we are putting out the second-largest driver of revenues to the industry. The aim is to step that up one by one each notch.
EP: What are the latest revenues you can give us for PPL?
MT: We’ve just crossed 104 crores [Rupees] [~US$14m] to be precise. Secondly, on IPRS, we’re very thankful for the government to be supporting the agenda of the writer. It was always an ignored community. The IPRS faces many challenges today. Platforms need to be aware that this is a right set in stone [referring to the rights of authors and composers]. The other challenges that IPRS faces are the ability to [determine the percentage of payouts] as technology changes almost every year. These are very complex negotiations; they’re not easy. When we say public performance, the IPRS now does publishing income for streaming services and public performance from everywhere, and the PPL (for sound recording) does only public performance, and just on the back of these two things is how the societies are faring that well.
EP: Is there a little bit of confusion in the market on the phonographic performance side in terms of other societies operating in that space from an end-users perspective?
VM: Whenever there is something new, this kind of confusion will happen. The more important point is [that until] a few years back the general impression in the market was [that] the labels are only interested in themselves [and that] they want to corner all the money in their pockets. Over the last few years the dialogue that we’re having with everyone in the industry — remember, a label cannot survive unless somebody writes a song very well, somebody composes and somebody sings it, otherwise what are we? We don’t create anything. It’s the community that creates. It’s important that all partners sit together: singers, lyricists, and composers, along with the labels, and work it out. That’s what is happening at the level of society. Is it smooth? No! There’s a huge amount of history. The good part is when we are as low as 150 million [US] Dollar revenue, the only thing that can happen is to go up!
On how artists are valued by labels
EP: Touching on the original writers and artists here, one interesting phenomenon from a foreign perspective is the short term deals between artists and labels — singles deals quite often, maybe an album. From the marketplace of artists coming and signing to labels, how are artists valued in that process and how do you get a sense of how much money to put on the table and what sort of projects should be funded?
MT: On a much lighter note, I’ll give this in two answers, I think if you look at it really practically, most of the time you will always have someone coming saying “Universal has offered me this deal”, or “Saregama has offered me this deal”, or “hey, can I have a 20 million opening and 1 minimum YouTube trend?”, and I believe that that practice needs to go away. Sometimes there is no science there like Anurag and Devraj said, you trust your heart and you say that this song is what we believe in and this song is what we should go behind, and in many cases, I think valuations — not for a film, but pretty much for a lot of talent it goes like that, it’s an age-old question, you’ll always be a bank, and you’ll always be looking for free stuff.
AB: I agree with Mandar on that. I guess the question we need to ask is: consistency of performance of the artist, and then start discussing our valuation for the artist. That’s a very important question to understand when we discuss valuations.
On fake views
EP: I’m sorry Mandar but you opened the door on this question and this is to do with “fake views” for want of a better phrase — not my words! Where are we at with that, because that’s also another interesting Indian phenomenon?
MT: The whole fucking industry does fake views, come on! Everybody in this room does fake views. The whole country does fake views, I’m telling you.
EP: Are you referring to ad buys?
BF: Ed, I’ll come in here. I think it’s a global phenomenon. I think the IFPI is working with the stakeholders across the industry to come up with a template that will probably be globally accepted in terms of filters, ensuring that there are standard operating practices. It’s a work in progress. It’s not an Indian phenomenon, it’s a global phenomenon.
On non-film music
EP: It’s a work in progress, excellent, OK. So, all this being said, in terms of where the tastes of the market are going at the moment, and obviously, once again, from a foreign perspective the narrative is ‘its always about Bollywood in India’, but I think that that is very much changing now — the rise of the non-film space — and I would almost like to segment that non-film space and say there’s the non-film space that still sounds like film music and then there’s the non-film ‘non-film’ music. Where are we at with both of those non-film segments?
DS: You know there’s nothing called — and I’m asked this question every day — music that sounds like Bollywood but doesn’t belong to Bollywood. Honestly that’s a bunch of hogwash. A great song is a great song. It’s [remained true] for the last many years all over the world, that’s not going to change. What you do as intelligent marketeers, as intelligent platforms, as intelligent creators [is] you try to pitch music into the ecosystem — closest to what they’re [the audience] comfortable listening to. India traditionally has been broadly divided into two parts — and that’s [the] same for film as well — is, love, [which is] a humongous genre. It’s not pop and rock and soul like the rest of the world. It’s love — there’s happy love, there’s sad love, there’s crying love, there’s dance love — there’s all sorts of love going on. It’s love! If it sounds like a film song, of course it will! Let’s look at the songs before film. There [was a] golden era of non film songs going back 30 and 20 years ago when the Adnan Sami’s and the Alisha Chinai’s did music. I can very easily say that film music basically ripped off those guys. A great song is a great song. It’s what the Indian consumer likes. Whether it’s in Punjabi, whether it’s in Tamil, whether it’s in Bengali or Hindi doesn’t matter. So for us, we’re pitching great music that already feeds the market. Today if we believe that hip-hop is going to be the next uprising, it’s because we believe that it’s come to an age in the earlier conversation of a larger streamscape — Hip-hop, as a case in point in non film, probably has a few million people that are so cultish, that they will listen to every song 500 times. Divines fans I know for a fact listen to his music 24×7. They wake up with his music they sleep with his music they go to work with his music. That guy [the fan] multiplied by 500 times versus pop music that’s been pitched into the world — it’s probably at a number level the same. In today’s demographic and psychographic — in our country, the demo is an old way of measuring stuff. It’s who the people are, where they are, what they’re doing. While we don’t have accurate data — broadly we know, [for example] that the metros consume so and so. Look at the rise of regional [music]. Non-film is not just coming from Bollywood and non-Bollywood. Today regional amounts for a gigantic ever-growing chunk in the streaming platforms today. Where is all that coming from? Because the next generation that’s growing up, or even some of our own peers today — they’re no longer a single music consuming individual. Till 6 or 7 years ago, before the golden age died, you listened to Bollywood because that was served to you in your face across 20 music TV channels, radio and so on. It’s not the case anymore. Today we’re at a phase where the national radio air check — which cannot be bought into, which cannot be swung, nothing fake going on there — which was a 100% Bollywood driven chart, today has between 30% and 40% of our music sitting in there — whether its Sony, whether it’s ours, whether its Times, doesn’t matter. On average over the last 6–8 months, there are 3–4 of our songs sitting every week in the national radio air check which means these are the top 20 songs played on the radio in the country across all radio stations. There is a huge amount of Bollywood there, no question. Bollywood still probably governs the top positions. But the truth of the matter is that the ecosystem is changing. People’s tastes are changing. Our kids are now listening to Bollywood plus independent [or] Bollywood plus international — that is the market that we have to take cognizance of, and feedback into that market, and I think all of us are doing that great.
AB: I agree with that. I’ll just give you an example of the Punjab industry — the Punjab [music] industry is actually an independent music industry today — it’s not really a film driven music industry. I think successfully over the last 10 years its managed to grow itself into a very independent, artist driven community industry and I think that’s the start of what is heading to non-film music: an artist is able to express himself without interference, an artist is able to express what he thinks, what his heart believes, go out and do something different. And I can only urge every creator of this country — just go out and do what your heart believes and you will see the results in time.
EP: I think with both Zee and Saregama, you’re less focused on the non-film space — is that correct?
VM: Yes — We’re all looking up to Sir Devraj Sanyal [laughs].
EP: You’re all just waiting for him to figure it out — is that what’s happening?
DS: We just called it earlier — to your earlier slightly not so kosher point — it’s not that everyones just buying views stupidly. It’s not. The way people are marketing music is rapidly changing. Some of us have the advantage of looking and learning and absorbing what our global counterparts are doing. A certain new artist needs a different type of face. A slightly more emerged artist needs a different kind of face. I’ve got two artist managers who manage two of our full-time 360 artists here and they’ll tell you — Aayushman is here, who runs Sukriti-Prakriti [sister duo], I can see Medha at the back who runs Lisa Mishra — these are people who work with us every single day. These are people who deliver 3–4 songs a year. We never have conversations about how many YouTube views. Our only conversation is about how best to market it, how best to sample it, how much more can we do, what kind of newer psychographic can we go to, what kind of new social innovation — our entire marketing conversation is about innovation and doing better and bigger and nicer and shinier things, and being able to go really deep. At least in our world, we ain’t having any of those conversations. Does ad work happen? Of course, it does! But it’s no longer to buy a ridiculous amount of views to make a point. When my leadership sits every morning — my marketing director is here — I have never, for the longest time remember ever having a conversation, ‘Boss Kitna YouTube views Hua?’ [Boss, how many YouTube views have we had?]. We discuss audio streaming, we discuss the social ecosystem, we discuss the landscape. But YouTube, while it’s super important — and I say this with full clarity of mind — because it’s the only video tool, the rest is slowly coming. It’s an even mix. Not a single platform is [more] important [than the other], you need to be on all of them. Especially for music like ours, you need to be on TikTok, you need to be on Instagram, you need influencers, you need great looking videos, you need to be able to sample it far and wide and you need to do radio and you need to do TV. A single artist who releases a single, Ed, usually has between 7 and 10 days carved out where they can’t do anything else when they release their single. They’re on the road going to Chandigarh, Ahmedabad, Calcutta, going to radio, telling the story and singing. Now that never happened before. When people create great music, it’s our job as facilitators, to make sure it is heard [by] as many people as you can. Radio has 900 million listeners — nobody talks about that listener base. It’s humongous — it’s larger than mobile and everything else put together. How do you service that? There are people who are sitting and listening to that. If you look at it from a more fundamentally uplifted point of view, if you can serve your creator in a way they are not used to being served before — I have 17 exclusive artists (which are probably going to become a little more), and we work with a whole host of artists who are non-exclusive (they do film separately and they do non-film with us) — all of them have the same benchmark. They want to succeed because the one thing that’s flipped in India is — and this is with the greatest respect to everyone who does OST — they’re [the artists] tired of being the little subtext in the movie poster. Like Universal globally, or Sony or Warner — they all want to have their own faces, their own identities, their own songs, they want to be known for that — and that time has come. It’s not coming, it’s come! It’s now evolving.
On ‘Project 2022’: Looking ahead, and finishing comments
EP: Blaise, to wrap up, cause we’re running out of time here, there’s just so much to talk about. But, ‘Project 2022’ if you like, getting into the top 10 [recorded music markets] in that period — how are we feeling about that?
BF: I think we are on course. The headwinds are kind of reducing, the tailwinds are with us. Couple of examples: the simple PP [public performance] market for an emerging market like Brazil, today you are at 77 million US Dollars. India is 14th, we have catching up to do. For us to get to the top 10, we have to double our revenues. We are at 150 million [USD], we need to get to 300 million. We’ve got a PP market which is under penetrated, under exploited and there’s a huge ocean out there. I think if we can even touch Brazil at 75 [million USD], I think [we’ll be] closer there. 830 [million] smartphone users by 2020 is another great driver for us. And lastly, a 2.5 billion [Dollar] digital advertising market, we’re going to see a lot of sync opportunities. That’s again low hanging fruit. Sync is still about 7 million when an average emerging market is doing about 25–30 million. These are the top 3–4 drivers that will push us into the top 10 by 2022. So we are on course.
EP: Just to wind up, going down the panel, what’s the single greatest cause of optimism you have about your business at this point in the context of India?
MT: I think the very fact that everyone on this panel and the other companies in the audience are actually investing huge huge sums of money, raising money from our shareholders, from outside, and from the global principles — that is a great sign. And in parallel, that many musicians, and creators — I actually hate the word ‘creator’ — it’s just a wrong way to describe someone — but that many talented people are actually coming out. Like how Anurag said, if you look at Punjab — Some time on a panel Hardy Sandhu said “If you go to Punjab and lift up a stone there will be 5 musicians sitting there.’ I think that is an encouraging sign, that there is talent out there for you to find and invest in. And the third big important thing is the fact that non-film [music] plays a very significant part of the industry.
DS: I think everyone’s said everything — the one thing that’s going to drive a lot of growth is the whole fandom scenario. Fans, communities are being built, and you can’t see them. If you’re clever and you can tap into these communities or herald the growth of some of these, a humongous amount of future growth is going to come from that.
AB: We are also optimistic. We are also investing significantly in great content, and we have great artists emerging [from] this generation. We have the tools to measure and monitor which didn’t happen earlier. It’s a great time for music today. It’s a great time for artists today. Today artists are becoming big brands. I don’t see that day being far away from where a musician is not on par with a film star. That’s just the start.
VM: From the past where the stakeholders were spending more time fighting with each other, for once we are seeing all the stakeholders coming together — I think that should be the biggest catalyst.
BF: Demographic dividend, 120 million people [in the age group of 25–29 by 2020], 7% GDP growth rate, data getting cheaper, smartphone penetration getting faster.
EP: Excellent, thank you very much, everyone.
Written by – Ed Peto (M.D Outdustry)
Outdustry -Market-leading creative services and music rights management. China & India.
To know more follow Outdustry