The Indian Music Industry & SaReGaMa

MG 785: Group Project

Aditya Banerjee - 08927850

Phani Raj- 08927896

Pramit Joshi- 08927815

Shishir Pol- 08927808

Sushant Waghmare- 08927827

Vasant M V- 08927807

Agenda

Music Stakeholders – Labels, publisher, online,

KE concepts – Commons, New Business Model, Technology

Current Online trends – Global

Current Indian music scenario

New Biz Models

Sustainability

Reference

Music Stakeholders

Artist

Professional Musician

Labels

Recording Studios

Event Managers

Consumer

Regulators

Uti lizati on of KE Concepts

Creative Commons

Copyrights

Technology as Enabler

New Business Models

Long Tail

Social Networks

SaReGaMaThe Company

Licen

ce Fe

es

Audio Compact Disc

s

Free C

ommercial

Time -

TVDVDs

Pre-Reco

rd. C

assett

es

Others

Distrib

ution Rights

Video CDs

05

1015202530354045

Composition of SaReGaMa's Revenue

2009 2008 2007

% o

f Sal

es tu

rnov

er

Licen

ce Fe

es

Audio Compact Disc

s

Free C

ommercial

Time -

TVDVDs

Pre-Reco

rd. C

assett

es

Others

Distrib

ution Rights

Video CDs

0

10

20

30

40

50

60

Sales Value in Crores

2009 2008 2007

Rati o Analysis - SaReGaMa

Music Industry (INR bn) 2005 2006 2007 2008 CAGR 2009p 2010p 2011p 2012p 2013p CAGR

Physical 7.25 6.34 5.55 4.86 -12.5% 4.37 3.93 3.54 3.19 2.87 -10.0%

Digital 0.86 1.11 1.44 1.88 30.0% 2.44 3.22 4.19 5.24 6.55 28.4%

Television and Radio 0.21 0.26 0.32 0.39 22.5% 0.46 0.56 0.67 0.78 0.92 19.0%

Public Performances 0.03 0.07 0.12 0.17 75.3% 0.21 0.25 0.29 0.33 0.38 17.0%

Total Industry Size 8.3 7.8 7.4 7.3 -4.4% 7.5 8 8.7 9.5 10.7 8.0%

Ratios SaReGaMa TipsIndustry (Whole Content provider)

Mar-09 Mar-09 Mar-09Debt-Equity Ratio 0.35 0.46 0.19Long Term Debt-Equity Ratio 0.07 0.4 0.13Current Ratio 0.99 3.46 1.63Fixed Assets Turnover 1.2 4.51 0.48Inventory Turnover 5.61 1.18 4.11Debtors Turnover 4.3 6.97 3.44Interest Cover Ratio 1.47 7.14 4.42PBIDTM (%) 9.16 24.91 19.88PATM (%) 1.32 17.69 6.1ROCE (%) 5.01 13.94 4.35RONW (%) 1.46 15.34 2.41

Financials – SaReGaMa/Tips

Income f

rom Fi

lm Pro

dn & Disb

n

Royalty

recei

ved

Compact Disc

Pre-Reco

rded

Audio Cassett

es0

20406080

100

TIPS sales

200920082007

Income f

rom Fi

lm Pro

dn & Disb

n

Royalty

recei

ved

Compact Disc

Pre-Reco

rded

Audio Cassett

es0

20

40

60

80

TIPS % of sales turnover

200920082007

39%

34%

10%

5%

3%3% 3% 2%

Revenue break up - SaReGaMaLicence Fees

Audio Compact Discs

Free Commercial Time -TV

Digital Versetile Discs

Pre-Record. Cassettes

Others

Distribution reights

Video Compact Discs

Jan/05 Jan/06 Jan/07 Jan/08 Jan/090

20

40

60

80

100

120

140

160

Changing times for SaReGaMa

Net Sales Operating Profit Adjusted Net Profit

Reactions down the memory laneDisruptive technologies & copyright

Technology Innovati ons

And parodies…

Copyright for the masses

1906 2004

The Enforcers

MPAA

USA Canada Australia

UK International India

Entertainment Industry associations around the world

Creati ve Commons

“The commons” — the body of work that is available to the public for free and legal sharing, use, repurposing, and remixing.

Standardized way to grant copyright permissions to their creative work.

“All rights reserved” to “Some rights reserved.”

What Creati ve Commons Off ers to Music business?

Promotion to the artist and his records

Allows artists to reach larger audience

Build upon reputation

Foster interaction between music members

Encourage artistic and future exchange

Freedom from economic pressure of big companies in releasing any kind of work

Bypassing traditional distributors and publishers

Will it change the face of music business?

Relationship between the parties involved in the music business

Artists are dependent on the work of others

The internet not creative commons makes disintermediation or cutting the middle man

Creative commons is all about skipping the intermediary

Only small record labels have agreed to license their work under the creative commons model

Big record labels already have a established system with lots of artists and work of art with them with market reach

Big record labels make a lot of money out of the current copyright system

Creative commons model will jeopardize their present business model , revenues and even their existence.

Stakeholders not yet clear how creative commons model will fit within those agreement signed previously.

Creative commons model is helpful in limited situation and not in all

The International SceneTechnology as the enabler

Online Music Stores

Major license

revenue for labels

Music Streaming

Portability

The Good Enough Revolution

New Devices

New Media

Online Radio

Major opportunity to recommend & guide users

to purchase channels

E-merging trends

Music recommendation engine acquisitions

Game changers

Search & recommendation

the key

The Indian ScenarioTechnology followers?

Music Streaming

Revenue from licensing

Music Downloads?

Where are the legal sources?

Amateur Publishing

• Crowdsourcing• Commons• Social Networking• Prosumer friendly

Personalizati on Services

Multiple revenue sources: License, service charges, partnership

Mobile Downloads

Mobile Music Exchange

Growing demand for music content on mobiles

Indian Music Industry (IMI) launched Music Mobile Exchange (MMX)

MMX a 7-member body comprising SaReGaMa, Aditya Music, Tips, Venus, EMI, Sony and Universal

MMX license - mobile stores/shopkeepers can legally sell music without violating the Copyright Act

MX licence - for a period of one to three years, at a minimal cost of Rs 1500- 5,000 per month per computer

The Value ChainEvolution over the years

Past

Produce Manufacture Distribute

Present/Future

ProduceConsume• Also producers

Where’s SaReGaMa?Technology leader/follower/laggard?

SaReGaMa.com over the years

Source: http://web.archive.org/web/*/SaReGaMa.com

1997 20012004 2006 2009

Focus seems to be on Hamaracd.com

rather than SaReGaMa.com

SaReGaMa on iTunes Store

License revenue

Hamaracd

Personalised Audio CD

Video Catalogue

rajshri.com

Some Partners

Business ModelsPutting it in action

Key Observati ons

Copyright infringements still a major worry

Key revenue streams online

Advertisements

Licensing

Value added services

Freemium models quite popular

A large user base is the best asset online

Long Tail can be manipulated

Fattening

Recommendations

Business Model Ideas

Policy to give away old tracks/single track from new albums under a CC license

Generates publicity

Draws people to channel

Charge for remastered/modified tracks (Classics’ Revival etc)

Subscription based streaming service

Purchased tracks remain in the cloud

Multi device applications to play purchased tracks

Allow DRM free downloads of purchased tracks

TV channel

Store with studio

CSR: Sponsored music labs in schools

Bands & Artists under the SaReGaMa umbrella

Music from the CloudsBusiness Model 1

Do P2P users buy more music?

Caveat: Survey relies on consumer recall & accuracy of information

Studies conducted by CRIA & in UK indicate that people who download music illegally from the internet spend more on music purchases than or equivalent to those who do not

Can it be extended to

India?

UK Study

CRIA Study

Some numbers – iTunes Store Sales

Music from the cloudsSaReGaMa Online

Service

Individual ConsumerCorporate

Partners

Price:Rs 10-15 per track (PPP$)Subscription services

Promos:• Reward points• Discounts

Special terminals at outlets to customise service as per customer’s needsMedium of customer’s choice: USB, CD, DVD etc

Alternate pricing strategies:• Pay what you like• Demand based ~ airline tickets

SaReGaMa BandsBusiness Model 2

Music Band Touch points

Pro Conce

rts

•National Level Artist•Huge Promotion •Revenues: Sale of ticketsLocal

concerts

•During festivals (local, College)•Corporate celebrations•Promotion: By organisers • Consumer: Invites sent by organiser, usually does not pay

Private Concer

ts

•Marriage parties, Business Hotels, Cruiz , etc•Promotion: At the discretion of the host•Revenue: Host family pays•Consumer: Friends and Family

SaReGaMa BandSigns up

contracts with local Bands

Infrastructure sharing

Easy search for Consumer

Quality and standardisation

Steady income flow from

performance

Event locations can also double

up as POS

Band Members paid per

performance

Band members promoted through

SaReGaMa Network

SaReGaMa taps a larger audience and

an alternative revenue stream

Regional Band which grow in popularity can

compete at national level

SaReGaMa gets a steady stream

of content

Win win situation for all stake holders

What’s in it for a Music Band?Financial/technical support from SaReGaMa

Co branding ,Possibility of making it big!!

Consumers of Band Music

Assurance of quality

Value for Money

SaReGaMa Experience

Search time reduction

Professional Service

How does it benefi t SaReGaMa?

Expands its networks of music

Commission on performances

Can promote songs under its label

Content Creation

Platform to distribute merchandise

Brand recall increase

Could get consumers to collaborate

Image sources

Wikimedia.org

http://techperspective.com/?p=7

www.hamaracd.com

Flickr.com

http://www.loc.gov/exhibits/bobhope/images/vc36.jpg

Reference/Links

http://www.indianmi.org/newsletter/Dec1/GurmeetInterview.html

http://www.indianmi.org/newsletter/November1/Subroto%20Interview.html

http://contentsutra.com/article/419-SaReGaMa-plans-online-music-store-whos-going-to-change-the-game/

http://www.rajshri.com

Ipsos MediaCT survey in UK: http://www.independent.co.uk/news/uk/crime/illegal-downloaders-spend-the-most-on-music-says-poll-1812776.html

CRIA study in 2006: http://support.crtc.gc.ca/applicant/docs.aspx?pn_ph_no=2006-1&call_id=29786&lang=E&defaultName=Canadian%20Recording%20Industry%20Association%20%28CRIA%29

http://www.wired.com/gadgets/miscellaneous/magazine/17-09/ff_goodenough?currentPage=all

http://arstechnica.com/tech-policy/news/2009/10/100-years-of-big-content-fearing-technologyin-its-own-words.ars

Indian Music Publisher’s Annual Reports

http://www.india-server.com/news/indian-music-industry-launches-music-7227.html