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Flashback 2014: Music industry's revenues under pressure, pins hopes on data

Ajita Shashidhar     December 29, 2014

The Rs 700-crore music industry's revenues continued to come under pressure for the second consecutive year in 2014 due to the Telecom Regulatory Authority of India (Trai) regulation against caller ring back tones (CRBT).

Trai has made it mandatory for telecom service providers to first get permission from the subscribers if they wish to activate a CRBT, and only then go ahead with it. This move has severely paralysed the music industry, where CRBT contributes 70 per cent of the digital revenues of music companies and 60 per cent to their overall revenues.

Though the projected growth rate for the industry was anywhere between 5 and 7 per cent in 2014, the industry actually de-grew by 5 per cent, says Shridhar Subramaniam, CEO, Sony Music India. Though the CRBT growth declined, the industry's hopes of benefitting from the data business also fell flat.

"While the VAS (value-added service) revenue dipped, data hasn't picked up as per expectation," says Devraj Sanyal, MD (South Asia), Universal Music.

This has led to all music companies struggling to post profits.

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However, Shridhar of Sony Music India defends himself by saying that his company's market share has actually gone up from 20 per cent to 25 per cent in the last one year. "We have started representing Warner Music from this year in India, at the same time the Tamil and Punjabi film industries have done well for us. We also had big Bollywood hits such as Bang Bang and Humpty Sharma ki Dulhania. All these factors have helped [in] cash registers ringing."

On the other hand, Sanyal of Universal says that his company's focus on non-film, non-traditional label business has proved a godsend. "Almost 45 per cent of our revenues have come from alternative sources. Had we not had our alternative revenues, we would have been in trouble." The company, says Sanyal, released Rahat Fateh Ali Khan's album, Back 2 Love, which got 26.5 million views. Even the live music show business has done well for Universal, claims Sanyal. The company has done over 30 live shows this year, where it has promoted its own talent.
 
Even though data didn't give them the expected revenues this year, Shridhar of Sony is confident of getting huge chunks of business from data in the coming year. With smartphone penetration likely to increase from 70 million to 200 million in 2015, Shridhar considers it to be a game changer for the music streaming business. "The best part of music streaming is that consumers have started listening to complete tracks. There is a resurgence of consumers experiencing pure music, which is heartening."

There are already a host of service providers such as Saavn, Hungama and Gaana offering music streaming. Even the telecom companies have started offering music streaming services. However, unlike the CRBT, which is a subscription-based model, music streaming is dependent on advertising. What remains to be seen is whether the streaming platforms would get the desired ad support.


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