Musicnomics: Making Sense Of Money In The Indian Music Business (Panel)
Tags: Music Business, Music Industry, All About Music, India, Emerging Markets

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 monetisation, 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 a 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 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 [2019]. 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 in the 2–3 year horizon. We are already seeing (on the back of 2018 and 2019) success enough, monetisation 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 of (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’s 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 which 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 judgement 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 judgement I think its an indicator of things to come.

EP: The original judgement itself is highly positive. There’s now an appeal which isn’t being seen as being a 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 to 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 the 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 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 which 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 24x7. 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, 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 an 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 cognisance of, and feed back into that market, and I think all of us are doing that greatly.

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?

VM: Yes.

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 are 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 everyones 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 into 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 where a musician is not at 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.