Crescendo - and the crash

There's more music but less money in the business of music

From music channels that constantly run music videos to FM stations vying for earspace to ambient music that runs in office cubicles to screeching polyphonic ringtones, there is no doubting that we are hearing more music today than ever before.

But the irony is that the music industry is in the grip of a steady decline in actual sales, with even the number of large national music companies having shrunk from "six to three in 2004", according to Shridhar Subramanyam, managing director at Sony BMG India.

Sony's international buy-out of BMG Music is set to make it the largest music company in the world with a turnover of ¤ 5 billion.

According to Subramanyam, 2004 saw the "Rs 800 crore official Indian music industry in a state of continuing decline by an alarming 10-15 per cent".

But Indian Music Industry (IMI) secretary general Savio D'Souza insists otherwise, saying: "The market has grown by 5-7 per cent from the Rs 450-500 crore bracket in 2003."

He pegs the piracy segment at another Rs 450 crore, despite almost daily raids on establishments and constant seizure of CD burning equipment. But technology isn't keeping pace with musical piracy. "There are more than 600 sites that allow illegal downloads of Indian music," says Savio.

As always, film music dominated the turnstiles, accounting for 60 per cent of the net revenues, followed by international music at 15 per cent (up from 10 per cent and continuing to grow in the organised retail market in the top eight cities), while regional, devotional and Indian pop music accounted for the rest of the musical pie.

Film music, the mainstay of the industry in every category, witnessed a fall in recording rights. As a result, the cost of acquiring the music rights for a film's soundtrack have fallen.

While premium film banners of stars like Shah Rukh Khan witnessed a marginal drop in rights accrual fees for their music, the biggest losers were recording labels working with the B and C category films.

"The low revenue potential in every segment, triggered by the prevalence of piracy, led to a slashing of as much as 50 per cent of what we used to pay for the music rights of these films in 2003," says SonyBMG's Subramaniam.

It is this "" piracy, and free downloads "" that has led to a number of recording labels ringing in their last notes. Today, there are only three major companies "" T-Series, Sony-BMG, and Saregama "" making music.

As budgets have slashed, and more and new products jostle for the shrinking industry's investible pie, the downward movement is bound to continue. Nevertheless, film music successes like Murder, Dhoom and Veer Zaara provided some reason for cheer.

Yash Raj Music's debut year went better than any other music company's with three brilliantly successful albums. Hum Tum and Dhoom were sold in India by Saregama HMV, but the overseas sales went into Yash Raj Music's coffers.

The biggest success of all was Veer Zaara, which followed the performance of the film's box-office fortunes and became 2004's top seller. "It has sold 1.5 million-plus copies and stood on most retail charts for 14 weeks at the top slot," says Vijay Kumar, head of sales, Yash Raj Music.

The company started its music arm to infuse fresh blood into a down and out industry. This year it will step out of home production territory to market music for outsiders that include Sanjay Leela Bhansali's Black and the Bobby Deol-starrer Jurm, apart from home production Bunty aur Babli.

The non-Yash Raj success stories included Murder, Main Hoon Na and, to some extent, Aitraaz and Musafir.

In the non-film segment, high-visual appeal remixes set a trend last year. Savio D'Souza feels that "remixes work to a certain extent" since their "success depends on the video rather than the audio".

Without the video, the audio does not have much impact. And though music channels have made popstars a sensation, cassette sales don't seem to adhere to that view.

The most outstanding new talent in the non-film segment came from fledgling music label Phat Phish Records' overnight sensation Rabbi Shergill's rendition of "Bulla ki jaana".

Phat Phish proprietor Anand Surapur says "there were 500 downloads of Rabbi's ringtone in the first three days of its music video launch". Shaan, Adnan Sami and a bevy of remix churning DJs (and able-bodied video girls) raked in some moolah in the segment as well.

The other concern that's been giving music labels sleepless nights is the issue of royalties paid on music played at restaurants, pubs, on the radio, and as ringtones. Ringtones are big business but sadly, industry stalwarts feel that the fee paid isn't enough.

"The non-physical form of the music accounts for less than 5 per cent of the revenue to the industry, which is paid as royalty, when it should be at least three times that number," says Subramanyam.

IMI believes the revenue from ringtone downloads to the music industry accounts for a meagre 2 per cent of the industry's turnover.

The next three-five years will see a mobilisation among the industry to engage in dialogue with television stations (to target talent hunt singers who sing songs of old artistes without paying royalties), radio stations, restaurants and discotheques to start shelling out more money.

"Sure, the music companies should get paid more; but it's the operators who keep the lion's share to themselves," says Mobile2Win's country head Rajiv Hiranandani, who witnessed a phenomenal 100 per cent jump in ringtone downloads last year, the most popular being the title track from Yash Raj's Dhoom.

His company, which creates content for cellular companies, feels larger problems lie ahead for the music industry.

"2004 saw the advent of Tru Tones (Airtel's Hello Tunes), which allows users to listen not just to the ringtone but the actual song. Once quality upgradation happens in cellular phones, it would be easier for users to download the song than pay for a CD," he says.

To tackle the piracy problem on a war footing, IMI is canvassing for piracy to be placed under the Goonda Act as has been done in Tamil Nadu. For an industry robbed off revenue on account of technological innovations, it desperately needs some ray of hope in 2005.