 "Saregama lets go of the physical")
Saregama India replaced the legendary music brand HMV in 2000, when the then RPG Group, which had the rights to the Gramaphone Company India and hence, HMV, was faced with an increasingly assertive EMI that wanted more control of the use of its brand names (HMV). Today, HMV, globally a music retail brand, is being steered by its new Canadian parent (Hilco) out of the woods. While it struggles in the European markets with dwindling sale of physical CDs and DVDs, Saregama is bracing to avoid a similar challenge.
Saregama still has its recording and artist development function or A&R (artiste and repertoire). But it has taken a call on the format it wants to bet on, and there is no prize for guessing. Close on the heels of the parent, RPSG Group's decision to shut the MusicWorld retail chain, Saregama has licensed Sony DADC, the physical format manufacturer, to produce its CDs and DVDs for the next three years.
Saregama will be paid royalty as well as a share of the revenue as per the agreement. The CFO G B Aiyeer says, "There was a question of capital allocation. So, we have decided to focus on digital, which is a younger business but gave us 70 per cent last fiscal." Aiyeer refers to both Saregama's own portal launched in 2008, and the ties with telecom operators, mobile phone manufacturers, DTH operators and Internet music aggregators who offer myriad means of music perusal such as caller ring-back tones, downloads, subscriptions and streaming.
Licensing from other labels and sources will be key to the portal's relevance as music aggregators such as Hungama, Dhingana and Saavn have become one-stop online shops for music sampling and consumption.
Saregama's rich archives might help it differentiate, even though audiophiles such as Vikram Sampath rue that the company has been unable to archive music before the 1940s, recorded and produced by it. Sampath is archiving and posting Indian music from 1902-50, spanning cinema, classical and folk music online (Archive of Indian Music), since it is now in the public domain (more than 60 years in existence).
But for copyrighted titles, Manthan says, "We expect a healthy chunk out of the digital space, especially our relaunched portal. We are already a well-known consumer brand unlike some digital music players, hence, it won't be difficult to drive traffic."
Steering the digital renaissance for the brand will be the chief technology officer, Keshaw Sinha, who joined in May, with previous stints at Web18 and Zapak spent in launching and scaling up digital properties.
The market for physical CDs and DVDs is at about Rs 300 crore (one-fourth of its size five years back).
But digital stores can fold up too. Flipkart, the veteran e-commerce player, closed its Flyte service which sold music titles and albums much like a desi iTunes, but found few takers due to rampant piracy and the absence of easy online payment models.
While piracy remains a bane for all intellectual property, Adarsh Gupta, senior vice-president of Saregama agrees that e-commerce is an issue, especially for "micro-transactions, that are frequent and small-ticket, such as purchase of songs." He adds, "We might look at multi-tiered pricing and smart cards for our portal. Models of freemium subscriptions and downloads have turned profitable globally."
What is in it for Sony?
Sony DADC is on a licence-buying spree. In music, it already has Sony Music and Saregama and is in talks with more. In movies and videos, it has rights to produce content from Walt Disney, Warner Brothers, National Geographic and Sony Pics. Starting a year ago with a professional content licensing team, its confidence is being fuelled by a state-of-the-art manufacturing plant that can churn out over 2 million discs daily, including CDs, DVDs and Sony's proprietary Blu-Ray.
"The the market fragmented due to languages preferences has led to a faster decline of the physical format. Companies have also suffered from poor distribution, junk packaging and content and inexperienced retail service," says Rajat Kakar, business head (home entertainment services), Sony DADC. Kakar's team is planning to tackle fragmentation by addressing local markets. It will target seven markets such as Bengal and Kerala that have scope for media isolation and are strong in consumption of local language content with vernacular and dubbed content. It will also widen reach from 1,250 to 2,500 touchpoints this year.
More labels might toe Saregama's line. Tips Industries MD Kumar Taurani says, "Even we want to hand over the physical production rights to someone. Times Music has distributed some of our releases for us. It becomes unwieldy to service retailers and dispatch SKUs. But for someone to consolidate the logistics of three-four players under one roof for say, five titles a month, it makes sense."
Why keep it alive?
So, even when Saregama and Tips have their in-house digital teams and partnerships with platform providers, why keep the physical format alive?
After all, retailers are performing dismally in sale of physical formats of music. "We tried eschewing a CD for Race 2 but Twitter burst out in protest, for example," points out Taurani. Gupta agrees that "cutting a CD" is still the best way to launch music.
With physical browsing almost on life-support, digital stores would have to incorporate more sampling for the audiophile. They will not only have to simplify browsing but also payments. Saregama hopes to reveal more of what it has in store by the end of this year.
Saregama still has its recording and artist development function or A&R (artiste and repertoire). But it has taken a call on the format it wants to bet on, and there is no prize for guessing. Close on the heels of the parent, RPSG Group's decision to shut the MusicWorld retail chain, Saregama has licensed Sony DADC, the physical format manufacturer, to produce its CDs and DVDs for the next three years.
Saregama will be paid royalty as well as a share of the revenue as per the agreement. The CFO G B Aiyeer says, "There was a question of capital allocation. So, we have decided to focus on digital, which is a younger business but gave us 70 per cent last fiscal." Aiyeer refers to both Saregama's own portal launched in 2008, and the ties with telecom operators, mobile phone manufacturers, DTH operators and Internet music aggregators who offer myriad means of music perusal such as caller ring-back tones, downloads, subscriptions and streaming.
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Saregama's music portal, which houses 2,50,000 of its tracks, will soon play a bigger role. Says the MD Surya Manthan, "We will revamp and relaunch our website well before the year is over. Right now it presents a sub-optimal experience (in terms of user interface). We will be open to licensing other music too."
Licensing from other labels and sources will be key to the portal's relevance as music aggregators such as Hungama, Dhingana and Saavn have become one-stop online shops for music sampling and consumption.
Saregama's rich archives might help it differentiate, even though audiophiles such as Vikram Sampath rue that the company has been unable to archive music before the 1940s, recorded and produced by it. Sampath is archiving and posting Indian music from 1902-50, spanning cinema, classical and folk music online (Archive of Indian Music), since it is now in the public domain (more than 60 years in existence).
But for copyrighted titles, Manthan says, "We expect a healthy chunk out of the digital space, especially our relaunched portal. We are already a well-known consumer brand unlike some digital music players, hence, it won't be difficult to drive traffic."
Steering the digital renaissance for the brand will be the chief technology officer, Keshaw Sinha, who joined in May, with previous stints at Web18 and Zapak spent in launching and scaling up digital properties.
The market for physical CDs and DVDs is at about Rs 300 crore (one-fourth of its size five years back).
But digital stores can fold up too. Flipkart, the veteran e-commerce player, closed its Flyte service which sold music titles and albums much like a desi iTunes, but found few takers due to rampant piracy and the absence of easy online payment models.
While piracy remains a bane for all intellectual property, Adarsh Gupta, senior vice-president of Saregama agrees that e-commerce is an issue, especially for "micro-transactions, that are frequent and small-ticket, such as purchase of songs." He adds, "We might look at multi-tiered pricing and smart cards for our portal. Models of freemium subscriptions and downloads have turned profitable globally."
What is in it for Sony?
Sony DADC is on a licence-buying spree. In music, it already has Sony Music and Saregama and is in talks with more. In movies and videos, it has rights to produce content from Walt Disney, Warner Brothers, National Geographic and Sony Pics. Starting a year ago with a professional content licensing team, its confidence is being fuelled by a state-of-the-art manufacturing plant that can churn out over 2 million discs daily, including CDs, DVDs and Sony's proprietary Blu-Ray.
"The the market fragmented due to languages preferences has led to a faster decline of the physical format. Companies have also suffered from poor distribution, junk packaging and content and inexperienced retail service," says Rajat Kakar, business head (home entertainment services), Sony DADC. Kakar's team is planning to tackle fragmentation by addressing local markets. It will target seven markets such as Bengal and Kerala that have scope for media isolation and are strong in consumption of local language content with vernacular and dubbed content. It will also widen reach from 1,250 to 2,500 touchpoints this year.
More labels might toe Saregama's line. Tips Industries MD Kumar Taurani says, "Even we want to hand over the physical production rights to someone. Times Music has distributed some of our releases for us. It becomes unwieldy to service retailers and dispatch SKUs. But for someone to consolidate the logistics of three-four players under one roof for say, five titles a month, it makes sense."
Why keep it alive?
So, even when Saregama and Tips have their in-house digital teams and partnerships with platform providers, why keep the physical format alive?
After all, retailers are performing dismally in sale of physical formats of music. "We tried eschewing a CD for Race 2 but Twitter burst out in protest, for example," points out Taurani. Gupta agrees that "cutting a CD" is still the best way to launch music.
With physical browsing almost on life-support, digital stores would have to incorporate more sampling for the audiophile. They will not only have to simplify browsing but also payments. Saregama hopes to reveal more of what it has in store by the end of this year.