If Sunil Bohra has his way, online digital platforms may soon become the industry norm for how a producer decides to sell her film’s music rights.
Many decades ago, film producer Shriram Bohra came out with the movie Al Hilal which featured the song Hame to loot liya milke husn walo ne. Ironic words, since decades later, this popular number is still raking in the cash—not for the Bohras, however, but for HMV, which owns the rights to the song. His grandson Sunil Bohra hopes to change that.
The fundamental problem with the existing model in the business of music in Bollywood is that most producers flog the rights to a music label in one shot for a sum of money that may grossly undervalue the property sold. Instead, he wants to provide a technology platform that can enable people like him to collect money over the lifetime of the song. His recently launched online music studio could soon challenge the dominance of big music labels like T-Series, Yash Raj Music, Saregama Shemaroo and others who buy and control the music rights of most Hindi films at throwaway prices.
“Instead of one-time acquisition of music rights, we want to promote film music albums at initial cost to the producer. And only after music starts selling will the studio plan to split the revenue with the producer in a 70:30 ratio favouring the producer,” says Bohra, sitting in his quaint Versova office, framed by a huge poster of Saheb Biwi Gangster which was produced by his company. The studio, which also has movies like Tanu Weds Manu, Shaitan and Not a love story in its stables, is now targeting producers of small and medium budget films(which account for over 80 per cent of films released annually) so it can house and sell their music digitally for a cut.
This is a novel plan simply because it propels a relatively old-fashioned industry squarely into the digital future, with concepts such as transparency, real-time reporting and a digital rights management. Bohra’s company will offer monthly reports of revenue earned by a film’s music album and even give a break-up of sales across mobile, online, radio, digital as well as from physical locations. “Having an online label requires very less investment. This is just an experiment and innovation in our existing business. In next three-five years, nobody knows what could be the revenue potential from the music industry. There is a lot of action waiting to happen,” says Bohra.
He’s right. The popular perception is that the music business is declining, but this is a major misconception. In fact, it is alive and thriving. In 2010, for the first time, the sale of music through digital platforms surpassed physical sales. “What’s really helped is the ubiquity of the mobile phone and the digital revolution that’s come alive through DTH, radio and the slew of music channels,” says Jehil Thakkar, Head, Media and Entertainment, KPMG.
According to a 2010 FICCI-KPMG report on Media and Entertainment industry , digital brought in Rs 420 crore, while physical contributed Rs 320 crore of a total industry size of Rs 850 crore. By contrast, in 2007, digital accounted for Rs 140 crore, while physical was Rs 560 crore.
Other numbers also bear out the digital boom in the music industry. In 2006, it accounted for just 14 per cent of the Rs 700 crore industry’s revenues. Today, the figure is a shade under 50 per cent. KPMG’s estimates suggest that it will move to a much larger 79 per cent by 2015, with barely 6 per cent coming from physical. Clearly, a lot is at stake.
This may not be readily apparent to someone still wedded to the old-world ways of doing business in Bollywood where music is always sold without a music company ever getting a chance to listen to its soundtrack. Sounds ridiculous, but that’s exactly how this uncertain-return industry operates. For producers who see selling music rights as a way to derisk the cost of their films, and get in some useful cash flow, this is a vital part of how their business works. For instance, Zindagi Na Milegi Dobara, Ra.One and Body Guard sold music rights to T-series at Rs 12 crore, Rs 15 crore and Rs 9 crore. “For a film with a budget of Rs 12 crore, music can bring in as much as 35 per cent, while for a film with a Rs 60 crore budget, that number could well be 25 per cent,” said Shridhar Subramaniam, President (India & Middle East), Sony Music Entertainment India.
Yet, with platforms for delivering music expanding, filmmakers are rethinking their models. For instance, Tips which produced Ajab Prem Ki Ghazab Kahani in 2009, grossed close to Rs 85- 90 crore at the box office. But instead of being sold for around Rs 2 crores, the music has brought in Rs 4 -5 crore revenues to date. “Since the rights were with me, I did not have to share in terms of music . Even after two years I am still earning from music,” said Kumar Taurani, Chairman and Managing Director, Tips.
This is a model that seems to have appealed to Saregama and T-series as well. T-series which released the Salman Khan starrer Ready in June similarly decided to hold on to the music rights when it could have been hawked for a handsome sum. “The thought never entered his mind. The fact is we have a great label and the music business is one we understand really well,” said an official.
There is another important reason why this shift is taking place. Popular songs like Munni Badnaam Hui, Sheila Ki Jawani and Chamak Challo have translated into digital applications in various forms. If a video game of Munni were developed, not owning the music rights could be a huge impediment to the franchise. Some film-makers and production houses have already realised this potential. UTV Motion Pictures has stopped selling the music rights of its films. Its last release, Delhi Belly has earned over Rs 6 crore in music till now.
In fact, a large number of players across the music industry value chain seem to be poised for sweeping change. Tips Industries, for instance, has virtually stopped physical production of music. “The only time we make CDs these days is when someone comes to us with a large order and makes a down payment,” says Taurani. Meanwhile, Shemaroo, the largest independent aggregator in Bollywood with over 2,500 titles, has put in place a team of 80 to execute its digital plans. “These people work on key platforms like mobile, internet and IPTV,” points out Hiren Gada, Director, Shemaroo Entertainment. His company owns the perpetual rights for over 300 films like Amar Akbar Anthony, Chupke Chupke, Namak Halaal and Jab Jab Phool Khile.
Phone makers are of course an important component of this chain. It is estimated that Nokia has over 1 million users in India, who, according to KPMG, account for 16 per cent of its global downloads. From an operator’s point of view, it is estimated that music brings in close to 60 per cent of its value-added services or VAS, much of which is bought from players such as Music Bharti ( a part of Bharti Airtel), which claims to be India’s largest music company in revenue terms Currently, 30-35 per cent of revenues flow back to the music industry, but that could change. “So far there is no particular revenue model for the industry as the bandwidth is slow. But the delivery system will change, forcing many players to relook strategies and ask for larger share,” said Bohra.
This much seems clear: bits and bytes are going to change Bollywood music forever.
