Earlier the sale of CDs, DVDs and cassettes formed the physical form of business, but now, music is heard through non-physical forms like the internet, mobile, radio and television, says Kumar Taurani, Chairman and MD, Tips Industries Ltd.
Bhushan Kumar, Chairman and MD, T-series, adds, Years ago, physical sales of CDs were the only mode of monetisation for music labels. So the music rights were sold at lesser price compared to today. In the last five years or so, price for music acquisitions have increased manifold due to the increase in the box-office collections as well as increase in monetisation from various platforms like TV, radio and digital along with physical sales.
The digital world
So while, digitisation takes over the physical form of music, companies now have deals with TV and radio channels, websites and mobile companies. The deals differ as per the mediums, size of the movie and usage of different platforms. As for channels, it differs according to the genres like GECs, music, news, lifestyle channels depending on their usage and size. Same goes for radio channels but on radio, deals depend on hourly fees, shares Bhushan Kumar. While Taurani says, We do have different kind of deals with mobile companies or TV channels. When theyre playing our music, they pay us. But when were promoting our film through them, we pay them. Depending on various situations, different deals are signed.
In this entire cycle, a films producer is at the least risk. Music companies pick up music rights for a particular film by giving a humungous amount to the producer. If the music doesnt do well, the company bears the losses, while at times, they also end up earning huge profits. Music plays a very important role in drawing the audience to the theatres. For example, the Aashiqui 2 album was a huge rage even before the film released, which later contributed to the success of the film on the whole, as audiences flocked to the cinema halls. Even the music of Yeh Jawaani Hai Deewani became extremely popular before the film released. Films guarantee revenue not only on the basis of content, but also on super-hit music. The promotional campaign for the film before its release, chiefly depends on the music. It helps the film generate revenue from music and helps the movie get a good opening. For example, what Lungi dance did for Chennai Express, Tum hi ho did for Aashiqui 2. In fact, Aashiqui 2 songs helped us in recovering money and earn profits. Music usually contributes 10-15 per cent profit, depending on the film, says Kumar.
The jingle of money
The revenue generated from music may also add up to a films overall profits. Sometimes, the music of a film, even minimises the damage done at the box-office. Taurani says, It depends. The revenue that comes from music varies from two to 15 per cent of the overall profits of the film.
Although, the scenario has changed over the years, the picture still remains hazy regarding the return on investment from music sales, considering the huge costs involved and piracy burning a hole in the profits. Ratan Jain of Venus, expresses, I do not know whether certain music companies who are buying the music rights of films manage to make a profit or not. Personally, I feel the price that big budget films demand for the kind of music they are doling out is not worth it. Hence, now our company doesnt buy music rights. On the other hand, Kumar says, With digitisation, physical sale of music has reduced, but piracy is still affecting everyone. The Indian Music Industry has taken strong initiatives to counter piracy. Though, the returns on music sale have increased due to new mediums available, the music labels are facing tough times as the cost of music acquisitions has increased manifold. No doubt, the avenues to recover money have widened, but at times it is not enough to recover the cost of acquisition and promotions, opines Kumar. While Taurani shares a similar view, hes also very positive that the scenario will get better, At various times, in every business, theres always some kind of transition happening, from physical to non-physical. Today we have to combat piracy, but were hoping that the future will be good. The scenario is not bad, and with a proper business model in place, all the companies are surviving.