|
1st July ,
2007 |
Or Read on below .....
Interview with Mr. Rajat Kakkar, Managing Director, Universal Music India
Q: Digital music is the latest buzzword in music industry
circles. Lets begin with some of the recent initiatives taken by Universal
Music India – especially in the space of Digital Music?
A: First of all, I think there is more written about
digital music than what is actually prevalent.
Just to give you an
idea, here are some figures- Today the worldwide market for digital music
is 20 percent of the overall global music market. That itself should show
you how there is more hype than substance. Our market sales still indicate
80% physical selling. This means that the bulk of the sale is still
concentrated in the physical product. Having said that, ‘digital’ is
going to drive the Growth Era.
By 2010 we will have a situation where
digital music would have overtaken the physical market.
It presents a
very exciting medium where there is low risk and high reward. Imagine a
scenario where we can co-ordinate artistes digitally and show case the
songs digitally. The manufacturing costs go down, the cost of distribution
goes down and naturally therefore it is a medium, which every company
including Universal is investing in right now.
I think in the Indian context we must look
at a different angle when we use the word DIGITAL.
Due to the lack of
broadband penetration in India, the Internet is yet to gain prominence in
the music scenario. So whatever little digital music is happening in India
exists over the mobile phones. Again, the mobile networks have only 2.5 G
and not the required 3G capabilities. This means that what we have are
digital ring back tones and ring tones.
The real power of digital will be noticed when full track downloads will be available both on broadband as well as on the phones so that people can then ‘own’ songs in a digital manner. Today what they own are only derivatives. A 30 second clip of song, which masquerades as digital. But I think going forward digital will get far more exciting so long as there is capability to download full songs in a legitimate manner.
Q: Given that more and more people are turning to the Internet
for their music needs does Universal have any new-media, music online or
Internet sale of music strategy in place?
A: As the world’s largest record company we have both
a responsibility as well as a role to play as far as spearheading the
music industry is concerned. However our priority is to ensure that we are
known as people who create good music.
For our digital foray we have forged great alliances with different digital partners. For example with I-tunes, a leading digital provider in the world we have a good partnership. We may also look at some of the other digital providers like Verizon digital mobile network or Rhapsody, O2 or Napster as all these companies have plans in the digital space. Universal will look at partnering with these people and ensuring that our content is available in the digital space as well.
So what both Universal and Universal Music India are trying to do is to completely digitize our entire audio work. Let me give you an example. Say an Indian operator like Soundbuzz, which is the only operator in this space wants to offer digital downloads to its listeners. Most music companies would give them a CD and they would convert the CD and offer it as digital downloads. But we at Universal have laid a sort of pipeline so that our entire universe of 5 million songs goes straight to Soundbuzz. So tomorrow if we sign a deal with them all 5 million songs will be available to the listeners of Soundbuzz. That’s the kind of strategy we are deploying where we are not building the front end but providing the requisite back end, which is "CONTENT". Our partners can then concentrate on how to make things work better.
Q: What’s the time frame we are looking at when we talk about
digital downloads of this nature?
A: This process is already functional worldwide. But
in India like I said earlier we are waiting for the broadband roll out
because music companies who have dabbled in digital music are not
experiencing great results. Besides the 3G network capabilities, which we
require for fatster and complete music downloads are at least a year away.
On our end we are ready to embrace the technology the minute we see it produce results. The moment both these things happen, our music will be ready to roll in the Digital space.
Q: Universal continues with its strategy of promoting
international groups and artistes in India. But if you were to talk about
Indian music, it is so heavily Bollywood inclined. Why is it that
Universal tends to keep away from popular Hindi film
music?
A: There are two or three
reasons for this. Since we are primarily an international company
international music forms our bread and butter. For the last 3 years we
have stepped on the gas as far as international music is concerned and
with very good results. Earlier India was only exposed to international
artistes like ABBA, Bee Gees and Bryan Adams, which were regular
bestsellers. In the last few years we have also exposed India to artistes
such as Akon or Maroon 5 and other new age artistes.
So as Indian audiences seek more international music these artistes also become more meaningful in the Indian context. We have seen that the significance of these international artistes in the Indian market has increased.
From a business perspective, the market for
domestic music has really been sullied or muddied.
There are just too
many players in this space and each player is outbidding the other in
terms of acquiring rights and out-maneuvering the other in terms of
lowering the prices both of which are very detrimental to business.
In the international music space there are only 4 major players in the world and all of them have some kind of equilibrium when it comes to pricing. But that is only and only as far as pricing is concerned because we still compete with each other when it comes to acquisition. At least there is sanity in the market as far as pricing is concerned.
In the domestic space everyday there is a
new music company that is being set up and it becomes very difficult since
you are paying huge amounts for acquisition and yet you are unable to
control the realization because the prices have fallen.
Take
an example where DVD prices have fallen to abysmal levels. Now the
objective of that particular company may not be to sell DVD’s but sell the
blank media and cover their overheads but that is something that is
affecting my business plan per se. Then you see the cascading effect, as
each music company follows suit. As companies talk about dropping their
prices they suddenly realise that the volumes are not commensurate.
In early 00’s music companies were seen dropping their prices to as low as Rs.99/- in the hope that this will trigger volumes but that didn’t happen. We all ended up being burnt pretty badly. Until 2004 end, the entire music industry was losing money. So you may feel great about acquiring rights of a blockbuster film but at the end of the day we are all in a commercial business so we need to ask ourselves - are we making money!
From 2000 – 2004 nobody in the industry made money as everybody was outbidding each other. It is at about the same time that we also exited the Bollywood business having realigned our strategy to favour international music then.
At the appropriate time, which I feel will come very soon, we will be re-entering the market. The world’s largest music company cannot stay away from the domestic market for a very long time. The market needs a shake out which we expect will happen very soon.
Q: Would Universal look at acquiring some of the smaller labels
or promoting the newer breed of artistes or fresh artistes that are
selling out now? For example the Pakistani bands like Jal, Aatif Aslam or
even a hugely popular Himmesh Reshammiya who have ringed in the cash
counters for TIPS & T-Series??
A: I won’t comment on these specific artistes but
yes, Universal believes in promoting artistes and supporting artistes and
making albums for artistes rather than buying something which is just a
finished product. So I’d rather support and promote artistes and
create albums for them and create artistes for the long term rather than
buying one Bollywood film and starting from scratch again. You
will see a lot of that happening very soon.
Sir, I hope u don’t mind me bombarding u with some Anti-Piracy Questions since our NewsLetter carries a major section on Anti-Piracy
A: Sure. Please go on.
Q:
Recently the discussion around piracy has taken great momentum.
It’s a Global phenomenon, which must be obviously depressing for
Universal, who is a Global leader in the music industry? What are some of
your major concerns?
A: I think we have tried to tackle
piracy in various dimensions at various time periods. Earlier we would get
the artistes to come on television and endorse anti piracy social
awareness campaigns. Then we moved away and said no its not about
awareness alone but also about going into the field to undertake raids so
there is fear of punitive action. Subsequently after that we said that we
should be able to affect the livelihoods of these pirates so we said there
should be more arrests and convictions and emphasized that they be put
behind bars.
Apart from these steps, we are also making a concerted effort to use raids more effectively. We now understand the importance of effective PR. We are trying to use artistes to speak for us. And I believe that the right way of going forward is to build a larger alliance, which is beyond music. The idea of anti piracy needs to seep down amongst the masses so that intellectual property is respected.
This is something our counterparts all over the world have tried. Internet piracy was a big thing in the US. It also proved to be the music industry’s biggest nemesis but the authorities quickly realized that going behind the Internet operators did not make any sense because the demand was coming in from the consumer. So they went ahead with a campaign appealing to the parents. The campaign said, “ Do you know that your son is a thief?” When you make a statement like that it shakes up a lot of people.The parents say ‘NO’ my son is not a thief, he is studying at MIT.
But we respond by saying that while he is there he is actually stealing stuff. When you go deeper into a parent’s psyche with a strong campaign like that people realize that we have actually equated stealing music over the internet to stealing any physical product. The crime is heinous and the campaign was very impactful.
We actually took up the battle legally dragging people to the court. People then realized and said ‘OK I realize I am doing something wrong but give me an option’. So on the other side, the corollary is that we must have options available for the consumers. We must ensure that he is getting legitimate stuff in terms of availability and pricing.
I'd like to believe that there is a bit of good and bad in each one of us.Its like “ If evil is simple to do I would do it, but if good is also easy to achieve I would do that as well”. According to me piracy is a problem that transcends the music space and into the human psyche .
Q: What do
music companies expect from a body like IMI? How do you chart their
progress in the Indian context? Also, what kind of support do you provide
to the IMI as a body?
A:
Universal is one of the major funders of IMI’s anti-piracy
activities. You know what they say about putting your money where
your mouth is. That’s what we do. We contribute actively to ensure that
the society is run well. Secondly being on the board of the IMI, we take
pride and effort to make meaningful decisions to make sure IMI is working
on the right track. So we do devote a lot of time as
well.
We do provide the IMI with a lot of inputs from within our system. For example, pointing out that a raid is required at a specific location that has been brought to our notice. In a sense we are the eyes and ears that provide feedback to IMI to conduct raids as well.
Of course we are also one of the key strategy makers for the IMI where we say what steps we should take now that physical piracy is moving to internet piracy.
But all this boils down to funding and we are the biggest contributors to the IMI and we will continue to do that. So time, effort and money is what we actively contribute to the IMI and we will continue to do that in the future.
Q: While many music companies have rallied around IMI and its
activities, there are others who have moved away and prefer to go solo.
What would you like to say to them?
A: I think people have gone away from the IMI for
reasons, which are not related to piracy. The issues have been more basic
like ‘I don’t like so and so person or I am bigger than the Industry.’ I
don’t think there is any ‘body’ in India, which is doing better work than
IMI whether it is in terms of figures or curbing pirates. Today if
you go to any state police an IMI person is very well known. We have
illustrious people like Mr.Ribeiro associated with IMI and its
initiatives. I think we have reached a stage where IMI is
now an identifiable brand.
My best wishes to people who have left but I don’t think they’ve achieved anything significant. Paying bribes to the cops and getting raids done is a short-term measure. But I think in the long-term you need to have a strategy and a body, which can take care of your industry and this is the example worldwide. I think the task ahead for us is to understand that the IMI which represents only 10% of the industry and when I say industry I mean the entertainment industry is doing almost 90% of the seizures. I think the time has come for the people to realize that if a body like the IMI is strengthened it can add value to industries such as music, films, software, computer peripherals all of which suffer from intellectual property rights violation. So I think in the next few years the task will be to take IMI beyond music to an overall IPR protection body given the goodwill it has developed.
Q: Just to end it on a lighter note Sir, are you a music buff?
Which are your favorite artistes / songs?
A: I am a mechanical engineer with an MBA in
Marketing. Before Universal I worked with Procter & Gamble. So one
would have thought that I would have never fit in to a music company where
everyone is a music buff but believe me, I am a great music lover
and I just love the music that we are creating here everyday.
Soundtracks which are very close to my heart include– In English ‘Summer of 69’ from Bryan Adams or a Hindi Track which goes Pal Pal Dil Ke Paas are always on my I-pod or my CD player.
I listen to ghazals and old hindi film songs. I also listen to new age music especially Bhangra. Of coure I listen to every international song that comes out. It may sound cliché – But I love Music.
Q: Any message that you would like to give our readers or
anything that you would like to tell them?
A: Today India is making itself visible in the
world. Indians and Indian culture are making a splash across the globe. As
Indians we must take pride in ourselves, in our diverse culture and the
only way we can protect our culture is by ensuring that we promote it by
buying legitimate stuff.
Look at Pakistan, Bangladesh, Sri-Lanka and Nepal. They are left with no music industry. Today the Pakistani artistes are coming to India and are trying to etch out a living here. Similarly there are some Sri-Lankan artistes too. Due to rampant piracy the music industry in these countries never developed. In India we have a vibrant music industry, which is conquering the world today. Indian music is all over the place and this can only sustain itself, if the music companies can make a return on their investment, which in turn can only happen if the consumers and your readers appreciate this and buy legitimate music their favorite artistes create. So make sure you contribute to the Indian Music Industry by buying legitimate music.
© The Indian Music Industry - 2007. Content Designed by DREAM-FACTORY