By Arpana,
New Delhi, March 24 (IANS) Although the Indian entertainment industry is growing by leaps and bounds, its musical arm is facing crisis - people are buying fewer audio cassettes and CDs.
While people in urban India are using the latest gadgets like mobiles and ipods to download music, in rural areas the market is flooded with pirated copies of all music albums, affecting the sales of music companies.
To top it all, producers are quoting astronomical figures to sell the music rights of new films to music companies.
"Piracy is certainly creating havoc in the industry. Another drawback is that people prefer visuals along with the songs, and they get this from television channels. Therefore, the demand for music cassettes and CDs is constantly going down," complained Ravinder Singh of R Music.
"I have been in this industry for the last 10 years, and I don't think the situation is going to improve. In metros, the music sales are going down while in the rural markets we have to deal with pirated copies. We are in a Catch-22 situation. To recover our losses we have now moved on to producing films and serials."
The Federation of Indian Chambers of Commerce and Industry (FICCI)-PriceWaterhouseCoopers (PWC)'s annual report for 2007 put the current size of the entertainment sector at Rs.437 billion ($10 billion approx) and predicted that the industry will see 18 percent compound annual growth rate (CAGR).
The projected size of the industry will be Rs.1 trillion ($23 billion approx) by 2011. The report will be presented Monday at the FICCI-Frames event in Mumbai.
The report said the current size of the music industry is Rs.7.2 billion ($165 million approx) and predicted that it would rise to a mere Rs.8.7 billion ($200 million approx) by 2011.
Certainly a worrying figure!
The industry has been showing very sluggish growth in concrete terms over the last few years, both in India and globally.
According to the report, 22 percent CAGR is estimated for the television industry, 16 percent in filmed entertainment, 13 percent in print media, 28 percent in radio, 16 percent in live entertainment, 17 percent in out-of-home advertising and 43 percent in Internet advertising.
The projected growth in the music industry is just 4 percent.
"I agree with the report. The music industry is certainly going through a bad phase. Apart from piracy, the slump is because of the rate at which we buy music rights of a film from producers. The astronomical figures that film producers quote act as a deterrent," Bhushan Kumar of T-series told IANS.
"Earlier, the physical sales (of cassettes and CDs) used to be very high. Now the demand for them has come down. Secondly, the cost of promoting the music is going up, and it becomes difficult for us to recover the money invested through physical sales. I would say that the growth of the industry depends upon having a uniform buying rate," added Kumar
But Smita Jha, principal consultant at PWC, doesn't agree. "No, I don't think this is a logical thing to say because you can't sell the music rights of all the films, say for example 'Dhoom 2' and 'Honeymoon Travels Private Ltd', at the same price," she argued.
"Introducing a uniform price rate is not at all a practical suggestion and virtually impossible to execute. It's all about confidence. If a music composer is confident that his music is going to be hit, he can quote a good price for it."
Jha insists that the prime reason for the lull in the industry is piracy.
"We believe that piracy is one of the main reasons, especially in the physical distribution market. Illegal cassettes and CDs are sold rampantly and hence the money earned from such sales does not reach music companies," she said.
Added Kumar: "Thanks to the overseas release of our films, people come to know about the songs and are inspired to buy music cassettes. Otherwise, it would be very difficult for us to find buyers in the foreign market."
However, the report says that mobile music and licensed digital distribution services are projected to fuel the recovery of the music industry world over. But piracy is infecting this area as well.
"As far as piracy on digital format is concerned, illegal downloads which can be used on ipods is a growing trend, though its impact is still not very significant due to the limited affordability of such devices," said Jha.
The report says that the pace of growth in mobile music reflects the fact that consumers increasingly view their wireless devices as an entertainment medium - using them to play games as well as to listen to music.
Ring tones currently constitute the dominant component of the mobile music market. Licensed digital distribution services are also contributing significantly to the growth.
The boom in the radio industry is also expected to have a positive impact on the music industry. The current size of the radio sector is Rs.5 billion ($114.5 million), which is less than the music industry. But the projected growth rate of radio sector is much higher than the music sector. By 2011 it is expected to touch Rs.17 ($389 million) billion.
"Yes, of course the increasing number of radio channels is good news for us. Every time they play a song, we get royalty. But again I would say that it doesn't help us in recovering the cost involved," said Kumar.