RadioandMusic
25 Nov 2014
editorial
Shridhar Subramaniam: 'Focus on your core'
PavanRChawla | 01/24/2011 03:35:49 PM IST

Shridhar Subramaniam joined Sony Music India at its founding way back in 1996, and became MD in 2002. He has a deep understanding of the Asian region, having previously overseen Sony Music's operations in Thailand in 2006 and 2007, and in end-2010, was named President, India and the Middle East for SME. Here, in conversation with Pavan R Chawla, Director Content & CSO – IndianTelevision.com Group and Editor – RadioAndMusic.com, Subramaniam speaks of his role for Sony Music in the Middle East, the recession of 2009 and why, in spite of being â€?bonded at the waist'  with a then reeling Film industry, the Music business did not witness reduction in film acquisition prices;  why new and established music labels exited the business and the strengths that keep his Company afloat and strong in this difficult environment. He also speaks of Sony Music's achievements from its foray in the South, its future plans, and more.

Excerpts  -

You were recently named President, India and the Middle East for Sony Music Entertainment. Tell us about the additional responsibility.

Yes. Sony Music now has an office in Dubai, and we are now the second music major to have an office in the Middle East. While I am based in Mumbai, I now oversee SME's presence in the fast developing Middle Eastern market. We are specifically focusing on the UAE, Qatar, Egypt and Lebanon. It's an exciting time as the Middle East is a growing market for International and Indian music, and we are planning an entry into Arabic music, which has a very rich heritage and is starting to travel more. There are some exciting digital and live music opportunities there too. I will continue to be based in Mumbai, and this region reports to Richard Sanders, President International, who is based in New York.

Tell us more about your role in the Middle East.

The Middle East is a very large territory that spans 16 countries and it is a culturally rich and diverse region with a long tradition of music and poetry. Both Cairo and Beirut are fascinating centers of creativity. The UAE is a sophisticated market with worldclass facilities and venues and is emerging as a vibrant center for creativity. We want to become a complete entertainment company with a focus on the digital and live music. We will develop interesting media partnerships based on our relationship with Simon Cowells �Syco Entertainment' which owns TV properties like X-Factor and Got Talent. In addition we will be fully engaged in the fast growing digital marketplace.

How are you managing both markets?

It is exciting and fun as you get to learn a lot more. And I have done it before when I was managing our Thailand company for two years. My first  task in the ME market is to understand the landscape, build a strong team and work at developing important partnerships. There are very strong and entrenched local players with many media assets, strong rosters and a lot of funding. We have to use our strengths and compete smartly. The beauty about starting late in this business is that you get to decide what you would do as we have no legacy issues there. And this is what makes it exciting.

Before we look forward, tell us about the difficult times of the recession and how were 2009 and 2010? How are things looking now?

It will be fair to say that 2009 and most of 2010 was an exceptionally bad year for new music releases. Other than probably Ajab Prem Ki Ghazab Kahani, Kaminey, 3 Idiots and to some extent My Name is Khan, virtually no soundtrack did well – until Dabbang came along last year. It has been patchy, and music suffered largely on account of two things: during most of 2009 and early 2010, film releases were rushed and crowded and in some weeks there were two to three big films releasing in a week. This adversely impacts music as there was not enough of a clean window for the music to get established.

Specifically on the recession, even though the music industry is bonded to the film industry at the waist, while the film industry clearly went through a recession with softening of prices, music did not follow suit. There was never really any significant correction in music acquisition prices. It remained constant -- in fact, it reached record levels with 3 Idiots and My Name is Khan.

Another reason for prices holding firm are that there were only two major music companies aggressively acquiring new Hindi content ; T-Series and Sony Music. Companies like YashRaj and Tips market their own products. Most of the players, who were active from some years ago have exited the music business  Big Music , UTV Music, Eros have either exited or have slowed down. So, with just two players, both of whom want the same tentpole  products,  and as a result the prices for those never dropped  But, the prices for the smaller projects have softened. In the last few months, we are beginning to see a more stable environment and prices should soften to levels where it makes business sense.

What caused the labels' exit?

At one point, there were around five to six  pure play music companies and a few production houses were retaining music rights. Most companies felt that investing in films is a more attractive proposition than only in music and companies also realized that to be profitable in music, one needs catalogue strength plus a constant flow of new products. Additionally, monetizing music is a specialized skill as the revenue streams are multiple – Physical, Digital, Licensing, etc. All of this requires specialized skill sets, a sustained risk appetite and be able to ride the challenges of industry downturns, price escalations, piracy, low rev shares and many other factors that are difficult to predict or control. And unless you have some scale it is impossible to convert these rights to meaningful profits.
 

And Sony Music's strengths lie in…?

…three things. First is our strong international music that gives us a constant flow of product. Artists like Shakira, Michael Jackson, Britney Spears give us the ability to hedge our risks. Second, we have strong relationships with several production houses – the likes of Dharma Production and Vishesh Films and others. Such relationships and association stand the test of time and constantly propel you forward. Third, we have been stayed focused on music. Most music companies have ventured into Film production, and even we briefly did that, but have come back to course and I think if the core of your business is music then it needs to be solely music. Also, from what I perceive is that if you become a film producer, as a music company you need to be unbiased and that is difficult. Producers need to believe that you will do justice to promoting their music and film and not be swayed by competing interests 

You earlier mentioned that there was not enough of a time window for films last year to establish their music. What is the ideal period for a new film's music to to get established and flourish?

Let us take an example of the last hit of 2010, Dabangg. If you notice, it had a clear and clean one-month window. Almost one week before Dabangg and three weeks after it, there was no project competing with it. That is a healthy period for the music to establish. And this in turn is good for the film producer, music company and everybody else in the value chain. Of course, the fact that Dabangg had great music and was a great product was essential. In fact, in 2010, most of the big films had a relatively clean run. In December there was some clutter but it was nothing compared to 2009.

Tell us more about the Sony Music's properties.

There are three pillars we essentially stand on: International music, Bollywood, and our not-so-visible presence in the South  Broadly speaking, 50 percent of our sales are from Hindi, while International and Regional account for 25 percent each. In terms of physical and digital sales,our revenue is fairly divided equally in three parts from physical,  digital and television-radio-and-public-performances.

Sony Music entered the South what, three years ago? How have you fared so far?

Yes, we entered the Tamil music market three years ago, and have become the Number One label there. The Bollywood-centric Mumbai media doesn't pay enough attention to how big that industry is, and its vast potential. It's amazing to see what all is going on there. So much is happening in regional television channels for eg, they even have full HD music channel that broadcasts music videos in 5.1 surround sound! Audiences in the South are still entertainment and star obsessed. Their following is almost religious and all of this translates into sales. Though the market is small, the per capita consumption and conversion levels are very high. The yield for Endhiran ( Robot ) from a market of 60 Million people versus that of Dabangg from a market of 400 Million people is a good example.

You once said the South seems like a media island…

Yes. What happens there is not known here in Mumbai and vice versa. But having said that, it is not all easy  There are issues there. The South has, well, unique business practices. It is a more individual-led industry and not corporatized at all. Another issue is that entertainment and politics are intertwined and most of the players are larger than life! Some producers have media interests and own media houses as well, so it's a difficult landscape to navigate. In the past, many national players have attempted and left after a few years. It is a very personal market and a lot is based on relationships. They have a different ethos and work ethic. But, the Industry is extremely creative and experimental. They respect their audiences and have a keen finger on the pulse of audience taste. Something, that Bollywood seems to have lost and has become elitist.

What are the issues that affect growth in that region?

There are a couple of key issues. The Producers association is remarkably strong and united. And this is equally true of the distributors, the fans of stars and the broadcasters. The second issue is the clarity and appreciation of rights  There are times when rights are held by multiple parties and specially in the case of new technologies, it is quite grey. The third dimension is the sporadic and impromptu manner in which films are planned or released. As most films are financed by individual producers with the help of distributors, the ground is constantly moving below your feet. But, it is changing quite rapidly and it will evolve in its own unique way.

What other regional markets are you look at apart from the South?

As of now we want to consolidate our position in the South. There is still a lot of headroom there as we've only been there for just over two years now. The catalogue is not deep enough and there are a lot of untapped opportunities. In the South, devotional and classical are also major categories and we will look into these genres going forward. As of now it is imperative that we build some scale and get the revenue model established, which is very mobile phone-driven, which in turn is very new content driven. With increasing broadband penetration, a deep and relevant  catalogue becomes necessary, and we are focusing on building that.

It must be critical to promote international music. How do you do it?

Yes, for us the biggest negative impact has been the decline is international music and our biggest challenge is to keep finding new ways to promote it. We are constantly struggling to find media outlets to support us. However, the Internet has helped us tremendously  We are trying to partner operators like Vodafone to promote a Shakira's Waka Waka or a Docomo to promote Michael Jacksons new album. It is heartening to see that in markets like Bangalore and Chennai we have dedicated Radio stations that play only International music. We will see this expanding into other markets as more and more people are becoming aware of the large untapped potential of this segment  Young kids will always find what is cool and no mainstream media can stop that. So, we are using the ever expanding online social media to market our international acts to them.

Five years ago, around four to five TV channels played international music. Today even on VH1 there is a slot for Hindi music!  But that's how it is and you've got to live and work with it. But the good news is that a lot more people are now listening to English music. In the large cities at any bar, club or restaurant it is impossible to hear Hindi music. Till a few years back, when English videos was aired on Television, the clubs played Hindi music, and now it is the other way round. It is an indicator of what will happen soon.

How has the reduced sale of international music impacted your release of albums?

We have reduced the quantity not the number of albums. We promote international music in interesting ways. And just to give you an example, for artists like Avril Lavigne, Mike Posner and Hurts (many of the readers of this article  would not have heard of them ) Indian fans rank in the top 3 for their Facebook and Artist sites! Our challenge is to bring this to the attention of mainstream media, and the second is to ensure that our new distribution partners like mobile operators and internet services understand this phenomenon.

What are your views on the FM Copyright hearing?

I think the judgment is partial, incorrect, and one-sided. What the Radio networks will now pay for royalty is amongst the lowest in the world. And just when these broadcasters are making record profits. If you check ENIL's published accounts, it is interesting to see what proportion of their expenses are copyright costs. It is shockingly low 

But while discussing this issue one has to take into account a lot of background and behind the scenes activity. Invariably, worldwide, broadcasters are more important to the government than content owners as they generate larger revenues and the government  needs them to bid for additional frequencies. They are a powerful group to go against and as some of the recent controversy indicates, they wield enormous power in all sections of the state. This is compounded by the fact that in other countries there are media cross-holding restrictions – which is completely absent in India. In most developed markets, if you own prominent TV channels or newspapers you cannot have a large radio footprint  In India there is absolutely no restriction -- you can run television, radio, newspaper, internet businesses, mobile services all in parallel. One interest can be amplified on all the other mediums heavily and the voice of the content owner is usually snuffed and that is exactly what happened in this case 

Our only recourse is to fight this in the courts and that is what we are doing.