The digital revolution had already arrived by the time Apple had announced the iPod and changed the music game in 2003. People had been using digital audio formats even before the iPod, but its launch along with iTunes, was the final nail in the coffin for physical audio formats. The world moved on to dedicated digital music players, such as the iPod, Microsoft’s Zune and a slew of other devices. But with the advent of smartphones in 2007, this category also became irrelevant soon,
Even in their brief outing, digital players revolutionised the music industry forever — affecting record labels, music producers, artists, listeners and all related businesses forever.
The rise of streaming services such as Spotify, Apple Music, Gaana, Saavn and YouTube Music meant no one really wanted dedicated music players any more. Not if you ask Saregama.
Arguably, India’s oldest record label, Saregama zagged and went the opposite way with its focus on hardware with the launch of Carvaan in 2017, a physical music player preloaded with the best Indian songs from yesteryears.
Although the success of Carvaan has been much chronicled since its launch, 2018 was a breakthrough year for Saregama as it recorded 297K units sold in only the third quarter coinciding with Diwali shopping season.
It’s not just hardware, though. The company has also branched out into producing movies that don’t follow the set commercial formula under its “Yoodlee Films” banner. Like many other new-age production houses and platforms, Yoodlee abstains from what has traditionally worked in Indian cinema and lays more emphasis on the storyline and the messaging in the film. It’s the golden age of streaming services in India, and the banner is working with several OTT players to produce original content for their platforms and is expected to make some more announcements soon.
Inc42 caught up with Vikram Mehra, MD of Saregama, under whose stewardship the company has seen plenty of recent success. We spoke to him about how the company is navigating this evolving landscape and how Carvaan turned out to be a major hit.
Till date, Saregama has sold a million Carvaan units, according to Mehra, which is an incredible number for a revived category, and the total revenue of the Mumbai-based company in the third quarter increased 61%, while the earnings per share (EPS) went up 295% y-o-y to INR 7.05.
It’s not surprising that the category has clicked in India. Music outranks all other interests or hobbies for online consumers in India, according to a Nielsen report outranking sports and food with 94% of online consumers stating they listen to music throughout the year.
And the market is only growing, if the launch of international streaming services is any indication. India is the nineteenth largest music market in the world, as per the International Federation of the Phonographic Industry and many are pegging it to break into the top 10.
We spoke with Mehra about the future of music hardware and of music and media consumption in India, and if Indians can really make the cultural shift en masse to pay for digital content.
Here are the excerpts from Saregama MD Mehra’s interview with Inc42:
Inc42: When music labels were increasingly going digital, you went hardware first with Carvaan. Now that you have a million units sold, could you tell us what drove that conviction?
Vikram Mehra: Many people believe that the driver of innovation is technology… it’s not. It is anthropology; it is the customer and the understanding of the customer that drives innovations and change.
Often people make the false equation of innovation is equal to technology but technology is all but just means to deliver and the actual success depends upon understanding your customers.
Inc42: In that case, how have you adapted technology as a delivery mechanism to cater to what the customer wants?
Vikram Mehra: We own 120,000 songs, including practically the first song recorded in India and the first 80 years of all film songs. When we were digitising our songs, we made two big decisions:
1) When it comes to the transformation from analogous to digital, we decided not to rely entirely on the machines alone. Every song had to be heard by an expert in that particular language because what happens is that when you are trying to remove the hiss from the analogue tape, the high and low-frequency part get cut which is capable of changing the feel of the song and we want to give the customers the original experience associated with these songs.
2) Second, we categorised our extensive metadata for each song into finer details like adding mood for audio, details about the video and actors, etc. So for example, if you want to license our music for an ad and the setting is family, elephant and picnic, we will give you a list of options in which the songs match that criteria.
Inc42: Are Indian’s ready to pay for music online?
Vikram Mehra: Yes, they are, and one of the key learnings we got from a survey that we conducted in 2015 was that the customer will not pay you for music but for the experience of listening to music. Carvaan is about laid back listening experience whereas an app is forward leaning and requires participation, and hence you can address the base accordingly.
Every month, we get 200 Cr data points coming to us from Youtube, streaming apps, public performances, etc. Last year, I had 2200 Cr data points and I am running big data right now and some predictive models about which are the top songs, which songs go well together, while also bringing in an element of unpredictability which the listeners enjoy.
I see tremendous potential for streaming platforms as currently, both the number of unique users are going up and the number of streams per user is also going up.
Inc42: What behavioural change in consumers do you see when it comes to digital content?
Vikram Mehra: A social change that is happening is practically everyone’s travel time is going up, irrespective of which tier of the city you belong to, you have time on your hand while travelling and data is cheap,.
In my previous company, I had done a study in 2007 which revealed that families like watching things together but now we have found out that it is changing. Thus the number of pieces of unique content can go up now because the number of screens has gone up. We want to fuel that trend and that’s why we don’t want to create our own app.
We are going to start a marketing campaign in America that will target Americans who want to gift their Indian friends- Mehra
Inc42: What’s the latest with Yoodlee Films? How did the idea come about in the first place?
Vikram Mehra: Genesis of Yoodlee happened in 2015, when we were conducting the survey, we also asked people about their views on the Hindi film industry and one thing that emerged was the fact Indian’s love larger than life cinema, but we often found ourselves being asked by viewers for more relatable and gritty cinema.
By the time you are 40, life has slapped you so many times that you don’t want to see reality and you want to live in a make-believe world. When you are younger, you have stars in your eyes and you want to see the real world. My cinema is only for 18-35-year-olds, only story-led, we are not making for devices but are making for digitally savvy consumers.
We never shoot on sets, no ‘item’ songs, bulging biceps and the movie length has to be less than 2 hours. But this is not art cinema and thus needs to be entertaining, keeping the audience at large in mind.
We have released six films till now in 2018, 5 of which have found a house with Netflix. We have a deal on six films that will happen soon now and we have also signed up with a leading Indian streaming platform for our next 12 films.
Inc42: It will be difficult to sustain the growth you saw last year, wouldn’t you say?
Vikram Mehra: It’s just the tip of the iceberg. With Carvaan, the size of the market right now is 25 Mn-30 Mn, if we look at criteria (sic) like affordability, age demographics (over 40) and the language which should have sizeable content available. I have not even added the cheaper product which could take the tally to 45 Mn -50 Mn products.
We have a monopoly here; this, our music and a million devices sold is nothing, especially if you tell that to a mobile company, they will not even look at you.
We are a content IP company, and we want to become the top content IP company which fuels content platforms in India and from abroad.