In 2000, Super Cassettes Industries, which sells under the T-Series brand name, decided it had to get more from the music it published. Though the law said anyone using its music had to pay licence fees or royalties, usually nobody paid for using songs on TV shows, in restaurants, at award functions and dozens of other places. T-Series started to aggressively pursue what it called ‘non-physical’ revenues — that is, anything it made from other than the sale of cassettes or CDs.
In 2000, the company’s revenues were Rs 110 crore. By March 2009, these had risen to a claimed Rs 350 crore. More important, profits have risen ‘tenfold’, according to the company. That is because the bulk of revenue growth has come from getting better realisations from the existing music, adding straight to the bottom line. Currently, more than 60 per cent of its revenues come from licensing fees or royalties from TV, radio, restaurants and other public places, and ringtones (which Hungama sells for it). The remaining 40 per cent comes from the sale of cassettes and CDs.
This changes the nature of the game in the Rs 2,600-crore music industry (2007 figures). In a highly fragmented music market, where most companies are still struggling to get telcos to pay more or get a larger share from royalty collecting bodies, T-Series’ success at getting more juice out of its content is remarkable. It indicates clearly that if companies start focusing on growth and plugging revenue leakages, instead of only whining about piracy, things could change.
Now, T-Series is planning to take on the internet. It has filed a suit against the use of its copyrighted music on Google’s YouTube. "We have brought them (Google, Yahoo) to the table," says chairman and managing director Bhushan Kumar. He is currently negotiating with some of the large online aggregators on how revenue will be shared.
Some of the biggest media companies in the world are struggling with that. How does Kumar reckon he could get more out of the internet? "Four years back, we never thought we could get 40 per cent of our non-physical revenues from the internet. The revenue potential from the net is huge; we just have to work on it," says Kumar.
He is hoping to go after the net just as systematically as the company went after people and companies already using its music. Since it was not a member of the Indian Music Industries Association (IMI), T-Series got no royalties from public performances of its music. IMI member firms’ royalties are collected by PPL (Public Performance Ltd) and IPRS (Indian Performing Rights Society)
The company started by licensing its own music, a move that Yash Raj Films soon followed. To get people to pay involved everything from cajoling to filing suits. Where success was patchy was in getting restaurants, clubs, et al to pay. M M Satish, former president of T-Series’, remembers that it took many years of raids before things started moving. Even then, a club could always say it was playing PPL music and not T-Series.
"In hotels, gyms, clubs, it was a very difficult task to analyse who was playing what," says Kumar. Finally, two years earlier, T-Series merged its public performance licensing division with IMI, after getting partial membership with the association. Now, IMI pays it a yearly minimum guarantee and collects royalties on its behalf. The rest of it — TV, radio, telecom — are licensed out by T-Series directly.
Doesn’t it make sense to go all the way with PPL and IPRS? Kumar reckons that for a catalogue as large as his — 38,000 titles or 200,000 songs — it makes sense to deal directly with buyers. What he doesn’t say is that PPL and other collection bodies could take 12-18 months to send money back to a company. That plays havoc with cash flow. So, T-Series finds it simpler to deal directly with different retailers.
While the company dabbles in production — it makes about two films a year — Kumar has no intention of becoming a film company. He reckons there is a lot of growth left in just buying music and reselling it. In fact, he’s just struck a deal to co-own Big Music’s 500-title catalogue and resell it along with Hungama. Kumar is on the lookout for other such catalogues.