The T-Series Story

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Themes: Ethics in Business
Period : 1970-2001
Organization : T-Series, Super Cassettes, HMV, Venus
Pub Date : 2002
Countries : India
Industry : Media, Entertainment & Information

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Case Code : BECG010
Case Length : 08 Pages
Price: Rs. 200;

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Background Note

The Indian Music Industry

The Rs 12.50 billion² Indian music industry has long been considered to be synonymous with Indian film music. However, due to the promotional effects of satellite music television and the entry of global music companies in the 1990s, non-film genres, such as international music, Indi-pop and regional music have also become popular.

Traditional music such as classical and devotional music and ghazals have also received renewed attention. The rapid increase in the number of corporate music retailing outlets, the increasing penetration of Compact Discs (CDs), the emergence of distribution channels such as the Internet and the ever-growing base of 60 million cassette players and four million CD players have facilitated the trend.

During 1990-2000, the industry grew by 18%, selling 210 million music cassettes and 13 million CDs in 2000. The industry was dominated by cassettes - the penetration level of CDs in India was only 5-6%, against 70% in the developed markets. However, CD sales have been consistently growing at a faster pace than music cassette sales.

Music is an extremely important feature of Indian films. (See Box). While a good soundtrack is vital for getting a movie pre-release publicity, a good movie aids the music sales after the release. Hindi film music accounts for 70% of the film industry's revenues.

T-Series was the overall market leader, followed by Saregama³, which had the largest number of titles from old Hindi songs. The other players, in order of their position in the market were: Tips, Sony, Universal, Venus, BMG Crescendo, Magnasound and Times Music. In addition, there were many small players, both at the regional and national level.

Understanding the Movie/Music Connection

Producers usually sign music directors for a movie in the planning stages itself. Sometimes the music directors are brought in after the story is completed. The producers then tie up with a music company. The marketing of a movie starts usually a month before the release of the music of the film, through print ads, posters, billboards and signboards. Once the music is released, trailers are shown on various television channels. The promotion costs are either borne completely by the music company or shared by the company and the producer. The overseas distributor is responsible for promoting the movie in the foreign markets. The promotion is sometimes continued even after the movie's release, depending on its performance.

Acquiring the rights to the music of a new Hindi film is costly, with the acquisition costs ranging between Rs 20-120 million. With the market being price sensitive, margins were low and the break-even volumes were high. There was considerable risk as predicting the success of a soundtrack was extremely difficult. The initial promotion costs for the music companies ranged from Rs 10-20 million. Besides this mode of paying an up-front amount, another model followed was the Minimum Guarantee plus royalty model, wherein the company paid a smaller amount to the producer and committed to paying royalty only if the income from the album exceeded a certain amount.

Source: ICMR

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2] 2000 figures.
3] Formerly Gramophone Company of India Ltd. (GCI), belonging to the R P Goenka group of companies, which owned the popular His Master's Voice (HMV) brand.