Sony Music Entertainment digital business director Hari Nair

Sony Music in 2014

Overall, 2014 had been a year of trying to control the decline – due to TRAI regulations impact on VAS services and Nokia Music Service being virtually discontinued. We saw both, ups and downs in this year. The music and video streaming growth has been the highlight of the year so far. We grew every month in our market share. We saw an increase to 24 per cent from 20 per cent. It was largely on account of international music growing, significantly in streaming services. Also the impact of the Warner and Parlophone license primarily resulted in the growth.

New areas of growth

Advertisement-led-apps are the new area that we are trying to tap into. It is growing slowly and steadily. It is miniscule as revenues and we see this growing year on year. Additionally, our Jive service has had a tremendous pick up and we are seeing great activation, usage and repeat usage.

Trends in the music business

IVR services like CRBT / Mobile Radio - the big interesting change that we are seeing collectively is even after having multiple complicated processes of consent, the traditional CRBT business is growing. Though revenues is not close to what it was. The month on month growth is an encouraging sign that consumers like and continue to seek this service.

Streaming services are growing in number, user acceptance and the usage levels are high. These services are being aggressively marketed on TV, print and digital - highlighting functionality and benefits and we see this moving consumers from pirate download sites to ad supported streaming services.

Number of apps developed in 2014

We made about 80-100 apps in 2014. Jive – our flagship app saw a major milestone of over a million unique users. The engagement on this app increased multi-folds in the last one year.

Artistes and music genres that did well in 2014

We had major hits during this year, which started with hits like ‘Hasee Tho Phasee’, followed by ‘Holiday’, ‘Citylights’, ‘Humpty Sharma ki Dulhaniya’, ‘Bang Bang’, and ended  up with ‘Zid’. Love songs are the greatest hits and doing well for us. Likewise, we saw major hits in our Tamil and Punjabi acquisitions. We have more than 50 per cent market share in Tamil Nadu and this is a massive number. The music genre that saw the healthiest growth is international music.

Partnerships

We struck a number of new partnerships this year; the Hungama service, Airtel, Wynk, Guvera etc and there are more in the works. In 2015, the WAP market continues to grow at CAGR of 30 per cent, we expect the CRBT to stay flat and in the next year or so we will see growth in video services.

Many in the music industry consider streaming as the way forward, but there are critics who state that "music streaming is teaching the new generation that music is for free". Comment

Yes, music streaming is free to consumers, but there is advertising that is being served to these consumers. We feel that moving consumers from pirate to ad supported, though both are free to consumers, is better for the industry as we are sharing in the ad revenues. This is what the TV Industry did for years. Over time the challenge will be to move a portion of these consumers from ad supported to paid subscription. For this, we all need to give consumers a reason: could be better curation, exclusives, discovery and functionality. We will see this develop over the next 18-24 months.

Challenges in 2014

The biggest challenge was that the industry is moving from a VAS dependent revenues to ad supported revenues. This is another churn and we are in the midst of it. Overall industry numbers would have dipped by 6-7 per cent. The new services that got traction helped to a certain extent, but we expect the market to grow by 8-10 per cent next year.

Apps for 2015

We would be deploying additional 200-250 apps in 2015.

Expectations for 2015

1) Strike more on piracy – With the help of ISP and other key regulators, we intent to strike pirate music websites and apps. We already pulled down 50 pirate music-apps from Google Playstore. We will continue this effort with more rigor.

2) Improved market share - If the business continues to be 100 per cent pull based, then we believe that across products, we will see uniformity in our market share.

3) Improved revenue-share from telecom operators on CRBT- Like telecom operators started the third party services on WAP; we wish they could come out with the same model for CRBT. Either party has to invest back into marketing and building this product up. With the current revenue share, we are not in the right position to invest for marketing this product.

4) Streaming business to pick up – We expect 6-8 per cent of paid-users from the user base, and a rise in advertisement-rates on such apps, which will help existing partners to scale up to next level.

5) Expect doubling of our video revenues. 

6) Launch Jive as direct to consumer destination for WAP and app, by Q1-2015.

Nair has been in the digital business for more than a decade. Prior to joining Sony Music, Nair was heading Sales and Operations at Mauj where he managed sales, account, D2C products and content licensing. He has worked with Mahindra Comviva at various positions.