Great to see vision of Management ( Vikram) to bring Indian music on global event.
If Indian music goes global, possibility of jump in revenues is exponential.
As per my research You Tube pay approx. 5 times more in Europe, 7 time in Great Britain, 12 times in Australia, 13 times in US compared to India.
It is similar for music licensing apps. Ganna charges 120 Rs/month for premiums. Spotify, YT Music, etc charges at least 10 $/month.
Once your library considered as global music, value increases, as we know how past deals are done in music industry.
If the raising of funds is for acquiring content library from a competitor then it could be a good move. Management has said in concalls earlier that they won’t shy away from raising debt to buyout content library of competitors.
But, if it is funding is NOT for the above mentioned it could be a red flag and I would become cautious.
I believe this is most likely to acquire content aggressively. I don’t think the funds would be used for any reason other than music.
Vikram in the past has mentioned about ambition to go for more relevant content and challenge T-Series. In terms of content acquisition, Saregama used to be quite strong in 80s and then in 90s, it went slow and lost the ground. 90s music was actually quite good which also explains why Tips has been doing better than Saregama in YouTube views despite Tips having lower library size. It is because Tips content of 90s is quite good.
My guess is funds are being raised to go more aggressive on the content side, get the content which appeals to millenials and challenge T-Series leadership. In what form the company would get content is difficult to say. It may get in form of some strategic partnership or acquisition or may use funds to purchase content in future.
To approve raising of funds by issuance of securities
The Company is a pure play content IP company and generates a significant portion of its revenues from licensing of its content.
It is proposed that the Board of Directors of the Company (‘the Board’) be authorised by way of an enabling resolution to
raise funds by issuance of securities, to facilitate and meet its requirements of additional fund mainly for acquisition of content –
music across multiple Indian languages, inorganic growth through acquisition to plug gaps in the content lineup and also for general
corporate purpose including but not limited to pursuing new business opportunities, acquisitions, meeting the issue expenses etc.
Excellent video on the music industry, with some salient information on Saregama and Tips. Must watch for investors in these companies.
One thing that I seek more clarity on, request anyone who knows better to please share your thoughts
At 36 min 20 sec, Shashank speaks about how Digital service providers share revenues with music labels. While YouTube has a normal revenue sharing model, Facebook has a fixed contract and Saavan, Spotify etc pay a fixed 10 paisa per song heard to the label.
If this is true, then apart from YouTube, how will the increase in premium subscription on other platforms like Spotify, Saavan, Gaana etc help music labels? The music labels get paid per song anyway, which is unaffected by number of people subscribing.
I asked Shashank this in the comments section, and his response was “When industry will shift to subscription model that time pay per song won’t be there while subscription revenues will be shared by platforms to labels”
Not sure if this is based in some fact or his assessment of where the revenue models will go when subscriptions increase. If anyone has any views on this, I’d request you to please share. For me, the entire investment thesis hings on increasing paid subscribers driving up total revenues for the platforms, and in turn for the music labels. But if there is no (or lesser) corelation between a paid subscriber and music label revenue, I will have to revisit.
Disclusore: Invested in TIPS. Interested in Saregama if valuations cool off.
Full portfolio here Vineet Jain portfolio
My understanding is 10paise per song heard is for free subscribers. They have different pricing flat fee per subscriber for paid subscriber. so if the paid subscriber base increase revenue to saregama and other players increase
Thanks @ashitpanjwani
Is there a source that you may be able to quote where this information is mentioned? Also any idea how this different pricing flat fee is arrived at for each music label? Is it in proportion to the number of hits that the songs of one label get from paid subscribers, or some other metric?
@Vineetjain111 If you read the previous con calls of Saregama and TIPS, it was mentioned by management that these platforms pay per stream + a part of subscription money + a part of advertising cost as well.
Pricing model has following buckets broadly speaking
Streaming - Per stream X paisa - any one any where listening - OTT streaming player like spoityfy/Gaana/wynk/saavan etc.
Streaming - Subscription sharing - as streaming platforms onboard subscribers- rev sharing will come in picture - why? - simply because global players like Spotify etc has set that as a benchmark or industry practice. This is supposed to be next leg of exponential growth for Indian labels.
Annuity/lump sump- full access to library for a fixed period ( 1-2 years type) - this is how Facebook,/tiktok of world got on boarded - most of these when renewed have a meaningful upside and contracts will be under renewal. So far we were in sort of pilot phase where platforms wanted to monitor music impact on their own revenues etc. E.g. Facebook paid XX cr and using full library over last Y quarters- at renewal Facebook has enough data points to attribute music impact to their own metrics and thus upside on next renewal.
Advertising- YouTube model is to share ad revenue with a pre decided % split, again its a fair deal based on standard method. This is a major contribution and takes push efforts from publishers ( create multiple YT channels, freshen up the content appeal, get chart busters and so on)
Other sources - brands, shows, performance rights etc.
Summary- revenue growth will come from
No of streams on music streaming platforms going up
Adding any new platforms or channels for streaming/OTT/video sharing/brands etc( becomes a new sales channel)
Revision of existing Annuity/fixed contracts on upper side
Subscription adoption leading to fee sharing addition
Increasing views and subscribers base on YT and similar channels
Tips has some partnership still in works( believe gaana/wynk) etc but Saregama serms ahead in curve.
Last 2 years have been a smooth ride on streaming biz and can be a decent growth for next 1-2 years as well, As of now Tips and Saregama claim that sheer size of their library is a Moat, however content relevance and consumer connect will drive future growth - we can see new music label ( e.g. music factoty) scaling well and comptetion from established giants like Tseries.
Doesn’t look like a right to win type scenario based on aging of content.
First thing is, these contracts are not very long term. They are re-negotiated from time to time. So it’s important to get a perspective on the long term trends than exact rates at present. The streaming industry is still evolving in India and as and when the content draws more ears, the charges can always get renegotiated depending on the power equation between the content provider and streaming service provider. Lot of data (Like which content is drawing what kind of audience etc…) crunching is happening behind the scene by both the parties.
I am not sure about Saregama, but I found this slide in the presentation given by Pershing Square on Universal Music Group (UMG) which might throw a light on one of the possible revenue-sharing models in the paid ecosystem. Link for UMG Presentation
Over here, the music industry gets a certain percentage of the revenues recognized by platforms. It is split amongst the labels based on their marketshare. However, I doubt that this will be the only kind of revenue model. Maybe, some platforms might have this kind of revenue sharing, and some might not. Also, as you can see in the below image, paid ARPUs are multiples of Ad-supported ARPUs. If Indian population starts shifting to paid subscriptions, the ARPUs might substantially go up.
Q2FY22 Income before Content Charge, Interest & Depreciation (OIBCID) Rs535 Mn +38% YoY
Q2FY22 PBT at Rs453 Mn +19% YoY on higher content/ advertising costs****
1HFY22 revenues +35% YoY while PBT +36% YoY**
During this quarter, Saregama launched multiple new songs across languages, including the hit music
of Akshay Kumar starrer Bell Bottom and multiple non-films “Original” songs across Hindi, Bhojpuri,
Gujarati, Punjabi, and Tamil languages. Company also marked its entry in the Haryanvi segment with
its first song launch. The other highlight of the quarter was the use of the iconic song ‘Dum Maaro
Dum’ by Apple in its latest iPhone launch advertisement.
Carvaan sales improved during the quarter in sync with the easing of lockdowns in multiple
states. Company sold 103k units during the quarter compared to 45k units in Q1
Saregama’s Tamil serial ‘Chandralekha’ earned the rare honour of being the first Tamils serial to cross
2000 episodes. The other serial ‘Roja’ continued its leadership position.
During the quarter ‘200 Halla Ho’, a Yoodlee film, got released in Zee5. Company recently announced
its First web series “Invisible Woman” starring Suniel Shetty.
Wanted to understand the risk in the business. What if the artists start ditching the music labels and start collaborating with the platforms like Gaana, Saavn, Amazon Music, as happening in the Movie industry with Netflix, Hotstar and Amazon Prime? Is there an incentive for the artists and streaming partners like Gaana to meet through music labels like Tips and Saregama?
