Massive - Kanguva - Title Announcement | Suriya | Siva | Disha Patani | Devi Sri Prasad - YouTube
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In the Q3 concall closing remarks, management mentioned that due to shift from advertising to subscription model, there will be short term pressure for the next 12-18 months. Why is it so ?
In terms of their existing deals, they might have better unit economics for the advertising model as compared to the subscription model. They haven’t disclosed the exact breakup anywhere for both the cases. They earn a revenue share in both cases as highlighted in the concall.
It is given that OTTs and music streaming services are gradually shifting from advertising to subscription model so they expect a short term pressure due to that.
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[quote=“lazy_investor, post:520, topic:11618”]
terms of their existing deals, they might have better unit economics for the advertising model as compared to the subscription model. They haven’t disclosed the exact breakup anywhere for both the cases.
[/quote]In advertising model, Saregama earns 10 Paisa , whereas in subscription model, Saregama gets 50% of what OTT/ streaming players charge. Mostly in this case Saregama will get at least 20paisa.
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Latest report by EY on media and entertainment in India - May 2023
“Music – The segment grew by 19% to reach INR22 billion. Film music, which had reduced during the pandemic, returned at scale. 87% of revenues were earned through digital means, though most of it was advertising led, there being around only 4 to 5 million paying subscribers despite streaming reach of over 200 million”
Music related excerpts : Attached EY Music Excerpt.pdf (4.1 MB)
Complete report on media and entertainment : Indian M&E sector grew 20% in 2022, touching the highest ever mark of INR2 trillion
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I am learning about this business and wish to understand the following.
Music in India is heavily dependent on the film industry (~70% of recorded music is film-based), unlike in other countries where independent artists and their albums contribute majorly to the growth of the industry. In the Indian music industry, there are 10–12 players, with the top four being national players like T-Series, Saregama, Tips Industries, Zee/Sony Music.
Usually, film producers in India usually hire music composers for their films. They use all these songs in their movies and sell the Intellectual Property (IP) rights to record label companies. This is a win-win deal for both parties as film producers sell the song’s IP rights to label companies, who in return publishes and distributes these pieces. All significant rights regarding the songs are with label companies.
Label companies issue licences for the songs to streaming platforms like Spotify, JioSaavn, and Gaana etc. Each time a visitor on these streaming platforms listens to any song or consumes any user generated content, these platforms pay a licence fee to the label company.
I want to understand if there is a possibility that the flim producers directly sell the IP rights to streaming platforms bypassing the record label companies? If no, why? Is it due to the Expertise and resources of record label companies. Record label companies have specialized teams and resources dedicated to music distribution, marketing, promotion, and licensing. They possess the infrastructure and industry connections necessary to effectively monetize and distribute the music across various platforms. Film producers, on the other hand, may lack the expertise and resources to handle these tasks on their own.
Is this understanding correct?
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Film producer would want to invest their time in producing film rather than doing distribution, marketing and dealing with so many streaming services. Also streaming service would prefer to aggregate songs from few labels rather than from hypothetically so many film producers.
Just my take on a very high level. I don’t understand media industry that well.
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I have been an investor since 1.5 years in Saregama and had a high conviction in current MD and in general have good outlook for content industry. But i was feeling a bit Jittery about the QIP they raised, but still invested because, they were planning for a long term investment to acquire music.
But in recent investor meet, most of the funds are just laying there. So my outlook on Saregama management turned negative for few reasons.
- The funds collected are invested over time, as music is produced over time, unlike some Pharma company creating a factory. So why dilute the stock, why cannot they take loan when it is needed.
- Their movie business, started with content rich movies, and slowly they are producing now the Commercial movies, hence taking more and more risk.
- Recent times, the commentaries are very vague with no details (or i am biased because of all the negativity in my brain)
Right now on HOLD. You think i am thinking in right direction or am i overthinking.
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any info related to demerger thing like when it happens and all
Hi
According to me management is good and waiting for opportunity to deploy cash.
In real life cash is last thing which financial institutions commit at times of crises.
They realised qip money when share was hovering around PE of 70 only thing thing should give you confidence in management quality plus they have utilised money to buy regional content but at reasonable prices.
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For your point 3, Management confirmed that allocation will not be more than 18% for films division according to recent Q4 concall
Also , Mr Vikram Mehra has taken a loan higher than his salary , how can one interpret this?
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Hi, sharing some of my overthinking:
As the music trend has been emerging, since few years we have noticed that people don’t usually prefer to listen movie songs. They listen to pop artists, independent artists like Badshah, king, raftaar, punjabi music artists, etc. If any movie song that goes viral, it is 1 in 10 chance. I am currently 21 years old and all of my friends, siblings, cousins always listen to new-age artists. Rarely do we listen to movie songs nowadays. Still there has been a lot of optimism around the company’s growth prospects. Sure the music licensing business is going to grow at really fast pace hereon but when we are investing to play that theme, we should also see if the music that goes viral is even being adopted by the co. or not. These independent artists and punjabi singers usually don’t sell the IP rights of their music as they themselves very well understand the power of passive income. I was trying to find new age songs in saregama’s catalogue but couldn’t find any.
Just some of my personal observation.
Open to constructive criticism
disc.- have a tracking position
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Totally agree, film music is on decline and standalone artists who are hit don’t prefer music labels
See below as an example -
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Singers are given least importance. There are thousands of singers but very few music composers. Singers mostly get money from shows and musical nights. They are paid least money in the value chain. Sometimes they even don’t know whether their song will be there in the movie or not, because, composer may finalize other version sang by other singer.(I heard this on one of the interviews given a popular telugu singer)
And finally they don’t get any royalties. Only composer and lyricist get royalties. Music composition and lyrics have IP while voice don’t have any IP. (Please correct me if I’m wrong)
That is what has changed imo. Film music has taken a back seat, singers can now record their own music, put it on YouTube and become popular.
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Here are a few popular new age songs:
- “Tere Vaaste”
- “Phir Aur Kya Chaiye”
- “Aaj Sajeya”
In addition, the collaboration news with Arijit Singh, along with their focus on film music, suggests that Saregama is more focused on building a catalog of new age songs, in my humble opinion.
You can read more about the collaboration between Saregama and Arijit Singh to create original songs in Hindi and Bengali in this article:
I’m quite optimistic here! Let’s see how this plays out.
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This is indeed a challenge. But I think Saregama is looking to handle this. Bringing in new Composers/Artists and collaboration with various artists (latest is Jimmy Jimmy as a K-Pop version). I think that Saregama also realises this and to grow it needs to adapt the upcoming ways. I would be more interested to look at the Music they produce in the next 2-3 yrs since they claim to have been using some kind of AI to understand the trends of music. we have to see if their new music continues to top the charts at least as the couple of previous years.
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Yes have read this article. The only thing that makes me worry is that if they buy 100 songs, it is barely 4-5 songs out of that which blows up the charts and makes them money.