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Airtel Claims To Be India’s Largest Music Company; We Do The Math

If you were wondering about why Bharti Airtel decided to set up separate divisions for Mobile Entertainment and Mobile Commerce, here one reason: Deputy CEO Sanjay Kapoor told PTI that “Music Bharti” is the largest music company in India, with more revenues than BSE listed Saregama India.  (Hat Tip: NeverClever on Twitter) It is worth noting that Saregama India has not yet announced its financial results for 2008-09, and it earned Rs. 143.7 crores in revenues during the 2007-08 fiscal (FY08). But, according to our calculations, Airtel’s music revenues are significantly higher than those of Saregama.

Much like other telecom operators, Airtel does not produce music, but earns revenues from music distribution via caller ringback tones, mobile radio and music on demand. Along with SMS, Mobile Music is the largest contributor to Airtel’s Value Added Services Revenue. Rs. 481.3 crores of Airtel’s Value Added Services (VAS) revenues in Q4 were not from SMS. This non-SMS component has steadily been growing for Airtel, despite total VAS revenues flattening out over the last 2 quarters. (Details here).

What Kapoor hasn’t talked about, is the sheer margin by which Airtel is ahead of Saregama in terms of total music revenues.

Airtels Music Revenues: A Calculation

Taking a highly conservative assumption that Music accounts for as little as 40% of Airtel’s Non-SMS VAS revenues – it’s probably closer to 55% – we calculated that Airtel had revenues of at least Rs. 708 crores from music distribution in 2008-09 (FY09), up from Rs. 458.4 crores in FY08:

airtel-saregama-music-revenue

At 55% (chart) of non-SMS revenues, Airtels music revenues in FY09 would be Rs. 973.5 Crores, and with a total of around Rs. 87.8 crores in the first three quarters of 2008-09, Saregama would need a miraculous Q4 to beat that.

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Airtel’s A Distributor, Not A Publisher

In all of this – this positioning game – it’s important to note that Airtel aggregates and sells music from many music publishers including Saregama, T-Series, Yash Raj Films, UTV, Rajshri Films, and several publishers from SIMCA. As the largest telecom operator of just 12 operational telcos, Airtel enjoys a lions share of the mobile music distribution space. Keep in mind that Airtel does pay out anything between 30-50% of its gross receipts from music to VAS Providers, Content Aggregators and publishers.

However, this claim and our calculations are indicative of the growing importance of mobile distribution in the music business. Unfortunately, companies like Saregama haven’t given a break-up of digital and non-digital revenues.

Note: In case you disagree with Airtels claims – do refute them in the comments. In case you spot any mistakes with our calculations, please do feel free to correct us. We will update accordingly.

Related:

— Saregama Financial Results: At the NSE

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— Airtel Restructures: M-Entertainment, M-Commerce Segments; Manoj Kohli, Sanjay Kapoor
— Updated: Q409 Results: Bharti Airtel Reports Q4 Net Profit Of Rs. 2239 Crores; ARPU, Minutes Of Use Down; M-Banking
— Motorola To Shut Down Digital Music Business Soundbuzz
— WorldSpace Eyes Web Based Services In India
— Q109 Call: Nokia Services Revenues Linked To Handset Sales; XpressMusic Tops The Charts

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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