In what is a clear acknowledgement that digital distribution is the way to go, Saregama India, one of India’s largest music labels, has inked a worldwide licensing agreement with the Home Entertainment Services division of Sony DADC (Sony Digital Audio Disc Corporation) for its physical business: Sony DADC will receive exclusive worldwide rights to the entire Saregama audio/video content library including its sales, marketing and distribution across physical formats like CDs and DVDs among others.
Saregama, which has a library of 1.5 lakh songs (150,000 songs) across various genres like Bollywood, Hindustani Classical, Instrumental, Carnatic and Regional music in 18 Indian languages, will focus on the digital part of the business, and is also keeping the artists and repertoire (A&R) division. While the deal period or the financial details of the agreement were not disclosed, a Radioandmusic.com report suggests that the Sony DADC deal is for 3 years.
Following this deal, Sony DADC claims to have the largest market share in the Indian physical content business in both audio and video. The company had previously secured home video licenses from Hollywood studios like Sony Pictures Home Entertainment (SPHE), Sony Pictures Home Entertainment (SPHE), Warner Home Video (WHV) and National Geographic in India. It also has the license for Sony Music content in India.
Saregama Will Focus On Digital
This deal seems to be in line with Saregama’s recent focus on digital music sales and the company’s declining physical music sales. As per a PTI report which cited Saregama India Managing Director Surya Mantha, digital format accounted for 70% of the company’s revenues while physical sales accounted for the remaining 30%. The reasons for the bet on digital is evident – digital is a growing medium, while physical sales are on the decline. By licensing all its rights to Sony, Saregama is choosing to focus its energies on digital. The company however positions this deal as a growth opportunity for the physical format sales. Mantha is quoted in the press release as saying “We believe physical business is here to stay and accordingly attach a lot of strategic importance to ensure a prominent presence.” Maybe that is true for them, if they’re getting a minimum guarantee from Sony DADC.
The company notes that it has invested significantly in the digital segment and currently offers music through various digital channels like CRBT, WAP, web and devices.
We had sensed that the shift to digital would happen, when Mantha, who has previously worked with Real Networks and Sify, and was the CEO of Web18, signed up for Saregama. It also appointed Keshaw Sinha as its Chief Technology Officer (CTO) in May 2013. Sinha had previously worked as the Vice President and Technology Head at Web18, where he was leading Web18’s entire web and mobile initiatives and therefore has significant experience in launching and scaling up digital properties.