Music label, film company — and now hardware seller — Saregama is transitioning out of its reliance on the mobile VAS business and is monetizing its music more on streaming services and YouTube. “This year apart from being the big growth driver that came in, has also been a year we have taken a very conscious call to get out of some businesses,” said Vikram Mehra, managing director at Saregama. “WAP business is one of them. This is a feature that we used to support on feature phones across this telecom operator, it used to be a large topline business, but we realize, it is a dying business and secondly, it is a non-IP business. We were playing a role of an aggregator and that is not what is a core of Saregama.”

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The numbers

Saregama’s B2B business, which is essentially its licensing of music to streaming services, is paying off more due to rapidly declining data costs. “Data cost, which was some 250 bucks when I joined this company has fallen down below 5 bucks per GB,” Mehra said.

In the last one year, OTT streams, which is essentially playbacks on apps like Saavn, Gaana, and Wynk Music, have grown by 44%, to 724 million in Q4-2018 alone. It’s important to note that music labels get paid by streaming services on a per-play basis, regardless of whether the listeners are paying subscribers or not. “3.1 billion times a Saregama music IP was consumed by someone in some part of the world in 28 days,” Saregama said. “And we know which song got played for each of these 3.1 billion instances.”

Meanwhile, YouTube grew by 111% over the last year, getting 186 million views a month. That’s 558 million views a quarter. YouTube alone gets a lot of views compared to the total of Saregama’s music across multiple streaming providers. “OTT & YouTube will continue double-digit growth while Telecom will continue to decline,” Saregama said in its investor presentation. “Consolidation may happen across OTT buyers, but the total streams will continue growing,” Saregama said, in an apparent reference to JioMusic and Saavn’s merger.

Music financials

While Saregama’s movie effort, Yoodlee, is much more long-term and is currently losing money, the music business is booming. From FY 2016–17 to 2018–18, annual music revenue grew by 107% — from ₹1.412 billion to ₹2.927 billion. Profit after tax for the entire company grew 205% in the same period, from ₹1 billion to ₹3.05 billion.

Of course, music revenue also includes (and is helped by) Carvaan, Saregama’s breakout retro music player that comes with old songs pre-loaded, aimed at older audiences.

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