At a time when every music platform worth its name is betting on digital media to cover a wider customer base, 110-year-old music company Saregama India Ltd has chosen to invest equally in physical devices for discerning audiences. A portable radio-cum-music player Carvaan that was launched earlier this month is the latest of its initiatives along with music cards that came out in March 2016. The company that returned to active film music acquisition last year after a six-year gap now intends to balance the two spaces. In an interview with Mint, Saregama managing director Vikram Mehra talks about the logic behind the hardware innovation and marketing it for the 35+ generation, future plans for the company and why India is not a country of freeloaders. Edited excerpts:

How would you explain a physical, portable radio in the digital age?

In 2015, we conducted a massive survey across the country to understand the music consumption habits of people. There were a lot of things we understood about how the customer today consumes music. One of them being that once people reach the age of 35, somewhere, the fear of technology starts creeping in. A lot of people told us that they wanted to listen to a Mohammed Rafi or a Kishore Kumar song and our obvious response was they’re all available on platforms like Gaana, Saavn, Hungama and Wynk. But the standard answer was it’s too complicated for them. At times, people just want to do other things while listening to music without hassle in their lives, like they did in the cassette or CD era. The genesis of this physical product is to give them a lean-back experience instead of a lean-forward one. But all the music in the radio is stored in a digital format. Plus, it doubles up as a Bluetooth speaker for the kid at home, and as a USB player. So calling it an old radio is just a marketing ploy to position it as a cool, retro thing. It’s as digital as it gets.

Are you focusing on a particular demography or age-group?

The bigger target group for us is the 35+ generation but the communication is through the younger crowd because we’re asking them to gift it to their parents. More and more children are not staying with their families, so each time you go home on Diwali or new year’s, you need to take something. Plus we’re capitalizing on the nostalgic tug associated with the music we’ve heard early in life. There will be a big advertising campaign somewhere in the end of June. We’ll be taking to digital media to talk to people of the younger age group to tell them it’s perfect for their folks. At the same time, there will be below-the-line promotions-demonstrations in malls and other public places so the parents can also see it.

How are the music cards, another physical innovation, doing for you?

They’re doing better than CDs for us. The customer we were attacking was the one who spends two-and-a-half hours commuting to-and-fro from office everyday. The travel time is going up in each city, not just Mumbai and Delhi but the likes of Jaipur and Ajmer too. Either you listen to the radio if you’re okay with advertisements or you want to listen to your own music. Data is still expensive to watch videos. So you store music on your phone and connect it to your car. Keeping that in mind, music cards were launched. We launched on 5 SKUs (stock-keeping units), we’re on 24 SKUs right now. We began with India and launched in the US last month and are expanding to the UK and Canada around June.

How is the digital space (OTT platforms, mobile subscriptions etc.) doing compared to the physical initiatives?

At the end of the day, there are 1.3 billion Indians who want to listen to music. The biggest repository of music from the 1900s to 1980s sits with us and we are looking for every possible way to get it out. 

OTT is the biggest contributor (for us), YouTube is another. Telecom is still big though it doesn’t have the old glory of caller ringback tunes. Other sources of revenue come in when our songs play in ads or films.

How tough is monetization for a music label in a country where consumers are known to not want to pay for content?

Everybody thinks Indians are freeloaders. I’m completely in contradiction of this view. You need to add perceptible value (to your offering). If you gold plate it and say you’re someone starting out but charging premium, it’s not going to work. With the sale of our music cards and our streaming numbers, we’ve realized that if you package it right, don’t overprice it, add some value like getting the original track and correcting the volume, people are buying it. What Indians will not do is pay a large premium, that’s tough.

You re-entered the film music rights business last year. Why did the break happen and what has the new journey been like so far?

Somewhere during that period, we could not strike the right business model to monetize the content we were buying. We were the king of cassettes and CDs but when the digital world hit us, we could not move fast enough to crack the right model. The smarter thing the company did was to not get into it because we would have burnt our hands. We remained profitable, we didn’t have new content but were making money from old content. Over the last 3-4 years, we’ve managed to carve our B2B (business-to-business) and B2C (business-to-consumer) channels so that if we go into the market today and acquire music, we will be able to recoup our costs and build library for the future. Kahaani 2 was our first film, we’ve announced Indu Sarkar with Madhur Bhandarkar and there are two other films in the pipeline.

How are genres apart from film music doing in India?

The only forms other than Bollywood that we focus on are classical and devotional. Both remain the highest download-to-pay ratio with 6 percent and 7.3 percent, respectively, when the industry standard is 0.1  percent and 0.08 percent. It’s a niche audience we’ve gone after, but they use download services and pay for them. We may acquire fewer customers but whoever we acquire is paying us. Every customer is a positive acquisition, not a negative one.

What future plans do you have for the company?

It is very clear for us. Acquire or create more music but at the same time, find more and more ways to make more money from B2B and B2C. – Live Mint