Music genre to lose 15-20% inventory due to ad cap

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By indiantelevision.com Team Posted on : 27 Feb 2014 09:04 pm

MUMBAI: Sony MAX and Sony MIX executive vice president and business head Neeraj Vyas was the Guest Editor of the Day at Indiantelevision.com today. In his role as a journalist, Vyas interviewed Sony MIX’s senior VP sales Mayar Penkar on music broadcasting as a genre and its potential.
 
Penkar feels the 12-minute per hour cap on advertisements would force music channels like 9XM and Masti to change their programming for the better.
 
He says the music genre does not get what it deserves in terms of ad rates because of the way these channels have been positioned so far.
 
Following are the excerpts from the interview:
 
From the sales point of view, what do you think is the perception of the genre in the trade and what is the perception of MIX in the same subset?
 
I completely believe that, music as a genre, and when I am saying music, I am talking about pure play music channels that are actually today looked upon as supplementaries or value addition to a media plan which is looking at Hindi speaking markets largely driven by the GEC (general entertainment channel) and Hindi movie channels. Today, it is being bought as a frequency buy. The reason for that are the broadcasters themselves for the way they have positioned the channel and the genre as more of a frequency buy channel and not as something which can actually deliver far more better results in audience targeting.
 
How can music be the vehicle for better audience targeting?
 
One of the biggest consumers of the music today is the youth. Be it on television, on mobile or any other digital platform and these are very important subset for most of the brands to actually be a part of the media plan or be a part of their marketing objectives. The broadcasters will actually have to make music channels far more relevant and important in the minds of clients than just the media sellers or media buyers. Till such time the client does not perceive music channels as a core genre for their media requirements or for their marketing requirements, they will continue to look the channel from a little downward point of view and not really from the mainland point of view. It will never be seen as the critical part of the media plan till such time the broadcasters take upon themselves to make it a relevant point with clients that this channel has lot of potential reaching out to the TG of 15-24 which is 60-70 per cent of today’s India youth.
 
So what are you trying to say is that education has not happened. It is being treated like a commodity and sold like a commodity and hence the core values of the channel will never be exposed to the end buyer?
 
Never! So coming back to MIX, the channel has made an effort to stand out in terms of its positioning, compared to what the other pure play music channels are. There is not so much differentiation that can be brought on to the content part. The role MIX has played by setting up the mood for the viewer with the segmentation of the music being played across the day has actually become far more acceptable to the viewer.
 
Why is MIX perceived to be a favourite among the music fraternity?
 
The kind of support MIX has got from the industry itself in terms of talent coming on to MIX and showcasing as to what their viewpoints on music are, has actually brought in a large amount of differentiation as far as MIX is concerned. Be it in terms of MIX voices, MIX Solos, MIX Gigs that we have done and TV’s first radio show. We brought radio live on television and I think that deserves a big applaud as far as MIX programming is concerned for having done something which is breakthrough in the space of music. Going forward things like this will only create that positive perception in the minds of clients that music can actually be looked upon as a proposition which is far more targeting and not anymore random and not just a commodity. So I guess MIX is playing that role, but is a fairly new channel in the space.
 
Coming back to the critical reality of getting a fair share of revenues, do you think the genre per say gets its fair share of revenues?
 
No product which is sold as a commodity will ever get its fair price. Today, my sense is that the entire genre is at least down by 50 per cent from the revenue point of view. The reason being, I think the way most of the broadcasters in the music space were operating was not very clear as to the setting up of the right benchmarks. Most importantly, in the pure play music channel, there were no strong networks involved in the business of pure play music.
 
The first strongest network that was involved in pure play music was Sony and that was one of the last ones to enter. So when you look at channels like 9XM, 9X Jalwa, Masti or Mtunes, the whole survivor model for them is to actually somehow get the money. The survival model for them is to actually not look at creating brand assets or creating a proposition which can for a long term be monetised.
 
What’s wrong in the music genre?
 
When you have quarterly profitability into play, you have gone ahead and aired 30 minutes of the advertising time in an hour. In a scenario where you should have actually consolidated as a category and as a genre to help raise the benchmark of the music space, the sheer fear that you may lose out that little bit of revenue has prevented creation of a fair pricing model. It would have helped the category on the long-term basis and would have made the category even more stronger as far as revenue potentials are concerned.
 
How will the 12-minute per hour ad cap impact?
 
As far as MIX is concerned, we are clearly awaiting the ad-cap regulation to happen. Once that ad-cap regulation happens, there will be a level playing field. Also there would be approximately six and half to seven and half lakh seconds which will clearly get vanished from the current music genre space. Once the level playing field is set, the market will suddenly realise the importance of music space with close to 15-20 per cent of the inventory getting vanished overnight.
 
People will start looking at this genre with a little more respect and I think that respect will come with a little bit of regulation and with a little bit of effort that each broadcaster will actually bring in to put on to the table when they are making their pricing models or pricing strategies.
 
I guess this channel will move. The music category according to me is in the same phase as the Hindi movie channels were in 2002 -- bought for frequency and not really for the content and the value that they want to bring on to the table. Hindi movie channels have actually moved a distance in the past 10 years. Music will move in a similar fashion.
 
But provided every broadcaster chips in…?
 
I don’t think there is a choice. Once they are down by 20-25 per cent of their inventory, nobody will have a choice but to actually re-look at their rates and by then if you have to go back to an advertiser asking for a rate hike, the first thing the advertiser will start looking at is the differentiation on the programming, content and quality of the channel if he has to start paying you a rate hike. Gone will be the days when broadcasters could accept commercials after commercials just because they could expand the time. So when the time restriction comes in, people will start looking at the product. I guess MIX in that point of time will be a clear winner as far as being looked upon as a much more valued product than just a commodity product.
 
So giving these realities and given the fact that ad-cap is a likely reality for the entire genre, what do you think is the growth prospect?
 
To look at it in a two-year horizon, the growth would be anywhere between 25-30 per cent. But if you look at it coming from the next fiscal which is going to be March- April next year, most of the people according to me are actually not ready for creating a strategy on how will they tackle the  rate growth. Reason being, most of these channels like 9XM or Masti used to enjoy clear dominance in terms of leadership 13 weeks prior to today. Even in a commodity model, they had established price points for themselves.
 
For them after April, life will become a more real scenario where they are number two and three players by a distance, in the sense of 25-30 per cent distance, with number one being MIX. And then to work at price points which will be much higher than currently what they were operating with or what they were enjoying as leaders is going to be a difficult task.
 
For them or for clients to start giving them higher rate hikes immediately, I don’t see that happening. We may see price point corrections happening but the category may just remain flat only because of lesser inventory and more or less securing the same level of revenue growth. But next year, this genre will actually become a very important channel. The genre will get its share price or share due in the next two years to come.

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