Music labels want Hindi film producers to cut soundtrack costs as revenue falls

But this decline in listenership, and the resultant fall in revenues have failed to move producers to lower the price at which they sell their film music rights to music labels, who in turn licence them to streaming platforms. Producers backing big-star projects have been particularly rigid when it comes to renegotiating prices, leading to fewer music sale deals happening lately and rights of multiple movies lying unsold, industry executives said.

“Recoveries for film music have been going down drastically. Rates depending on views on YouTube and on streams on services like Spotify and JioSaavn have reduced, while some players like Wynk have shut down entirely. Earlier, labels would get good money from older catalogue playing on television, but music channels have shut down as well, while radio is hardly bringing any business. It is an easy thumb rule that film music rights should see some correction,” said film producer Vinod Bhanushali, who also owns a music label HITZ Music.

Also, music labels are no longer dependent on Bollywood music, as there are several options in the form of regional and indie pop that are garnering traction, Bhanushali pointed out.

Producers hold firm despite weak returns

Depending on specific contracts, streaming platforms pay music labels between 50 paise and ₹2 per stream of a song.

To be sure, despite dwindling monetization opportunities, most film producers still refuse to take a cut, according to executives at music labels. “Most stars and producers don’t care if you as a label make anything back, they’re just collecting their upfront recovery. There is little logical negotiation you can carry out as a label except perhaps a few percentages here and there and refusing to buy, in the first place,” said Mandar Thakur, CEO , Times Music. Thakur added that their company is being very careful about what they buy and not going ahead with deals that seem over-priced and not lucrative in a bear market . “It’s a take it or leave it scenario,” Thakur said.

The clout of some producers speaks for itself, making it harder for rates to come down in general. In some cases, labels are not looking at return on investment for albums – instead they are more interested in market share of the production company. In case of a big film backed by a powerful profucer, the entire investment is easily recovered by OTT and audio rights alone, according to Shahir Muneer, founder and director at Divo, a south Indian music and media company.

Labels pivot to regional, indie tracks

Producer Anand Pandit said the current situation has emerged due to a shift in user preferences. People now prefer individual songs or playlists over full albums or soundtracks. In response, labels are collaborating with popular artistes and using social media to create a buzz. They are also placing songs in commercials, TV shows, and video games to maintain their presence.

The entire film industry is going through an evolution of sorts where really big films and albums are failing while smaller albums and films are doing really well, according to Jackky Bhagnani, film producer and founder of music label Jjust Music. 

“Music labels are not offering the same kind of high premium prices like they used to, because revenues are not coming their way. There are many reasons for that, the per-paisa stream which the platforms used to offer back in the day is not the same anymore,” he said. “As far as YouTube goes, initially, 90% of their revenue used to come from music. But now other content, including stand-up comedies, fiction shows, podcasts, has really picked up. That kitty of revenue is getting divided,” Bhagnani explained.