New PLC management – Kites and Bollywood

Didn’t take long for the pundits to pronounce Kites a dud.  One assumes that the production machinery behind the movie had that figured out pretty early on.  Which is why they went overboard on the distribution front – opening in 2000 screens in India and 500 overseas.  The logic is pretty simple.  The critic reviews come out during the first weekend.  Go overboard on marketing and ensure that there is huge interest – and advance bookings – for the movie.  Make sure there is plentiful supply (as in screens) across the country and for the somewhat gullible NRI market.  Cash in on the first weekend (before anyone has had time to judge the product).  Keep your fingers crossed during the second and (hopefully) third week.  Move quickly to the international TV release.  Get the DVDs out in a month or so.  Cut prices on the DVDs in one more month.  Then milk the long tail of music and video rights.

Its a model that is borrowed from Hollywood and perfected in Bollywood (I prefer not to call it the Indian film industry :)).  I say perfected in Bollywood for the speed with which the industry moves to TV, DVD and price cuts.  The public is still suffering the after effects of the marketing blitz.  And the pirates aren’t given enough time or margins to capitalise on a new release.  Which means the producer can maximise the RoI on the movie.

Its a lesson in new PLC management – where speed and scale are of the essence.

More bad news for music

How does one make money from music anymore?

1. The traditional model of selling an album around one or two great songs doesn’t work anymore.  People can legally download a copy of the single from itunes.  So, instead of $ 14.99 for an album, you have to be content with $ 0.99 for a song – although its likely that you’ll sell a lot more singles.  Still, the gains are hardly likely to make up for the loss.

2.  Sales cycles are incredibly short.  I did a post on the New Product Life Cycle sometime back – music is a classic representative of this cycle.  True block-buster albums are rare.  Most music has to be be sold within a few months of launch and then milked from compilations.

3. Piracy is rampant.  And there is precious little one can do about it – though that doesn’t stop the industry from trying!

I can go on.

But along the way, a few good internet models started emerging – like itunes, Rhapsody and Spotify.   This was good.  There was hope for the industry.  As long as an economic engine finds its place, one could keep the consumers and the labels happy.

Now it turns out that some of these models aren’t so good for the artistes.  Apparently, Poker Face played a million times on Spotify in the last 5 months – and all Lady Gaga got was the princely sum of – hold your breath – $ 167.  (You’d spend more money than that on coffee at Heathrow waiting for your flight to take off!).  This is a problem.  As the Guardian puts it:

“Spotify is the cool company that keeps the Kids happy, but also signs contracts with the Man…And if this is the best Good Cop can do, God help us all”

Is Spotify ripping off the labets?  The labels ripping off the artiste?  Or, a business model that doesn’t work?  That music will survive is a given.  The question is – with what business model?