CULMINATING  EXPERIENCE   PledgeMusic  To  India     Tanya  Nath  (Masters  in  Global  Entertainment  and  Music  Business)                           Table  of  Contents   EXECUTIVE  SUMMARY…………………………………………………………………………………3   EXECUTIVE  SUMMARY…………………………………………………………………………………3  ...............  2   EXECUTIVE  SUMMARY  ....................................................................................................................................  3   MARKET  STUDY  OF  INDIA  .............................................................................................................................  4   CULTURAL  ANALYSIS  OF  CONDUCTING  BUSINESS  IN  INDIA  .......................................................  5   HOFSTEDE’S  MODEL  ........................................................................................................................................  6   RECOMMENDATIONS  .......................................................................................................................................  8   POLITICAL/LEGAL  ANALYSIS  ...................................................................................  9   RELEVANT  ISSUES  POLITICAL  ..................................................................................................................  10   LEGAL  ....................................................................................................................................................................  10   POLITICAL  RISKS:  ............................................................................................................................................  11   RECOMMENDATIONS:  ..................................................................................................................................  12   DEGREE  OF  ECONOMIC  INTEGRATION  OF  THAT  COUNTRY/REGION  WITHIN  A   WIDER  REGION  ....................................................................................................   13   GROSS  NATIONAL  PRODUCT:  ....................................................................................................................  13   GROSS  DOMESTIC  PRODUCT  PER  CAPITA:  .........................................................................................  14   TRADE  RESTRICTIONS  OR  BARRIERS:  ..................................................................................................  14   INFLATION  RATES:  .........................................................................................................................................  15   RECOMMENDATIONS:  ..................................................................................................................................  16   METHODOLOGY  FOR  PRIMARY  DATA  ...................................................................   16   TARGET  MARKET  ............................................................................................................................................  16   MUSIC  FANS  IN  INDIA  ...................................................................................................................................  17   MUSICIANS  IN  INDIA  ......................................................................................................................................  18   WHETHER  PLEDGEMUSIC  SHOULD  EXPAND  OR  NOT  TO  INDIA?  ...........................   19   SWOT  ANALYSIS  ..............................................................................................................................................  19   CONCLUSION  &  LIMITATIONS  ..............................................................................   21   BIBLIOGRAPHY  .....................................................................................................   22   APPENDIX  ............................................................................................................   23   SURVEY  FOR  MUSICIANS  IN  INDIA  .........................................................................................................  23   SURVEY  FOR  MUSIC  FANS  IN  INDIA  .......................................................................................................  27       2           EXECUTIVE  SUMMARY     With the opportunity given at Berklee College of Music, I have been working on a consulting project for my culminating experience. My topic for the consulting project was to get a chance to work with a company from the U.S or Europe, which is looking as India as one of the companies to expand to. I felt this would be a good topic for me to work on as I have prior experience in market research and survey and coming from India, I was familiar with the market and how to conduct business there. Several online streaming and digital companies are trying to internationalize to the Indian market but a lot of research and time is required to analyze the culture of the country and whether it will be a successful market for the company to expand or not. One of the guest lectures at Berklee was by the humble, Benji Rogers, CEO of PledgeMusic. He gave us great tips on start-ups with his personal examples of how he started and is carrying out PledgeMusic. I was really intrigued by their business model and idea and felt PledgeMusic would be a great company for the Indian   3     market. I got the opportunity to speak to Benji Rogers, CEO of PledgeMusic about my culminating experience and he was interested in the idea. PledgeMusic is a direct-to-fan online music platform that helps musicians reaching out their fan base to distribute and pre-sell their music projects. It’s a great way for the fans to the see the process of their favorite making music as it happens. So, I analyzed the cultural, legal and political aspects of the music industry sector of India, which should be beneficial for the company. As before expanding to another country, it is really essential to understand the regulations and cultural aspects of how business is conducted in that country. I conducted the market research by doing a survey analysis of the Indian market and then recommendations whether or not it will be profitable for PledgeMusic to expand to India and under what circumstances. MARKET  STUDY  OF  INDIA     I did some research on the Indian digital music industry market. “MusicAlly reports that Vinodh Bhat, CEO of Saavn - which has 10m active users amongst the 1.2 billion population - said that: "It would be a huge mistake for the Western music and entertainment industries to ignore India’s potential" and that he expected consumption of Western music to grow from 4% to 10% in the territory over the next four years” (Music Week, 2013). The digital music market recently overtook physical music sales in India as it has in much of the rest of the world. By 2011, approximately 60% of music was purchased through digital mediums (Nextbigwhat, 2013). In this paradigm, consumers pay for data rather than compensating the artist or label directly. In India, as in the global marketplace, music pirating proves to be problematic for all facets of the entertainment industry. It is common for retail stores and street vendors sell pirated movies, music, and digital books in a poorly policed black market. Peerto-peer digital piracy sites are becoming increasingly popular as more consumers gain access to broadband Internet. The US India Business Council cites piracy as “robbing the Indian entertainment industry of approximately $4 billion of annual revenues and 820,000 jobs”   4     (Culture360, 2009). However, the magnitude of this problem is frequently debated. These data are often identified as being inflated and for “flattening out issues of social or economic difference in their picture of the phenomenon” (Culture360, 2009). Regardless, it is clear that pirating is a common phenomenon and a primary method for obtaining music and other proprietary media and entertainment. The rate of media piracy can be explained when the means of the audience is considered; Approximately a quarter of India’s population lives below the poverty line and the cost of CDs and DVDs obtained legitimately is prohibitive for the average Indian citizen with limited earning potential (Biswas, 2012). Piracy provides a cheap, affordable alternative or Indian consumers of limited means where luxury items must be deferred for consumer items of necessity. CULTURAL  ANALYSIS  OF  CONDUCTING  BUSINESS  IN  INDIA     India is a diverse country with a mix of languages, cultures, traditions and religions. So for a company who is trying to internationalize to India from another country, will have to know the cultural differences before conducting business there. Using the hofstede’s model, a company can find out the major cultural differences between the host and the home country for doing business there. India is the second most populous and high context cultured nation. High-context cultures tend to “use and interpret more of the elements surrounding the message to develop their understanding of the message ” (Hollensen, Global Marketing, p. 237). Social status/standing and familiarity or prior knowledge of the person and the social setting or background can provide additional information, and will be perceived by the message receiver. In high-context cultures, such as Indian culture, interpersonal relationships are regarded as highly important. Trust is not gained over a short period of time as in low- context cultures. More thought and effort may have to go into developing interpersonal relationships in places like India. The context of words, tone of voice, gestures, body language, and even social status or family history are considered as key factors of developing relationships. Indians prefer to conduct business with those that they know. In Indian culture, relationships tend to hold higher importance over material possessions. In reference to friendship patterns, “relationships are built upon mutual trust and respect. Indians   5     prefer to have long-standing personal relationships prior to doing business” (IndiaLanguage, Cultures, Customs and Etiquette, 2013). Business agreements may be sealed with a handshake instead of a complex agreement. HOFSTEDE’S  MODEL   India is a diverse country with a mix of languages, cultures, traditions and religions. We can get an accurate overview of India’s culture by using Hofstede’s Model and can recommend ways of managing the cultural differences between India and the United states (home country for PledgeMusic). To establish a business globally, it is always more beneficial to understand the demographics of the host country. According to Hofstede’s Model (4+1 model), we can analyze the culture of 2 countries in four aspects: 100   90   80   70   60   50   India   40   United  States   30   20   10   0    PDI   MAS   IDV   UAI   LTO   Source: www.geert-hofstede.com/countries.html POWER DISTANCE INDEX (PDI): This dimension of the model concerns the inequality amongst the people in India in terms of social status, caste system and hierarchy. The PDI analysis of the graph indicates that India is high in power distance, which means that when it comes to decision making whether at home or at their workplace, the people at the top make all the decisions. A person with a higher social status is respected and obeyed more than a person with a lower social status. In these societies, equality is not stressed.   6     High power societies benefit the workplace because decision-making is left to the top management. MASCULINITY (MAS): This concerns the gap between the values of men and women in a cultural society. Every country has different set of norms in terms of communication between genders. According to the MAS analysis, India is ranked third highest in the world in masculinity dimension depicted on Hofstede’s model. The analysis depicts that India and United States are both considered a masculine society, which means that when it comes to the workplace, there is a lot of competition amongst people and an immense display of success. This system of intense competition for the ‘success label’ begins in school and continues throughout an individual’s lifetime. INDIVIDUALISM (IDV): Individualism denotes the degree to which people in a country learn to act as individuals rather than as members of groups (Global Marketing, page 236). In an individualistic society, the bonds between individuals aren’t very strong. In contrast, Collectivist societies place value on cooperation and teamwork. India is a collectivistic society, as depicted in Hofstede’s model with a low IDV score. In India, people are used to working in groups and are interdependent on each other. Whether in the workplace or outside, people like to maintain harmony amongst the group and seek their family or friends for advice. Building relationships is the most important thing when it comes to doing business in India. They tend to know and trust the people they are willing to do business with. UNCERTAINTY AVOIDANCE (UAI): Uncertainty avoidance refers to the way a society deals with uncertainty. Not many countries have a high tolerance for uncertainty. India and The United States both have a low tolerance for uncertainty. Both societies have trouble dealing with recurring change. People in an organization usually tend to follow certain rules and values. The culture is not very open to new changes and situation. Whereas a country with a high tolerance level are open to new and diverse ideas.   7     Since India and United States both are a low to middle level tolerance country, there is slight difference in thought processes when it comes to change. LONG TERM ORIENTATION (LTO): “Time orientation is defined as the way members in an organization exhibit a pragmatic future-oriented perspective rather than a conventional history or short-term point of view”(Global Marketing, 237). As indicated in Hofstede’s analysis, India has a high long-term orientation. When it comes to conducting business, Indians always think long term, economically speaking. The United States, on the other hand has a short-term oriented culture, which indicates that their society does not tend to differ relationships by social status and does not believe in personal steadiness. RECOMMENDATIONS   Upon analyzing the culture of India (the host country for PledgeMusic) and United States (home country for PledgeMusic), I can recommend certain ways to manage these cultural differences so that PledgeMusic can easily internationalize the label and adjust to the Indian Culture. • Proper management and organization structure: Following analysis, it clearly determines that India is a collectivist society and people prefer to work in teams. Additionally, organizations in India tend to have a hierarchical management structure due to high power distance. So, the label should appoint American expats to lead the Indian teams and work with them. • Improved Communication: There is a huge cultural communication gap between the Americans and Indians. The management should be able to overcome this communication gap by understanding the communication dynamics of each society and by talking to the Indian employees about how the greet each other. We could also implement an anonymous complaint or suggestion box to help overcome this gap. There can also be a problem of language. Indians speak British English, so some words are quite different from American English. Thus, it is important to notify employees of differences in prose as to adjust efficiently within the workplace environment.   8     • Gender Gap: There are few gender issues in the Indian society, business women are highly respected in the society. • Scheduling of appointments: Since Indians have a high time orientation value, its better to schedule appointments in advance for a business meeting. POLITICAL/LEGAL  ANALYSIS   Since its independence in 1947, the growth of India’s political stability has allowed for its emergence as an international power. Prior to 1991, socialist governance of the private sector had been causing international investors to shy away from India due to high costs of exchange and legislative constraints. However, recent political and legislative reforms have given way for rapid economic growth by opening trade between Indian and western economies such as The United States and Western Europe. In 2011 alone, there has been an estimated 36.5 billion dollars worth of goods imported to the United States (US Census Bureau, “Foreign Trade Balance”). Moreover, the United States is India’s largest investment partner with an estimated 9 billion dollars worth of investments India’s growth in international trade and investments, however, is hindered by internal corruption, poor infrastructure and inflation (US Department of State, “U.S. Relations with India”). India’s comprehensive legislative framework has made it facile for businesses to grow within its economy. The legal system provides an environment in which businesses can flourish without significant interference from government. Despite India’s structured legal framework, implementation of these legalities is, for the most part, null and ineffective. This has allowed for several business scams to occur since its economic liberalization. Moreover, judicial processes within India are incredibly slow, with deliverance of verdicts usually lasting more than a few years. The lack of effectiveness in terms of speed of India’s judicial system can be attributed to the disproportionate ratio of judges to citizens; 15:1 million (“Country Analysis Report: India” 40). The current Prime Minister’s (INC) government has focused its efforts on international integration and international trade; it is pursuant of economic policies   9     that supports liberalization and attracts foreign investors. Although the current government has been expected to increase the pace of economic reforms, there has been a lack of delivery, which has been described as a political paralysis; most likely a result of the country’s increasing problems of inflation and fiscal deficit. RELEVANT-­‐ISSUES   POLITICAL   Several policy measures have been applied to reduce the inflation crisis within India. Such measures include the Direct Tax Code, which will effectively simplify the taxation process. Additionally, reforms have led to an increase in bonds issued by foreign investors to a limit of $40 billion annually (“Country Analysis Report: India” 55). A focus on increasing macroeconomic policies have been at the forefront of the government’s agenda, with the most current regime expected to further facilitate economic reforms. India’s ruling bodies are without a doubt pro capitalism and have made great strides in increasing opportunities for international business. It has improved relations with world economic powers from the western world. Nevertheless, India will remain behind if the economic reforms are not processed and delivered. Moreover, despite India’s surge in its economic strength, sequential growth in this sector will continue to stagger and lag in terms of international standards due to frequency of internal and external terrorism and threats thereof. LEGAL   India has been very successful in establishing a very comprehensive legislative system, which has allowed for its businesses to prosper. One of the most recent and important reforms, which have given businesses an edge, is the implementation of the Value Added Tax (VAT). Also, increasing information technology systems has abetted the online tax payment process, which in turn has made easier to navigate the corporate tax structure and to open a business as well (“Country Analysis Report: India” 39). India also has in place laws protecting intellectual property such as the Patents Act, the Copyrights Act, and the Trademarks Act. These laws further provide a stable legal environment for industries within the entertainment sector to operate in.   10     Additionally, India has been restructuring tax policies that are key to increasing global economic integration, although policies are still a bit rigid compared to international standards. This is demonstrated in the incentives that several Indian states have offered international investors such as tax concessions, reduced tariffs and subsidies. “According to UNCTAD World Investment Prospects Survey 2009-12, India ranked second in terms of global FDI in 2010…” ( “Country Analysis Report: India” 38). Through all the efforts the Indian legislative have made to increase international trade, the lackluster pace of economic reform has discouraged international investors which has led to a plateau in economic growth. Although India’s legal framework provides a sustainable environment for businesses, the implementation of these legalities is often delayed and or ineffective due to weak corporate governance. For example, the implementation of intellectual property laws is weak and has allowed for very high rates of piracy within India’s entertainment industry. Enforcement in this sector is practically non-existent and reparations for pirated media are basically zero. These problems are sustained and exacerbated by India’s judicial process, which is stagnant. Problems in piracy will remain if reforms in legislation and corporate governance are not implemented. POLITICAL  RISKS:   Ownership Risk Ownership risk in India is marginally higher in comparison to established economic countries. This can be attributed to the current problems such as the fiscal deficit and inflation crisis. Additionally, the government has been under public ridicule due to recent allegations of corruption and the slow pace of economic reform. Operational Risk Operational risks of current businesses in India are moderate. The legal framework provides a safe environment for business to operate without risk of unnecessary administrative obstacles or taxation. Foreign companies are allowed to set up subsidiaries within India to carry out activities and can also form alliances with domestic businesses without difficulties. However, IPA’s are not implemented efficiently, which leaves businesses within the industry at high risk for piracy.   11     Verdicts for piracy cases cannot be reached in a timely manner either because of India’s slow judicial process. Transfer Risk The Foreign Trade Act of 1992 assists in the development and regulation of foreign trade. This act aims to increase India’s stake in global trades with a focus on industries that exhibit great potential for export expansion. FDI in India has significantly improved as well since 1991 with its stock reaching $177.7 billion in 2010 (“Country Analysis Report: India” 38). Tax reforms are being implemented such as the Direct Tax, which is aimed at taxation relaxation. The implementation of the VAT will reduce inventory and warehouse costs by covering all goods and services produced within India with one standardized rate. India, however, does not have a single financial market regulator, which makes it difficult for investors within and outside of India.   RECOMMENDATIONS:   • Expedite/Outsource Legal Processes: As previously mentioned, India’s legislative process is very slow and does not guarantee protection of IP. Thus, one recommendation to consider is to outsource legal processes in another, more developed nation. For example, trademarking and copyrighting could be processed within the United States Government and these rights could be protected worldwide. In a worst-case scenario where an entity infringed PledgeMusic’s copyright within India, the case could be handled in an American court. • Incorporate Business outside of India: Though India’s taxation processes are becoming fairer and less costly, there is still work to be done before a business can intend to formalize in India and operate under its tax structure. In this vein, we recommend formalizing the corporate structure in a country outside of India as to bypass India’s taxation processes. This would give the business more leeway while it is in its beginning stages and reduce transfer risk while still growing the business.   12     DEGREE   OF   ECONOMIC   INTEGRATION   OF   THAT   COUNTRY/REGION   WITHIN   A   WIDER  REGION   India has become increasingly implicated in the Asia-Pacific regional market thanks to their ‘Look East’ campaign (‘PM’s visit a success’, Business Standard, 2013). The policy aims to strengthen the ties between the strategic and economic collaboration between India and countries of South-East Asia in order to counterbalance the strategic leverage of China. This has resulted in a convergence in governance between these countries. Alleged reports (‘PM’s visit a success’, Business Standard, 2013) show that ASEAN nations are looking to complete the official integration of India to the trade block by 2015 to ‘forge an Economic Community’ (‘PM’s visit a success’, Business Standard, 2013). This would allow the free travel of goods, services and production services between the countries but also encourage economic alignment. India is looking at Indonesia as its main market for inward investment. The two countries have agreed to engage in a Comprehensive Economic Cooperation Agreement to increase trade and encourage investment. Additionally, the youth demographics of Indonesia offer an attractive opportunity for Indian goods and services to be exported (‘PM’s visit a success’, Business Standard, 2013). Therefore one can see that India is integrated and is an active player in it’s regional economic context. GROSS  NATIONAL  PRODUCT:   The gross national product represents the value of goods produced nationally and as a result of international trade for an annual period of time (Hollensen, Global Marketing, p. 216). India’s GNP for 2012 is of roughly 4,749 trillion US dollars (adjusted to Purchasing Power Parity) (‘World DataBank’, World Bank). The growth rate for India’s GDP (domestic product relating to the value of goods produced domestically over the period of one year) in 2012 was of 3%. This indicator is a record low for the country over the last 10 years and shows a difference in 8% from 2010. However the country’s GNP is in constant growth and has been for   13     the past 10 years. This leads us to believe that the reason for this shortcoming in GDP is due to India’s heavy reliance on international activities. GROSS  DOMESTIC  PRODUCT  PER  CAPITA:   The country’s GDP per capita at PPP is of 3,840 US dollars (‘World DataBank’, World Bank). This places the country in a transitional stage between being a Less Economically Developed Country (LDC) and being a Newly Industrialized Country (NIC) or Developing Economy. This means that the country is very much capable of exporting goods. Moreover, high economic growth shows that a country results in difficulties in producing what is demanded by domestic and foreign customers’ (Hollensen, Global Marketing, p. 217). Relating briefly to our goal, this would allow India to rely on its competence at exporting goods to thrive from this addition, but also help in producing and harnessing what is widely available as a domestic raw material: talent TRADE  RESTRICTIONS  OR  BARRIERS:   India has recently made an effort to make the transition into an open economy. Heavy restrictions on imports and foreign investments were put in place and tariffs exceeded 200%. It wasn’t until the tail end of the 20th century that India began to implement reform on their closed economic system (The World Bank, “India’s Foreign Trade Policy”, 2013). Despite recent growth, India is still regarded to be a shielded economy. The World Bank describes India as being “considerably restrictive”, stating that “agriculture tariffs average between 30-40%, anti-dumping measures have been liberally used to protect trade, and the country is among the few in the world that continue to ban foreign investment in retail trade” (The World Bank, “India’s Foreign Trade Policy”, 2013). Trends indicate that India is slowly working towards an open economy by implementing regulations that will benefit consumers rather than protect producers. The country has pushed for a globalized trade system in an effort to further stimulate the economy. India is currently developing new trade agreements with East Asian countries and the United States (The World Bank, “India’s Foreign Trade Policy”, 2013).   14     In the past, U.S. exporters have complained of being impeded by various Indian trade restrictions, asserting that current regulations are discriminatory towards American businesses. In July, 2013, U.S. Vice President Joe Biden urged that lifting tariffs and “buy local” requirements as well as amending weak intellectual property right protection would result in bilateral trade increasing by five times (South China Morning Post, “US Vice President Joe Biden to Urge India to Lift Trade Barriers, 2013). The Obama administration has stated that improving trade relations with India is a priority, although there is much work to be done before both countries can reap from the benefits that come with amended trade restriction (Brander, Obama Faces Heavy Lift With Trade Relations, 2013) INFLATION  RATES:   The current rate of inflation in India (based on the Consumer Price Index or CPI) is 10.748% annually and .851% monthly (Global Rates, 2013) In comparison, the inflation rate of the CPI the United States is 1.518% annually and .120% monthly (Global Rates, 2013) Since 2004, the inflation of India’s CPI has increased by nearly 7%. This can really help in determining the prices of the products, which the Indian music fans will pledge for. There are numerous catalysts that boost India’s rate of inflation. Primarily, the country’s steady population growth (approximately 1.31%) outweighs the growth of production (Index Mundi, 2013) The demand for essential goods and commodities is greater than it’s supply, ultimately boosting the cost of production. Secondly, India’s unbalanced economy plays a role in the increase of prices. The growth in the agriculture sector has been less than average which has triggered an increase in the need to important basic goods and commodities. India’s weak currency has further raised the prices for imported goods and contributed to the inflation of CPI (Nihalani, India - The Unbalanced Growth Theory, 2009). Lastly, India’s growing economy has enabled people to spend more money. Those in the private sector who have experienced an increase in earnings are influencing the country’s growth in demand. The increase in demand has surpassed that of supply, resulting in higher inflation (Nihalani, India - The Unbalanced Growth Theory, 2009).   15     RECOMMENDATIONS:   Overall, India’s growing orientation towards a liberal, open economy is a great opportunity for the country to expand its areas of business and focus on exports within their trade area. Increase in exports would play in favor of the country’s economic growth, as the value of their imports is far greater than the total value of exports. More to the point is the low value of the currency and the ever-growing inflation rates. The more the country imports goods the greater the impact of inflation is. Seeing how their relationships with ASEAN countries have been improving in the recent past, it makes sense for a country like India to focus their efforts on producing within their borders, and exporting goods to their neighboring countries. This was a detailed research of the social, legal/political and economical analysis of conducting business in India and recommendations to adapt when expanding to the country. METHODOLOGY  FOR  PRIMARY  DATA   The best way to find out whether it will be profitable for a company to expand to another country is by asking the consumers about the company’s product/service. There could be questions along on the lines of whether they’ll use the service or their willingness to pay for it.   TARGET  MARKET   I decided to conduct a quantitative survey for the music fans in India and for the musicians in India. For the music fans in India survey, I sent it out on forums, music schools in India and social media communities like twitter, facebook etc. I got 52 useful responses.   As  per  the  musicians  in  India  survey,  I  reached  to  out  some  of  my  friends  in  India   who   are   musicians   and   got   in   touch   with   music   school   in   Delhi,   Global   Music   Institute.  They  have  some  ties  with  Berklee  College  of  Music  and  kindly  sent  out   the   survey   to   their   students.   The   response   was   really   helpful   from   them.   I   received  21  useful  responses  for  the  musicians  in  India  survey.       16     MUSIC  FANS  IN  INDIA     The   survey   responses   are   attached   in   the   appendix.   From   the   Music   fans   in   India   survey,  I  have  analyzed  that  most  of  the  music  fans  are  willing  to  pledge  for  their   favorite  artists  but  most  of  them  aren’t  willing  to  pledge  for  more  than  Rs.  1000   i.e  $17  while  a  few  are  willing  to  spend  more  than  $160.       I  think  the  price  would  majorly  depend  on  who  the  artist  is  than  what  they  are   offering  to  their  fans.  Also,  there  isn’t  much  difference  between  the  fans  pledging   for   physical   products   or   digital   products.   For   quite   a   few   of   them   it   doesn’t   matter   as   long   they   are   being   provided   with   the   musical   content/other   exclusives.       As   per   the   physical   products,   most   of   them   would   pledge   for   backstage/   guest   list   access   and   signed   collection.   Surprisingly,   23%   of   the   music   fans   would   pledge   for   vinyl’s.   I   personally   feel   that   this   could   be   a   great   thing   for   PledgeMusic  as  most  of  young  music  fans  in  India  haven’t  heard  the  sound  of  a   song   playing   on   record   player.   Additionally,   there   are   close   to   zero   places   in   India   that   sell   vinyl’s.   It   would   be   really   interesting   to   see   people   listening   to   vinyl’s  in  India.     From  the  survey  responses,  I  found  out  more  than  half  of  the  people  don’t  pay  for   music  but  I  strongly  feel  PledgeMusic  would  be  a  great  platform  to  change  that.   However,   even   if   the   fans   will   pledge   for   their   favourite   artists,   most   of   them   are   not  willing  to  pay  more  than  $17-­‐$20  for  it.  For  the  ones  who  do  pay  for  music,   they  get  their  music  from  itunes.  google  play,  CD’s  and  sometimes  records.       For   the   ones   who   don’t   pay   for   music,   get   their   music   from   youtube,   soundcloud   and   torrent   websites.   About   62%   of   music   fans   in   India   would   pledge   for   both   Indian  and  International  artists,  about  28%  would  pledge  for  only  International   artists  while  the  other  10%  would  pledge  for  Indian  artists.       17     MUSICIANS  IN  INDIA     The   survey   responses   are   attached   in   the   appendix.   The   feedback   from   the   musicians   was   really   interesting.   96%   of   the   musicians   are   looking   for   funding   for   their   new   album   and   they   all   are   interested   in   giving   the   fans   access   to   exclusive  offers  and  items  in  exchange  of  additional  revenue.     As   per   the   exclusive   offers   the   would   be   giving   the   fans   to   access   were   mostly   CD’s,   backstage   guestlist   access,   signed   collection   and   process   of   making   the   album.  27%  of  them  will  give  out  vinyls.       Some   of   them   mentioned   that   they   would   give   a   session   with   the   band   in   their   practice   place   and   others   are   not   really   for   exclusivity.   They   feel   if   they   put   something  out  there,  it’s  for  everyone.       About   40%   of   the   musicians   that   responded   to   the   survey   require   more   than   $1600   of   revenue.   Others   at   least   require   $160   for   the   making   of   their   new   single/album.     To  receive  funding  from  the  fans,  91%  of  the  respondents  want  to  be  personally   connected   to   their   fans   and   are   willing   to   offer   both   physical   and   digital   products.  As  per  the  physical  products,  73%  of  the  respondents  are  only  willing   to   offer   CD’s   and   27%   of   the   respondents   are   willing   to   offer   both   vinyl’s   and   CD’s.   They  get  funding  from  various  sources  like:     18         WHETHER  PLEDGEMUSIC  SHOULD  EXPAND  OR  NOT  TO  INDIA?     SWOT  ANALYSIS     I   conducted   a   SWOT   analysis,   which   shows   the   strengths,   weaknesses,   opportunities  and  threats  of  PledgeMusic  in  India.       19     \             WEAKNESSES    STRENGTHS       -­‐  Music  fans  are  not  willing  to  pay  a  lot.   -­‐Doing  business  in  a  country  with  lot  of   cultural  issues  can  be  a  little  difficult     -­‐  PledgeMusic  is  already  a  brand  in  the  music   industry   -­‐  They  have  a  great  reputation  in  the,  US,  UK  and   other  parts  of  the  world   -­‐  Great  platform  for  emerging  artist   -­‐  Revenue  generation  for  the  artists       S        W   O      T       OPPORTUNITES   THREATS           -­‐Entry  of  new  competitors   -­‐  No  Competitors   -­‐  Blue  ocean  market     -­‐Pricing  strategy   -­‐impending  new  legal  requirements     -­‐  Reducing    piracy                         After   analyzing   the   PESTEL,   SWOT   and   Market   of   India,   I   decided   to   perform   a   scenario  analysis.  This  will  give  a  clearer  picture  of  the  three  scenarios  whether   PledgeMusic  should  expand  to  India  or  not.       No.  of  artists   signed   Minimum  fans   would  pledge  for   Maximum  amount   fans  would  pledge   for   OPTIMISTIC   SCENARIO   PESSIMISTIC   SCENARIO   IN-­‐BETWEEN   SCENARIO   20   5   10   $9.99   $2.99   $5.99   $400   $100   $200           20     CONCLUSION  &  LIMITATIONS     After  studying  the  Indian  market,  I  feel  like  it  would  be  good  for  PledgeMusic  to   expand  to  India  but  they  would  have  certain  limitations:     ! Great   for   Indian   artists   but   not   for   international   artists   as   they’d   be   earning  more  revenue  in  other  countries.     ! Cost  of  setting  up  a  business  in  one  of  the  major  cities  like  New  Delhi  or   Mumbai  and  going  through  other  legal  formalities.   ! Marketing  of  the  platform  in  India  and  making  fans  and  artists  aware  of  it.   ! Pricing   of   the   products,   so   that   fans   in   India   would   pledge   for   their   favorite  artists.     These   are   the   main   things   to   be   kept   in   mind   if   PledgeMusic   does   decide   to   expand  to  the  Indian  market.     If   they   do   expand   to   India,   PledgeMusic   could   act   as   a   great   platform   for   emerging  artists  India.  Not  only  for  them  to  get  funding  for  their  new  music  but   also  for  them  to  gain  visibility,  nationally  and  internationally.  I  feel  $200  would   be  the  maximum  price,  which  the  Indian  music  fans  would  be  willing  to  pledge   for   after   my   analysis   of   the   survey.   This   can   turn   out   to   be   a   really   profitable   market,   at   least   when   the   Indian   artists   are   concerned.   However,   where   the   International  musicians  are  concerned,  I  believe  it  won’t  be  as  profitable.  Due  to   the   fact   that   if   they   would   pledge   for   products   by   international   musicians,   the   shipping   costs   would   be   really   high   and   the   fans   would   have   to   pay   custom   duties.     Direct-­‐to-­‐fan  would  be  a  great  platform  for  any  country  as  there  are  independent   musicians  in  every  corner  of  the  world  and  there  is  not  better  way  for  them  to   gain   funding   for   their   music   than   through   their   fans.   It   not   only   gives   them   a   personal   connection   with   their   fans   but   also   gives   them   constant   inspiration   of   making  impeccable  music,  especially  if  they  know  their  fans  are  eagerly  waiting   for  their  new  music.       21     BIBLIOGRAPHY     1. "Flippin' over India's digital music industry." The Hindu Business Line. http://www.thehindubusinessline.com/features/eworld/flippin-over-indias-digitalmusic-industry/article3233483.ece (accessed November 29, 2013). 2. Hart, Tina. "'It would be a huge mistake for the Western music industry to ignore India's potential' - Saavn CEO." Music Week. http://www.musicweek.com/news/read/saavnceo-it-would-be-a-huge-mistake-for-the-western-music-industry-to-ignore-india-spotential/055601 (accessed November 29, 2013). 3. Jad El Alam, John Moses, Tanya Nath, Jasmine Shepard, Marcus Martines. “Sumerian Records to India.”,2013. 4. Mani, Deepa, and Geetika Shah. "Sony Music (India)." Indian School of Business ISB007 (2013): 18. 5. "Music Business Research." Music Business Research. http://musicbusinessresearch.wordpress.com/2013/06/04/is-streaming-the-next-bigthing-an-international-market-analysis/ (accessed November 29, 2013). 6. "Online Music Industry in India: A look at Past, Present and Future." NextBigWhatcom. http://www.nextbigwhat.com/online-music-industry-in-india-297/ (accessed November 29, 2013). 7. "Saavn urges music industry to see streaming as India’s salvation." Music Ally. http://musically.com/2013/08/01/saavn-urges-music-industry-to-see-streaming-asindias-salvation/ (accessed November 29, 2013). 8. International Branding & Marketing 1 (2013): 21. 9. "Indians Will NOT Pay For Music? Wrong." NextBigWhatcom. http://www.nextbigwhat.com/indians-will-not-pay-for-music-wrong-297/ (accessed November 30, 2013). 10.   IFPI Digital music Report 2013. 2013. (e-book) (Accessed: 30 Jan 2014). 22     APPENDIX     SURVEY  FOR  MUSICIANS  IN  INDIA     Q1:  Are  you  looking  for  funding  for  your  new  song/album?                 Q2:  Would  you  be  interested  in  additional  revenue  streams  from  your  fans   by  giving  them  access  to  exclusive  offers  and  items?                           23     Q3:  If  yes,  what  all  exclusive  offers  would  you  be  willing  to  provide  to  the   fans?               Q4:  How  much  revenue  would  you  need  from  your  fans  for  the  making  of   your  new  album/single?  (in  rupees)             24       Q5:  Would  you  want  to  be  personally  connected  to  the  fans  to  get  funding   from  them?             Q6:  Would  you  rather  offer  physical  or  digital  products?                         25     Q7:  If  physical  products,  which  of  them  would  you  rather  have  the  fans   pledge  for?         Q8.    How  do  you  get  funding  for  your  music?             26       SURVEY  FOR  MUSIC  FANS  IN  INDIA     Q1:   Would   you   be   willing   to   participate   in   the   making   of   an   album   by   an   artist  that  you  love  by  pledging  financial  support  in  exchange  for  access  to   the  process  of  the  album  before  it  comes  out,  and  exclusive  offers?               Q2:   Would   you   want   to   help   out   an   artist   that   you   love?   If   yes,   how   much   would  that  experience  be  worth  to  you?                       27         Q3.  Which  artists  would  you  like  to  see  offer  this  process?           28         Q4:  Would  you  rather  pledge  for  physical  or  digital  product?             29     Q5:  Which  physical  products  would  you  pledge  for?       Q6.  Do  you  pay  for  music?  If  yes,  where?         30           31                                                                       32     Q7.  If  no,  where  do  you  get  your  music  from?             33     Q8:  Would  you  rather  pledge  for  International  or  Indian  artists?         Q9:  Whats  the  maximum  amount,  you  would  be  willing  to  pay  to  receive  the   exclusive  content  of  the  artists?  (in  Rupees)         34