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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.
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
