India too had lost a few favorites but some sailed through the storm and evolved. One such example of this transformation can be seen in the journey of TIPS Industries, who had to once painstakingly lose 400 staff as there was no work left for them when cassettes and CDs were dying and its manufacturing plant was shutting down. The industry was not just fighting the tech evolution but also crumbling to the raging and seductive piracy devil.
But now, TIPS, listed on Dalal Street, is almost making it a habit to post record quarterly revenues. TIPS was among the first in India to embrace the digital shift, capitalising on opportunities such as launching YouTube channels and collaborating with global music labels and streaming platforms. Their proactive stance against piracy was a game-changer. It also through the years took royalty fee cases seriously to fight copyright infringements and it believed in putting out a strong word on ethical partnerships and respect for creative works.
Statista pegs the Indian music industry to be valued at around 2,200 crore rupees at the end of last year and is set to grow to 3,300 crore rupees by the end of 2025. TIPS too looks to up their share in this lucrative market and it bets on a great journey ahead.
The melodious 90s
Starting with humble beginnings, the Taurani brothers – Kumar S. Taurani and Ramesh S. Taurani – in 1975 started trading in LPs (Long Playing Phonograph Records) for major Indian companies – HMV, Music India, and CBS. Within a couple of years, they emerged as the leading dealers for these companies in western India.However, influenced by Plato’s wisdom that music gives soul to the universe, they had a bigger dream, which turned into reality with the birth of Tips in the 80s.In India, Hindi music sales was believed to be dominating the industry’s numbers with melodious Kumar Sanu, Alka Yagnik or Udit Narayan’s songs being the craze from paan shops and humble salons of those days to big, fat, yet simple, Indian weddings where uncles would tap their feet to perhaps Govinda’s hit aapke aa jane se track.
TIPS came out with some of the biggest hits during this period, ranging from a song in Phool aur Kaante to Gupt, Andaz Apna Apna, Khalnayaak and others.
Since 1981, TIPS held the record for the most gold and platinum discs among all Indian record labels. It went on to sell 1,50,000 cassettes per day to the Indian market, have its own distribution system where a team of distributors served more than 1,000 wholesalers across the length and breadth of the country who, in turn, served more than 4,00,000 retailers.
At the start of the 90s, India’s legitimate and pirate cassette sales totalled 18 crore per year, the second highest in the world and ahead of then most populous China, according to media reports.
“Cassettes and CDs were a very integral part of the culture in the 80s and 90s,” said Amit Doshi, head of IVM Podcasts, while reminiscing enjoying a Johnny Lever album with a lot of mimicry.
The noisy halt that silenced many
But in a matter of hardly a decade, all this came crashing down. The advent of MP3 CDs, particularly the surge in piracy, dealt a severe blow to the physical music market. By 2003-04, the landscape had shifted entirely, leaving the traditional business model in shambles.
“Suddenly, the entire physical business had really gone away in 2003-2004, all gone. We thought let’s keep quiet,” Kumar S. Taurani, managing director at TIPS, told ET Online.
India Today had reported in 2001 that after touching a high of Rs 1,200 crore in 2000, music sales have halved. More people were listening to music, but all they were buying were pirated discs from even makeshift shops that opened at nooks and corners. Piracy was pegged to inflict a financial blow of Rs 700 crore, surpassing the entire industry’s turnover of Rs 600 crore in 2002, as reported by India Today. Many music label companies were reportedly up on sale, or many thought of diversification.
Diversification to digital: TIPS’ fortunate non-pivot
During the tumultuous years of 2002-2006, TIPS faced challenges that nearly led to diversification into real estate.
In 2003, TIPS was “struggling” even as its large library of music helped it to earn money.
“So, we had our own resources. We thought to ourselves that, we have two options – one is to keep quiet or do something else, some other business and we thought of property development,” Taurani added.
However, the Taurani brothers fight over who and how they will run the real estate business.
Telecom symphony & TIPS’ phoenix moment
They thought of sticking to their love for music and films. Perhaps this fortunate pivot failure was a key turning point. A strategic decision to focus on filmmaking, exemplified by the success of multicast ‘Race’ that TIPS produced made them rise from the ashes again.
“We wanted to make a big, grand bounce back. In 2008, when Race released, the market had improved and we made good revenues from movie and the rights from the music that was a superhit.
This was the time when caller tunes played a significant role. The song Pehli Nazar from the movie as caller tune alone generated Rs 10 crores for TIPS.
The ring back tone business amounted to an 8,000 crore industry back then, with the music industry making Rs 500 crores out if it.
“Though the returns were not substantial, we managed to survive, and gradually, the music business revived,” Taurani said.
Platforms such as YouTube, Saavn, and Gaana soon emerged as the new conduits for music consumption. TIPS was among the first music labels from India to open a YouTube channel and its oldest videos date back to 2007.
“Then we thought – okay, business is going to be there because people will never stop listening to music,” Taurani said.
Taurani highlighted the industry’s shift from selling music to users directly purchasing, subscribing, or experiencing it through ads on digital platforms. The move marked a significant turn in the company’s fortunes.
“Now you are listening to music, or you are subscribing or maybe you are seeing the ads, and we are getting money,” he said.
Piracy’s demise & Jio era
One striking triumph with the digital dawn was the decline of piracy. Taurani said piracy is now a relic of the past and the demise is due to the massive shift to digital platforms. The ease of access, coupled with affordable data plans, rendered piracy obsolete. TIPS’ early entry into the digital space, including partnerships with YouTube and other international giants, played a pivotal role in this transformation.
The entry of Jio in 2016 marked another major turning point, catapulting the digital play to new heights. Cheap data plans fueled a surge in music consumption, benefiting TIPS Industries and the industry at large.
“Today, you are getting data for a low price and you are not bothered about data consumption. The Jio’s entry boosted our sales, in fact that is not just for TIPS but for the entire music business. Now there are platforms such as Amazon, Netflix that are all helping this industry,” Taurani said.
A Redseer report earlier this year said the Indian audio OTT industry has experienced a notable increase, with daily streams growing by approximately 1.6 times over the last three years, reaching 460 million in FY23.
Future Harmonies
Taurani foresees continued growth in the digital space for the next 7-8 years, with every household having access to IoT and entertainment.
“At present I feel the Industry is around Rs 2,700-2,800 crores, The Industry has so much potential that I believe in another 3-4 years we will reach 8,000-9,000 crores overall,” Taurani said.
The company currently holds an 8% market share, which it thinks will reach double digits soon.
TIPS promises its investors 30% on-year top line growth, but it has been delivering even 50% jump and remains poised for a melody-filled future. It also remains open for acquisitions and in 3-4 months may also want to expand into more regional music.
While the industry has seen what the tech evolution can do, IVM Podcasts’ Doshi says this is now an opportunity rather than a threat.
“The music space, or the audio space, has only been growing. I think that music as an industry, and audio as an industry, need to be aware of technological advancements and need to incorporate them in the business at large,” he said.
