'No cohesive action against piracy so far'

Q&A/ Marcel Fenez & Smita Jha | PwC

A FICCI-PricewaterhouseCoopers report estimates the Indian media and entertainment industry to grow from Rs 51,300 crore in 2007 to Rs 115,000 crore by 2011. The booming industry, however, suffered a setback on the issue of piracy "" a source of major concern.

Marcel Fenez, global head (entertainment & media), PwC, and Smita Jha, senior manager, PwC India, spoke to Shivani Shinde and Aminah Sheikh on the issue of piracy and other trends as well as challenges that face the sector.

The government has rejected the draft optical disk policy. What's your view?

Marcel Fenez: Piracy is a global issue and I do not subscribe to the mindset that it is an industry issue.The fight against piracy has to happen at all the levels. Yes, there are things that need to be done at the supplier side.

But you cannot abandon the need to enforce the rights that exists. It's very important for local markets to take action.

Especially if you are looking for foreign investment as you then go into the risk review. You also have to understand that piracy does not just impact imported products but also the local industry, jobs and economy.

Smita Jha: What the government is saying is that they do not want to create a Police Raj kind of a scenario as one of the recommendations said that you need to stamp every CD that is manufactured. That means having an inspector sitting at the factory. However, it is a fact that in India no cohesive action has taken place so far. Whatever is happening is in bits and pieces.

The PwC report 2008 reveals that the CAGR of the music sector in India is a mere 2 per cent for the next four years. Why is it so low as compared to the other sectors?

Smita Jha: The Indian music industry in comparison to the global music industry still has a higher growth rate. Physical sales have declined no doubt.

However, overall digitalisation is good news for the music industry. A majority of Indians use mobiles to access music, but globally, online is the preferred platform for music.

In India, mobile contributes around 70-80 per cent of digital revenues. However, telecoms dominate the revenue sharing agreement. Hence, the M&E segment revenues from music take much of the hit.

How do you see the growth of radio?

Smita Jha: The radio industry can do better if the two-three regulatory issues are addressed. For instance, the news and current affairs will add value in terms of content.

Now, since a radio company is allowed to have three stations per city, it will allow them to diversify and experiment with content. The other issue: When a station operates in a small town the operation cost is high, but with networking, the cost will come down substantially.

Globally, the print media is slowing down, while in India it is the opposite. Your comments.

Marcel Fenez: Yes, overall print is on a decline. But the pace of that is different in different countries and in some markets it continues to show growth.

For instance, in Hong Kong they are revitalising the industry with free sheets. It is said that young people do not like to buy newspapers. But when they are traveling and listening to music they do read if they are provided with free papers. So we have seen a shift from paid to free. We have also seen in markets like India, print growing faster than the global average.

The report suggests that online advertisement will grow 32 per cent CAGR but the broadband penetration is yet to catch up in India?

Smita Jha: First, since the base is small, any growth on this will be large. However, the patterns of the last few years suggest that there has been an increase in the online advertisement as time spent on the Internet is increasing.

Besides it is also going regional. Moreover, websites are getting new content, which was a problem earlier.

Also, when we look at broadband; but that is on the wired segment. Then the other avenues are also increasing like wireless, etc.