The Indian market is much smaller and we have too many players. I do notthink the market is large enough for so many players. I got into thisindustry about twenty years ago when I joined CBS. Over the years, I haveseen a large number of companies winding up operations or selling out asthey found the business unsustainable.

Do you think there will be a shakeout in the industry?
I do not anticipate a shakeout in the industry. What will really happen isthat we will have to look for strategic alliances or buyouts. Even now,music companies in India are constantly making use of others' distributionfacilities. There will be place eventually only for a few players.

How will BMG Crescendo be equipped to handle the situation?
Our distribution system is our biggest strength. I saw the opportunity indistribution about ten years ago. This is the most important thing in themusic industry apart from creating quality content. In fact, we opened smalloffices and appointed C&F agents to get a hold on what we were distributing.We distribute music for a large number of music labels in India today. Theseinclude labels in the South like Tharangini, Audiotracks and Atlantis inWest Bengal. Therefore, while people view us as a pop company, not too manyare aware that a major chunk of our business comes from other parts of thecountry.

Most music companies in India have invested in film music. What are BMGCrescendo's plans for the film music market?
We have consciously stayed away from the film music market since it is ahigh risk game. The capital base of the company is not strong enough to takeon an investment of that kind. It's really now that BMG Crescendo hasstarted to make money and may think of it now. Our market share today isabout four per cent and I would like to increase it to ten per cent. Theonly way to achieve that would be to get into film music. We will have towork out a detailed business model to look at the feasibility of gettinginto film music.

How then, do you plan to expand your market in India? We have acquired somelabels in the past. To us, this seems logical since it is easier to buy outrather than create. The major catalogue we bought out was Pan for Rs 5.5crore. Pan has artists like Jagjit Singh and Hariharan. I see growth ourgrowth coming from the acquisition of labels and making a few largeinvestments in Indian music. The South is a huge market and we may acquire afew more labels there. The company is also looking very closely at ghazals,classical and Hindi pop.

What will be the impact on your turnover because of label acquisitionsand expansion of distribution?
We have just been given the distribution rights for Virgin Records in India.The Pan acquisition coupled with our strength in the South will certainlyboost our turnover. We will close this year with a turnover of Rs 45 crore.This includes about Rs 15 crore through our alliance with Virgin. I amlooking at BMG Crescendo having a Rs 45 crore turnover through its own musicin the next three years.

You have spent many years in the music industry. What are the significanttreads that you notice?
A positive development has been the way music retailing in India has takenoff. The large music stores lend credibility to the music industry and makethe buyers a lot more secure. It allows the music companies to sellcatalogues because of more space. We can also promote artists in the storeby having interviews or getting them to perform. I would give retailinganother 4-5 years before it can actually make an impact. Music in ourcountry is still sold through smaller shops and wholesalers. What I amworried about is the low CD penetration in India. It still is an audiocassette market. The problem in our market is that cassettes sell at too lowa price and CDs sell at too high a price. We need to push the CD market fortwo reasons - the real pride of ownership is only from a CD and not acassette and more importantly our retail establishments need to recovertheir costs. The only way to push CD sales is to rework on the pricing.

Internationally, selling music over the Internet seems to be catching on.What are BMG Crescendo's plans for the Internet?
I think it would take about ten years before a substantial portion of ourbusiness comes from music downloading. Time and cost are still majorconstraints when it comes to downloading. I don't see it replacingconventional distribution for a long time. Overall, the net will be usefulfor promotion and distribution of music. In my opinion, international musicwill end up selling more than Hindi film music. What we are worried about ishow we are going to use the net to our advantage. The ideal situation wouldbe retailers becoming e retailers and allowing consumers to download musicin their shops.

BMG holds a 70 per cent stake in BMG Crescendo. Do you think there willbe a complete sell out?
I have no issues about selling my 30 per cent stake if I need to.Ultimately, I will not be able to match the size of their investments. Ibelieve we need to create an institution out of BMG Crescendo and we mustkeep our personal interests aside.