CALCUTTA, India, May 24 (UPI) -- Fiscal year 2001 was a pleasant surprise for "Bollywood," India's Hindi film industry.
While the rest of the sectors in the country, except software, were struggling, Bollywood sailed through the year with a 20 percent growth in theatrical sales within the country and a 100 percent surge in exports.
Although the current fiscal year didn't quite start off like the previous year, movie producers are still smiling.
But for Bollywood, which feeds the country's $300 million-a-year Hindi film-music industry, the past 18 months have been nothing to sing about. While its movie sales were surging, sales of music, which account for at least 20 percent of movie revenues, were almost flat. In certain instances, revenues even shrank by about 5 percent.
"For Bollywood's music peddlers, the past 18 months have been quite like a boom-to-bust story of dot.com burnout," said T.P. Agarwal, head of Start Worldwide InfoTech.
It wasn't always like this. Three years ago, it looked like Bollywood's music was on a roll, with a few Hindi movies ascending the U.S. and British box-office, aided by queuing non-resident Indians. Music companies tripped over themselves to outbid rivals. Satellite channels joined in too, and eventually the cost of music rights for Hindi films rose to more than 50 percent of their production costs.
But the party ended almost as suddenly as it began. The music industry watched in alarm as music sales -- through cassettes and CDs -- of at least half a dozen films nose-dived, and remained lukewarm for many others. Worse, many of those movies were blockbusters in the country's box office.
So why does a sector that was once regarded as the most robust in showbiz suddenly seem to be in the dumps?
Obviously, the number of people listening to music in India has not dropped. In fact, the media for enjoying music -- records, radio, tapes, cassettes, CDs, TV, cable, the Web -- have proliferated. The overall size of the music market is three times what it was in the 1980s, which were considered to be the best years by the industry.
"It is just that the industry has not kept pace with technology," said Amit Khanna, chairman of one of India's largest entertainment companies Reliance Entertainment. "The music industry's senior executives are a geriatric lot, bred on old record and tape businesses, martini lunches and talent spotting (not nurturing). They were caught napping even as vinyl was spinning out of fashion."
According to Khanna, while a Hindi film-music industry still relying on high-volume low-value audio cassette sales was trying to flood the music shops with cassettes and high-priced CDs, the pirates were having a field day downloading Bollywood's music from the Internet and selling it through pirated MP3 CDs for as little as $1.50.
But, according to Khanna, "this is half the problem. In a market where 70 percent of sales come from film soundtracks, acquisition costs had reached unsustainable levels. After a feast, film producers are now being starved of royalties by cash-strapped music companies."
Some feel the downslide has had a much-needed sobering effect on Bollywood's music industry, hammering down both prices and expectations.
"Acquisition costs will be more realistic now, and will not be driven by star-value alone," said Kumar Taurani of Tips Cassettes, an upstart Indian music company that reportedly burnt its fingers in nine out of 13 Hindi movie albums it released in the past 12 months.
According to Taurani, ambitions are already scaling down across Bollywood and music contracts are being renegotiated.
Yet all is not lost. "The structure in the music business is poised for change," said Khanna adding, "some music companies have already started waking up to the harsh realities of the digital world and are a savvier lot these days."
A couple of big music companies have already started distributing Bollywood music through the Internet and even smarter ones, like Tips Cassettes, have started tapping the vast country's rural markets with cheap CDs and CD players that cost a less than $35.
Optimism still exists.
"The music industry the world over is passing through a bad phase," said Khanna. "But overall, with the right marketing strategies, I feel Bollywood's music could still grow at 4 percent this year."