Saregama, Microsoft in music pact

Saregama India has inked a pact with Microsoft to upload its music tracks on the latter's website, company vice chairman Sanjiv Goenka announced on Wednesday.

Saregama's music, which is available on large sites like iTunes, Real Rhapsody and Napster, would now be available for downloads in the recently launched MSN Music site, Goenka said after the 57th annual general meeting of the company.

"Our business model is going through a paradigm shift with digital downloads being one of the most lucrative area. I expect digital downloads to contribute 50 per cent of our profit from 2007-8," Goenka said, adding that Saregama titles would be on every major website going forward.

Generally, revenues are shared between the aggregators and websites and the company, which has the copyright on the tracks. Users pay for downloading songs from such websites.

Apart from digital downloads, Saregama is betting big on home video segments, which is growing by leaps and bounds. The market size is estimated Rs 100 crore (Rs 1 billion) and this could get double this fiscal.

Goenka said Saregama has forged alliance with Paramount for marketing its titles in India in the last fortnight. Apart from that, the company has tied up with four overseas studios, Universal, BBC, Mira Max and Warner. "We made good money from Harry Potter labels recently," he said.

The company is also getting big time into film production with subsidiary Saregama Films. Its maiden venture Tumsa Nahi Dekha is going to be released soon. It is also venturing into Bengali films as well.

All these efforts will offset losses from audio and video piracy partially and lead to positive bottomline this fiscal. After three years of consecutive loss, Saregama turned around in the first quarter with profit before tax of Rs 0.85 lakh. It is hopeful to end the year in black as well.

Saregama is in the process of selling excess land at its factory in Kolkata and would realise about Rs 15 crore (Rs 150 million) from that. Goenka said this fund would act as fuel for the engine of growth going forward. In the AGM, the company also passed an enabling resolution to borrow Rs 100 crore.