Essay

(How is digitization of music changing the music industry?)

On the one hand, listeners have easy access to a universe of music, often for free via
both legal and illicit avenues. Even paid streaming services that offer access to wide
catalogs of completely authorized music are much less expensive than physical
musical media ever was; a month’s subscription to Spotify Premium or Apple Music
is the equivalent of the price of a single CD in the late 1990s, for example. Affordable
and authorized streaming services have also helped reduce the amount of piracy
across the music industry by shifting the balance between risk and reward for would-
be pirates.

While the affordable and broad choices provided by streaming services are a boon to
consumers, and the reduction in piracy benefits to both recording artists and record
labels, many musicians are still less than pleased with the proliferation of streaming
services. The amount of royalties received by an artist when a listener streams their
song is significantly less than what they would receive from the purchase of a physical
album. Some musicians, such as Taylor Swift, have pulled their music from these
services for this reason.

Spotify has been known to host “hackathons” to support music education and
tomorrow’s musicians. These events have led to a number of new music analysis.

When the music industry was dominated by record labels and physical media for
music distribution, the recording artists behind the music had a much smaller role in
the musical marketplace. Record industry executives were the ultimate decision
makers, deciding what artists to sign, what music to release and how to market it;
record sales were the major avenue to financial success and the primary way to
measure the viability of a particular artist within the industry.

Digitization has shifted the balance of power within the industry, giving more
decision-making authority to consumers and musicians themselves. While streaming
music services may have reduced the amount of royalties that artists receive when
listeners tune in to their music, the increasing digitization of the music industry has
granted recording artists greater opportunities to involve themselves in more revenue-
producing opportunities within the industry. Under the old industry model, record
labels dictated marketing efforts, and the emphasis was on selling records. Now,
musicians have the freedom to experiment with novel marketing methods, such as free
distribution of their music and surprise album releases, while relying on alternate
avenues to generate revenue, such as touring and merchandising.

Prior to the digitization of the music industry, musicians and recording artists had one
path to fame, success, and a profitable musical career: getting signed by a major
record label. To be sure, record labels still hold clout in the industry, but they can no
longer act as the gatekeepers they once were. Digital technology has made it possible
for musicians to record without the financial backing of a label. Further, the advent of
digital technology has allowed for much less expensive studio space that musicians
themselves can produce recordings in, and the entire process has shortened to a matter
of weeks or even days.

Releasing music has also become untethered from record labels. While vinyl has seen
a surprising resurgence lately, new bands and recording artists have the completely
valid option of releasing their music without concerning themselves with
manufacturing or distributing physical copies at all. Digital avenues, such as YouTube
and Spotify, allow musicians to access a receptive audience of potential fans without
incurring the heavy costs of manufacturing and distribution.

Q.1) Explain the concept of Masala Bonds including their history and process flow. Discuss
any recent Masala Bond issuances.
Masala Bonds are bonds issued outside India but denominated in Indian Rupees, rather
than the local currency. The term was used by the International Finance
Corporation (IFC) to evoke the culture and cuisine of India. Masala is an Indian word
and it means spices.
History
The concept of Masala bonds was introduced nearly six years ago by the government
and International Finance Corporation (IFC) to stem the record fall in rupee due to
capital flight spurred by a severe current account deficit and the tapering of quantitative
easing by the US Federal Reserve. The record crash in rupee brought the UPA
government into action. The government in consultation with International Finance
Corporation (IFC) decided to launch rupee-denominated bonds in international markets.
IFC launched the first offshore bond programme of $1 billion in October 2013. From
2013 to 2014, IFC issued seven tranches of offshore rupee-denominated bonds, settled
in US dollars and pegged to the rupee foreign exchange rate, for maturities ranging
from three to seven years.
Objective
The objective of Masala Bonds is to fund infrastructure projects in India, fuel internal
growth via borrowings and internationalise the Indian currency.
Uses/ Allocation of funds raised
The issuer of these bonds can sell rupee bonds to a third party (domestic or offshore)
but the proceeds from the issue can't be used for real estate activities or capital market
investment. However, the proceeds from these bonds can be utilised for development of
integrated township/affordable housing project or any other infrastructural development
project.
Corporate Issuers

HDFC, NTPC and Indiabulls Housing are among Indian corporates which have raised
funds via this option. HDFC was the first corporate to do so raising 3000crore in
July,2016.

Kerala Infrastructure Investment Fund Board (KIIFB)

KIIFB issued Masala Bond in 2018 raising 2150 crore and it has turned out to been the
only publicly traded masala bond transaction of Financial year ending Maqrch,2019.
This is the first state government bond which has an international rating.
The Bonds are listed at Singapore Exchange (SGX) and London Stock Exchange’s
International Securities Market (LSE ISM).
The tenure is 5 years. The amount will be repaid by 2024 and the interest rate that
would be paid on bond is 9.723% per annum. The interest will be paid semi-annually.
Pension funds, insurance funds, asset managers, private wealth funds and banks are
investors for these masala bonds.
The fund raised will be used for Kerala’s several ongoing infrastructure development
activities including KFon, Petrochemical and Pharma Park-Kochi, Coastal, Hill
Highway, Trans grid 2.0 project, among others. The funds can be used for any medium
as well as long-term critical and large infrastructure projects, except those which will
have an environmental impact such as nuclear power plants.

Q.2) Evaluate in detail the business of any Indian unicorn?

Policy Bazaar
PolicyBazaar.com is an aggregator website, which helps customers research and
compare the features of different insurance policies within a category, hence
enabling them to make an informed choice. The company has tied up with insurance
brokers which help them procure information such as price, benefit, insurance cover
etc directly from the insurers for the customer to compare. Based on the information
provided, the customer then chooses the best option. It doesn't charge customers
anything for this service.

Major revenue comes from lead generation for the insurers, advertising and policy
sales. Till 2011, 85% of revenue came from lead generation and advertising and the
rest 15% came from policy sales. Now, 85% comes from e-commerce or policy
sales.