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It's the inflation factor at work again. Like most other consumer products, audio cassette prices too have been on the upswing in the past few years. Two years ago, Hindi film music was available between Rs.28- 30. Almost a year back, prices escalated to Rs. 35 and right now one Hindi film audio cassette is available for a steep Rs 40. If this sounds bad, international music fans have suffered worse. Earlier, international music was available in the Rs.40-50 price range. Later, the price bracket went up to Rs. 60-75. But now, most top-of-the- line western music is priced at Rs. 90. Those companies which have desisted from touching this price line are also planning to get into the hike act. Surprisingly, music industry executives are extremely defensive about the ever increasing prices. Argues Parag Kamani, Marketing Manager (International) HMV,``I don't think our cassettes are overpriced at all. As a matter of fact, Indian cassettes are the cheapest. Abroad, a cassette is priced at 11 US $ which roughly translates into Rs 330. I think, that settles the issue." Agrees Suresh Thomas of BMG Crescendo,``Cassettes are the most underpriced products in the country. It's high time the music industry started working on better margins because that's the only way it will survive. The higher the cassette is priced, the more respectability it will gain. Also, we will able to improve the quality of music being given to the consumer. Today, if I am not happy with a track, we'll probably let it go because there's no budget to rework it." Both Kamani and Thomas cite longer playtime as one of the reasons for the increase in prices for international music. Earlier, international music was recorded on 45 rpm LP records but now most products are available only on CD with playing length of 70-80 minutes. Explains Kamani,``When a company purchases music, the costing is done on the basis of the playing length. When there is an increase in length, there is bound to be an increase in the price, right? But most of the time, the music companies end up bearing the brunt for increased lengths." Ramesh Jain of Venus feels that in the case of Hindi film music, the price hike is directly linked to the obscene amounts music companies are spending on buying up audio rights. ``These days," says Jain, ``audio rights cost almost 4 times, what they used to 2 years ago. So obviously, we too have to increase cassette prices in order to recover our investments." The recent budget has also added to the woes of an already battered music industry. Due to the 10% excise hike in audio cassettes, companies are now having to absorb further losses suffered by paying extra excise duty to the government. However, according to industry sources, music companies are now planning to pass the burden of higher excise duty on to the consumers. In the Hindi music category, companies like Tips, HMV and Venus are planning to price their new cassettes at Rs. 42, while Time Audio is reportedly planning to boost their cassette price to Rs.45. ``With excise duty on audio cassettes having gone up by 10%," says Kamani, ``the overall profit for a company has been reduced by 10%. We also have to pay royalty to our artistes besides which there are several other expenses which the consumers are not even aware of. Yet, we give English music to the listeners at the current price because we don't want to exploit them." For many years, industry executives have justified lower pricing as part of a strategy to fight audio piracy. Now, that policy is being knocked at by younger entrants like BMG-Crescendo who don't subscribe to the lower margins-better sales school of thought. ``For some stupid reason," says Thomas, ``we've always underpriced cassettes to fight piracy. Although this hasn't affected the piracy scene one bit, there have constantly been lower margins. So, we haven't got more sales nor have we made more money. If you don't shake up and wake up, you will not survive. Or else like HMV, you can perpetually keep running into losses." Spiralling prices, however, don't seem to affect market trends or sales. Currently, BMG-Crescendo is planning to further increase the price of their international products by Rs.5-10. Warner Music which has a tie-in with Music Today is also pricing their cassettes at Rs.100 while Sony Music, which is soon hitting the stores, is also slated to price it's products in the same range. Adds Jain,``Whenever an album is a hit, a high price doesn't affect sales but when the album doesn't work, it definitely slows them down." Shrugs Kamani, ``We're trying to absorb as many losses as possible for the customer, but whenever we can't, we have to pass them on." Thomas, meanwhile, is utterly unapologetic about price hikes. ``Seventeen years ago," he says, ``an LP cost Rs.55 whereas a Coke cost 90 paise. Today a Coke costs 10 times more, so why do people expect cassette prices to remain the same? I am conciously making an effort at moving prices up." |
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