0:01 [music] >> Welcome to the NPTEL course on music and entertainment industry law. This lecture will be on business models for audio video content. The concepts covered in this lecture are basic revenue streams, major business models for audio content, and the major business models for video content. The keywords of this lecture can be seen here.
0:49 The rapid growth of digital technology and internet-based platforms have significantly transformed the way audio and video content is created, distributed, and monetized. Traditional models that rely heavily on physical sales and broadcasting have gradually evolved into diverse digital business models driven by streaming services, social media platforms, and online distribution networks. Today, content creators and companies rely on multiple revenue streams such as subscriptions advertising and transactional payments to sustain their operation and reach
1:37 global audiences. In this lecture, we will be exploring the fundamental revenue streams and the major business models that shape the modern audio and video content industries, including the roles of record labels, streaming platforms, music aggregators, collective management organizations, and various video-on-demand models. Let us start with the basic revenue streams. Subscription is now one of the most prominent basic revenue stream in the music and entertainment industry. It is a most common model used by companies generating content
2:22 where the content is hidden behind a paywall. That is only way to access the content is to pay for it. This can be through a subscription or where the user is given a certain number of fixed previews per month before being asked for subscribing. So, the usual model is that you will be allowed to access the content only if you take a subscription. That is the one option. The second possibility is that some of the content could be available for free and once you finish that fixed preview option then you will be asked for doing a subscription to see the remaining content. A subset of this is the freemium model
3:10 where in the access to basic content is free. The basic content would be made available freely but the users can choose to subscribe for the premium content for payment of certain fees. Example is the Spotify Premium to get an ad-free experience. Membership is another subscription model where in the content can be free or paid but the users who purchase a membership receive perks and bonus materials. For example, OTT platforms like Netflix and Hotstar require membership to access movies and shows. So, this could be like most some of the content could be available freely and there There be some allied services also. And if you need to get the allied services, perks, and bonus materials,
3:58 then you need to take a membership. That will be a paid membership. But some content may be available in the platform for free. So, the free content is basically to attract more consumers to the platform. And once consumers familiarize with the platform, they will be interested in accessing more content, and they may consider taking a membership, which will be a paid subscription in the future. Now, let us see another major kind of revenue stream, which is the advertising. Content and technology companies generate revenue through a variety of advertising formats, including display ads, search-based ads, video advertising, text and SMS promotions, as well as mobile, digital,
4:45 location-based advertising, especially within the mobile ecosystem. So, you may also be familiar with these kinds of advertisement strategies, which is being followed by network providers, cellular mobile service providers. And this is also followed by streaming platforms also, wherein there'll be a lot of advertisement, and the main revenue stream for the company will be from the advertisement. In addition, startups in this space often design unique platform-specific advertising formats tailored to their systems. For instance, Twitter introduced features such as promoted tweets and sponsored post on its platform. Another commonly used approach, particularly in podcast, is the
5:31 sponsorship-based advertising. Various music and other content platforms like YouTube also offer lot of advertisements. Even movie theaters, before they run the show, display the ads. So, this is like ads becoming one of the additional revenue stream for the theater exhibitors. But for streaming platforms, the ads are actually emerging as the big biggest and the most prominent revenue stream. So, that is the biggest difference. You can see that advertising advertising is being accepted as one of the most important revenue stream now for the music and entertainment industry. Another model is a transactional e-commerce model. Content and technology platforms frequently rely on transactional or
6:19 e-commerce based revenue model. These models often provide flexible access options for users who wish to consume the content occasionally either through one-time purchase or limited use without committing to a full subscription plan. So, this is like you don't have to do a full-time subscription plan or you don't have to do to you don't have to watch the advertisements also. But this will be like a one-time purchase. You may have seen this option in YouTube and other platforms also where for some movies will be available on a one-time purchase scheme. So, when you just pay for that movie, get that movie, you need not watch the ads or you don't have to take the full subscription. It is like a one-time purchase for a limited content. This is
7:06 the transactional or the e-commerce model. One of such common methods is micro payment. These are usually small payments made for individual piece of content. For example, you can buy an individual song from Apple for downloads or buy and watch a single movie on YouTube. So, this is like consumers who prefer to access only a particular content, this model will be attractive for them. This is the transactional and e-commerce model. For the platform also, this is beneficial because they will get to know the number of people who are interested to access a particular content. And that revenue or the royalty received can also be directly transferred to the owner of that particular content. So this stream of revenue source has a particular advantage for companies, especially
7:52 platforms which make available movies, especially the new movies. Now the major business models for audio content are like what you see on the slide. Independent record labels are there, subscription and streaming based models are there. Social media platforms are also emerging as one of the important revenue streams for the music industry. Music aggregators also has a significant role in this sector. And when we talk of commercialization of the music, collective management organizations, that is the copyright societies in India and abroad also has a very significant role. And all this is based on different licensing practices. So the sing model or the licensing models also have prominence in this sector.
8:39 In addition to all these conventional and non-conventional revenue streams, performance is also a major revenue stream for the artist. Now let us look at record label first. Historically, record labels exercised significant control over nearly every aspect of the music industry. Artists had limited avenues to finance their recordings, tours or other projects, which meant labels often functioned as key investors. High quality recording was largely restricted to professional studios that possess the necessary equipment. And gaining access to major retail outlets for music and merchandise required the resources, connections and
9:25 expertise that only prominent record labels can provide. Independent artists were typically confined to small local audiences, while signed artists who work under the record label, could reach broader markets through physical distribution and promotion, which remained always costly. There were also few effective ways for artists to directly engage with their audiences. Uh but revenue was primarily generated through sale of the physical recordings. As a result, many independent artists always aspired to be signed with major labels as operating successfully without their support was extremely challenging. This is also the reason that in the olden days, record labels used to have a
10:10 very significant role, which is a very powerful one in the music industry. But their role is actually a little bit diminishing because now it is possible for independent artists to directly engage with the platform. Provided they have proper legal support. Record labels can be categorized into two main categories. One is the independent record labels. Independent record labels empower artists through independence. They focused on niche genres and artist development. Unlike major labels, independent often operate with lower overhead, utilizing digital distribution to reach global audiences, while relying heavily on physical sales, sync licensing, and
10:55 direct-to-fan engagement to maintain profitability. They mostly work with limited budgets. While the major record labels, these are actually big corporations like Sony Music Entertainment, I'm just giving an example here, that own a variety of subsidiary record labels as well. So, if you look at the record labels around the world, they could be categorized into these two. Some are the small independent record labels, while the most of the music industry is now controlled still continue to be controlled by some major record labels, which are very powerful in that regard. So now, let us see how this process happens. A recording artist enter into recording contract with the recording labels, which enables the label to exploit the
11:41 sound recording in exchange of royalty payment. In this contract, recording artist assign the copyright in the sound recording to the recording company. So, this is how it happens that a recording artist, means an artist who may have composed the song, who may have sung or composed the lyrics as well as composed the music, and who wants to perform on the recording studio, he will be entering into a contract with the record label. And now, what happens is that by way of this contract, he will assign his copyright to the recording company. In most of the recording agreements, labels secure control over distribution of the artist's work across both physical and digital com- copies. So, usually both rights over the physical as well as the digital format
12:27 will be taken by the record label. This typically include right to market and sell recordings through digital platforms such as iTunes, YouTube, covering downloads to computers as well as wireless delivery to mobile devices. These rights often extend to full track downloads, ringtones, ringback tones, and other mobile-based uses. So, all these uses which are very prominent in the modern-day industry are being taken care by the record label, who claims the rights by way of an agreement with the recording artist. Now, let us see the subscription and the streaming model. The rise of online streaming has significantly reshaped the music industry with services like Spotify, Apple Music, and Tidal
13:13 leading the space. Artists generate income based on the number of streams their music receives. The royalty rates differ across platforms. While streaming is often criticized for offering relatively low payouts to artist, it has also opened up powerful opportunity for discovery, enabling musicians to reach global audiences and build a wider recognition. So, now as I said earlier, actually without getting assistance from a record label itself, some of the platforms allow the artist to independently or individually upload the [clears throat] content to their platform and thereby distribute it. So, now one additional thing we'll have to remember here is the different types of rights which we discussed in the previous lecture.
13:59 So, in the previous lecture, which is lecture number two, we have seen that over a sound recording, the producer of the sound recording may have three different types of rights. So, when the digital sale or the physical sale is happening, it was the second category, which is the right to sell. But, when the music is made available over a streaming platform or a subscription-based platform, it will not be sale, but will be usually the right to communication to public, which will be licensed. Now, an additional revenue stream is the social media platforms. Platforms like TikTok turn viral trends into chart-topping success, propelling both emerging artist
14:46 and other catalogs back into public consciousness, thus progressing from discovery to monetization. Social media platforms provide artist with unprecedented opportunities to connect with a broad and diverse audience. Given the vast number of users on these platforms, bands, solo performers, musicians can effectively reach potential fans by strategically using social media to promote their work and engage with the listeners. Artist can produce and share content on platforms such as Instagram, Facebook, TikTok, YouTube to engage new audiences. Musicians can use formats like music videos, lyric videos, images, and short
15:31 skits to showcase their style, genre, and creative identity. Now, let us see music aggregators. Music aggregators are a vital part of the modern music ecosystem. They act as intermediaries between the artist and the digital distribution platforms. What they do is they gather music from the individual artist, independent artist, and then labels it and delivers it to online stores and streaming services, enabling a global reach without requiring separate agreement with each platform. So, what the aggregators do is once they source the music from independent individual artist, then the remaining part is taken by care by the aggregators. They do the labeling and then delivering it to the online
16:16 store. So, the rest of the contractual arrangements will be taken care by the music aggregators. In addition to distribution, music aggregators also manage complex legal tasks such as digital rights administration, royalty collection, allowing artists to concentrate more on creating the music. Music distribution platforms play an essential role in managing metadata and administering royalty. Metadata refers to descriptive information associated with a track such as the artist name, song title, album details, which ensure proper identification discoverability and attribution of the music. In addition, aggregators are also responsible for tracking streams and downloads across platforms in order to
17:02 calculate and allocate royalty accurately to artists and other remaining right holders. Now, let us see collective management organizations. By empowering or appointing professional collective management organizations or CMOs to administer their rights, authors and performers and producers and other right holders can streamline and simplify the process of managing those rights. The role of CMOs does not come in the initial stage, but it comes at the later stage once the immediate commercial utilization of the music has already happened. So, let us assume that the music is produced and now the record label has publicized it and now it is available in the market. The same music may be sought by
17:48 different people for different purposes. The revenue stream, even though it's powerful, would be so diverse that managing this right distribution may not be individually possible for the the recording artist or not for the recording label. So, that is where the role of collective management organizations comes. Generally, CMOs carries out these several key functions. That is it tracks the use of works, including how and where, when they are used, negotiates the price terms with the users, grants licenses for use of protected content on behalf of members and other repres- other represented right holders, and collects payment from the users, which are then
18:33 distributed to the respective right holders. In India, this function of CMOs is undertaken by the Copyright Society, which is established for the purpose of Copyright Act 1957. So, under the Indian Copyright Act, this business of issue of licenses can only be carried out through a registered Copyright Society. Now, let us see the single licensing order. Under this model, artists grant permission for their music to be used across various forms of media, such as television programs, films, advertisements, and video games. So, music is already ready. So, now somebody else want to use that music as part of some other content. So, the same music instead of selling it
19:18 as the same music, it is being merged into a television program or a film or an advertisement or a video game. This is known as the sync licensing or synchronization license. These licensing deals can provide a significant revenue stream, especially for musicians whose work has a broad appeal. So, in the Hollywood industry, this is a very powerful revenue stream. But, in India, music is usually made for the purpose of inclusion in movies. So, the sync licenses normally happen in India mainly with regard to advertisements and video games. In particular, sync licensing has become increasingly popular as it allow music to be paired with visual content,
20:05 enhancing exposure and improving the chances of a wider recognition and commercial success. Now, let us see the live performance model. In recent years, live performances also has emerged as a major income stream for the musicians. Whether playing intimate local venues or large-scale concerts and events, artists can connect directly with audiences, generate revenue through ticket sales, and boost earning through merchandise. As sales and physical albums have declined, touring has become a central component of many artistic careers and overall business strategy. So, now the major Let us see what are
20:51 the major business models for a video content. So, the major business models for video content include advertisement-based video content, broadcaster video on demand, free ad-supported streaming TV, pay-per-view, premium video on demand, subscription video on demand, traditional video on demand, and hybrid video on demand. Here, in this lecture, I'm concentrating mostly on internet-based or digital-based commercialization techniques. Advertising Let us start with advertising-based video on demand. This is a monetization model where streaming platforms offers free on-demand content to users in exchange of watching advertisements. Platforms like YouTube,
21:37 Tubi, Pluto TV is allowing viewers to watch free content while they generate revenue through ad interruptions. This help advertisers to reach specific audiences often with higher precision than the traditional television, because of which this model has now become extremely popular. The next one is broadcaster video on demand. This is an online streaming model or maybe a broadcast-based streaming model wherein you can choose the content and you will be able to watch the content in your home. This may be made available to traditional TV through satellite network, or it may also be available through internet-based streaming techniques.
22:22 This is particularly benefiting live events like news, sports, and award ceremonies. Another type of model is a free ad-supported streaming TV. It is a streaming model offering linear scheduled on-demand content for free, funded entirely by advertising rather than subscriptions. So, this entire model is based on stre- uh based on advertising, and there is no commercial return expected from the end consumer. This is very similar to the traditional cable network where it delivers virtual channels via internet connected devices. Unlike subscription based model like Netflix, these channels operate like
23:08 traditional cable showing content on a set schedule often referred to as a channel surfing. However, this is also internet based where the content is delivered over the top via smart TVs, smartphones, tablets, and computers. Another model is pay-per-view which is very commonly offered on as an additional feature in the streaming platforms. Users typically maintain a basic subscription and can choose to pay this extra cost if they want to see a want to want to see and enjoy a particular premium or an exclusive content. So, this model actually offers lot of flexibility. Like you need to pay only if you want to watch that premium content.
23:54 Another model is premium video on demand. Premium video on demand is a revenue model in which OTT platforms charge users an additional fee to access content earlier than its general release. So, if you want to re- see the content very early, means on the day of release itself, you have to pay for it. But after some days or after some weeks or months, the same content may be made available on the platform without any subscription fee. So, viewers can watch the film which is recently released in theater after paying this this additional fee. This you may have seen in platforms like Netflix or Disney Plus which allows users to pay extra for early access to exclusive video content.
24:40 Another model is subscription video con- on demand. It allows users to access a library of content for a recurring fee, typically a monthly or annually fee. It focuses on predictable revenue, high user retention, and content exclusivity to build brand loyalty. This model is being followed by platforms like Netflix, Disney Plus, Amazon Prime Video, etc. This is primarily driven by subscriptions, and it is typically ad-free. But sometimes these platforms, even after subscription, will also interrupt with some ads. So, if you want to remove the ads altogether, you will have to pay some additional fee and take an take a subscription, which is of a higher amount.
25:27 Another model is the traditional video on demand. This model allows users to rent or purchase individual video content on a per transaction basis. It operates through a electronic sale through or download to rent, ideal for new releases and exclusive movies. Here actually, it follows the traditional approach of video on demand, where people used to go to video libraries and take the content. So, here you're either buying the content or renting the content. On a like a pay pay for a particular view or pay per use or pay for that content method. Now, another model is a hybrid video on demand. Most of the business models discussed previously are overlapping in this model and are used in a combination.
26:14 This combines different monetization methods, typically the SVOD, AVOD, and TVOD methods in a single platforms. It maximizes the revenue by offering flexibility, allowing users to choose between ad-supported free content, lower-priced ad-supported subscription, and purchasing premium content. This way it caters to both premium subscribers as well as budget-conscious viewers, while also reducing reliance on a single income stream by mixing ad subscriptions and transactions. Now, to conclude, the business models for audio and video content have evolved significantly with the growth of digital technology and online platforms.
27:00 The traditional revenue sources such as physical sales and broadcasting have been complemented and in many cases replaced by modern models such as streaming subscriptions, advertised based models, licensing, transactional video on demand models, etc. These models provide creators, record labels, and platforms with multiple ways to monetize the content while enabling the audiences to access media more conveniently than ever before. As technology continues to advance, hybrid and innovative monetization strategies will likely play an increasingly important role in shaping the future of global media and entertainment industry. The references of this lecture can be seen here.
27:48 Thank you very much for listening to this lecture. I hope you are enjoying this course.
