K3G Music Rights: Rs 12 crore Broke Even Even the sale of 48 lakh cassettes has not booked profits.

Last year, Salman Khan's baby brother Sohail Khan splurged Rs 12 crore to launch himself as a star opposite Sameera Reddy in Maine Dil Tujhko Diya. And for good reason. The Khans ruled and music company Tips, caught in the rapture of the industry's biggest boom ever, had promised to buy his film's music rights for Rs 6 crore or nearly half his budget. But things are different a year later. With the slump in the music industry, the music major backed out of the deal, leaving Khan to push an expensive film with newcomers. It's an uphill climb. "We understand," he shrugs wearily. "After all, there is a slump in the music industry."'

For Bollywood which feeds off a Rs 135-crore Hindi film-music industry, the past 18 months have been nothing to sing about. Sale of music rights, which accounted for at least 20 per cent of a film's revenues, are now down to 10 to 15 per cent. Bogged down with inflated film deals and piracy, the music companies mirror the boom-to-bust story of the dotcom burnout.

KOI MERE DIL SE POOCHE Music Rights: Rs 1.5 crore Loss Rs 75 lakh The spate of flops have deepend the slump in the music industry.

It wasn't always like this. Three years ago, it looked like the industry had bagged a license to print currency with films like Kuch Kuch Hota Hai and Taal ascending the US and UK top box-office charts and NRIs queuing up to watch Khan heroes romance nubile nymphets in foreign locales. Music companies tripped over themselves to outbid rivals for film rights. Last year HMV acquired music rights of producer Vashu Bhagnani's five underproduction films for a staggering Rs 25 crore. Satellite channels too joined in the crore game vying to acquire film titles, with Star Plus buying a flop like Fiza for Rs 5.75 crore and Sony snapping up Kuch Kuch Hota Hai for Rs 4 crore.

Greed never looked this good in Bollywood's season of plenty. Suddenly satellite and overseas rights and music-the non-theatrical business as the industry called it-became till ringers. These new cash cows yielded nearly half of a film's revenues. A Subhash Ghai film like Yaadein that cost Rs 17 crore, was sold for Rs 21 crore even before unspooling in theatres. Of this, Rs 8.2 crore came from the sale of its music rights to Tips, the industry's single largest deal.

GADAR Music Rights: Rs 1.5 crore Profit Rs 50 lakh A rare success story scripted by a reasonable price tag.

A 70 per cent cut on CD prices has failed to revive the film music market.

The party ended abruptly and the bills started coming in. The music industry watched in alarm as Yaadein, Nayak, Aks and Asoka and, more recently, Haan Maine Bhi Pyaar Kiya and Tum Ko Na Bhool Payenge turned Daisy Cutters at the box office. Cassette sales of these films nosedived.

Worse, even the hit films didn't seem to bring in the musical moolah like Mohabbatein (55 lakh tapes) and Kaho Naa Pyaar Hain (65 lakh tapes) had during the boom. The sky-high acquisition costs were simply not sustainable. Take the case of two of last year's biggest hits, Lagaan and K3G, whose music rights Sony bought for Rs 6 crore and Rs 12 crore each. Even with respectable sales of 32 lakh cassettes and a marketing blitz lasting seven months after its release, Sony is only close to breaking even on Lagaan. Even K3G, which sold 48 lakh cassettes and claimed to have the biggest box-office opening ever, didn't quite justify its Rs 12-crore price tag.

At the industry's recently concluded annual jamboree, Frames 2002, embarrassed Andersen consultants admitted they had gone way overboard with predictions of a phenomenal 80 per cent growth for the music industry. The real figure was a measly 8 per cent. The hangover has kicked in. Former music titans like Venus and Time are hibernating and others like Zee stick to home productions.

AKS Music Rights: Rs 1.5 crore Loss Rs 50 lakh Sales of cassettes nosedived as the Big B-starer bombed at the box office.

In a desperate bid to attract volumes, music companies slashed CD prices by nearly 70 per cent, from Rs 295 to Rs 90, making them only a tad more expensive than audio tapes. While CD sales have picked up marginally, the Hindi film music market has shrunk by 25 per cent on the combined assault from digital mp3 music downloads and rampant piracy.

Amit Khanna, chairman, Reliance Entertainment, feels the industry is crying wolf. "The music industry, which relies on high volume, low value audio cassettes, has not prepared itself for the global transition like digital delivery initiatives," he says.

Many feel that the downslide has had a much-needed sobering effect, hammering down both prices and expectations. "The acquisition costs will be more realistic now and not driven by star-value alone," says Kumar Taurani of Tips which burnt its fingers with nine of the 13 film albums it released last year. Sony says it is now acquiring only a limited number of titles that fit its profile, including Shekhar Kapur's Bombay Dreams and Mukesh Bhatt's next film. HMV refused to pay J.P. Dutta the Rs 5 crore he asked for LOC's music rights.

YAADEIN Music Rights: Rs 8.2 crore Loss Rs 5.5 crore A typical case of overpricing that led to massive losses.

Across Bollywood, ambitions are being scaled down and contracts are being renegotiated, leaving a trail of hurt egos and ruffled feathers. HMV, which bore losses of nearly Rs 8 crore after Vashu Bhagnani's Rehna Hain Tere Dil Mein and Deewanapan flopped, is now wary of paying Rs 15 crore for the three remaining films. Bhagnani has threatened to drag HMV to court. "It's not about the money, it's about reputations," he says. "It is a 50-year-old company and cannot afford to renege on contracts." HMV's Harish Dayani denies he has and reiterates that the deal with Bhagnani is still on. Clearly, it's bargaining time in the film music business.

The producer of Bharat Bhagya Vidhata is on the prowl. T.P. Agarwal says he was "cheated" by his music company Universal, which reportedly not only did not pay him anything for the music rights (which is understandable) but hijacked his hero Vikramaditya for an in-house music video that was aired before the film's release. Miffed, Agarwal has floated his own music company, Star Worldwide Info Tech. "I already have the support of several producers," he declares.

THE FLOPS: Returns did not justify music rights price tags Tips Cost (in Rs crores) Yaadein 8.5 Ehsaas 0.5 Sony   Zubeidaa 1.2 Asoka 6.0 Universal   Lajja 2.5 Bas Itna Sa Khwab Hai 1.5 T-Series   Nayak 3.0 Kyonki Main Jhoot Nahi Bolta 1.1 HMV   Aks 2.0

The other cash cows too began running dry. Bollywood's assembly- line romances suddenly found themselves unable to command exorbitant prices for overseas rights after the global recession and September 11. Sony, which had paid Rs 12 crore for the overseas and satellite rights of Mission Kashmir, dropped Shah Rukh's Asoka at the last minute. Late last year, a nervous Sony backed out just 12 hours before inking a Rs 25 crore deal with producer Yash Johar for K3G's overseas rights. Days later, they downed the shutters on their overseas distribution wing. The share of overseas returns has now shrunk from 15 per cent to 7 per cent of a film's revenue.

Conscious of committing the cardinal sin of overvaluation, the industry has turned more circumspect. "We expected too much," says Kishore Biyani of Pantaloon who is producing the Hrithik Roshan-starrer Na Tum Jaano Na Hum. "I think even the industry heavyweights were swayed by the hype."

Distributors in the domestic market say they have drastically cut down on buying films, attributing it to a combination of unrealistically high film prices and low box-office recoveries. Earlier, no respectable film lay unsold more than eight months of launch. Now it is almost the norm to buy films after they have been completed. If a film with a Khan cost Rs 3 crore, you bought it because you knew it would get you at least Rs 4 crore. "Not anymore," says distributor Tolu Bajaj. Even the biggies aren't getting the prices they're asking for. J.P. Dutta who wanted Rs 4 crore per territory, for his star-crammed Rs 30 crore Kargil war epic LOC, was forced to scale it down to Rs 3 crore. "Two years ago, a Salman Khan film like Har Dil Jo Pyaar Karega made Rs 12 crore from the sale of its rights. It would now get only a paltry Rs 5 crore," estimates trade analyst Komal Nahta. An expensive Maine Dil Tujhko Diya wouldn't even be made.

Media analysts estimate that prices for the satellite rights of films have dipped by at least 25 per cent and even Sony television, one of the biggest and most aggressive players in the satellite market, is now rethinking strategy. When advertisers hesitate to dole out Rs 2 lakh for a 10-second spot, channels are not too eager to lay their hands on an Asoka or Albela that might not click.

Yet all is not lost. It never is in the film world. Says Ghai: "We could have another Taal or Kuch Kuch Hota Hain tomorrow and we'll be fine." Dreams, after all, are the stuff of tinsel town.