Speaker pre-loaded with music that's flying off the shelves

You could have earned a minimum net profit of INR 88 Crores over 7 years by manufacturing and selling a speaker pre-loaded with music, provided you owned the music's ______ .

Saregama India Limited (herein referred to as 'the Company') launched Carvaan in May 2017. Carvaan is a portable music player pre-loaded with 5,000 vintage Bollywood songs, designed to evoke nostalgia and appeal particularly to the elderly. The theme was chosen to connect with older adults, while the music genre is enjoyed by people of all ages.

Following the positive response and acceptance from the audience, the Company introduced a variant of Carvaan called Carvaan Mini. This lighter version is designed to reach a broader audience due to its compact size and lack of network dependency. Carvaan Mini comes in various editions, including ones ancient scriptures like the Shrimad Bhagavad Gita.

Carvaan, priced at an average of INR 5,000, is being marketed as an ideal gift for parents and relatives who enjoy a hassle-free, nostalgic music experience. Launched as a device offering pre-loaded music owned by Saregama, Carvaan has evolved into a platform where users can stream podcasts and music in addition to the pre-loaded Saregama tracks.

Over 40.07 Lakh units have been sold in a span of 7 years from the FY 2017-18 to FY 2023-24.

For the FY 2022-23, the company has earned revenue of INR 1,27,60,93,000 from sale of products. Considering 5,61,000 units were sold, the minimum average selling price is INR 2,274 

Considering a minimum average selling price of INR 2,200 per unit, the revenue from Carvaan sales from FY 2017-18 to FY 2023-24 amounts to INR 881.54 Crore.

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The Company earns a gross margin of 25% from Carvaan sales. With a minimum net margin of 10%, the Company would have netted INR 88.15 Crore, based on the revenue of INR 881.54 Crore [INR 8,81,54,00,000 * 10%].

Question: Is it permissible to pre-load music and sell speakers?

Answer: Yes, you can pre-load music and sell speakers, as long as you own the copyright to the music you have pre-loaded.

The most rational and economical approach for consumers would be to purchase an ordinary bluetooth speaker, available for as low as INR 750, connect it to their device, and access music through applications such as YouTube or music streaming avenues like Spotify and Wynk. There are no restrictions preventing you from doing so.

The company is able to offer speakers pre-loaded with music because it possesses the copyright for the music included in the pre-loaded content.

If you upload a YouTube video featuring music owned by the Company, the Company retains the right to monetize your video. This means that any ad revenue generated by your video will be directed to the Company's bank account. Alternatively, in the worst-case scenario, the Company may choose to remove your video from YouTube.

picture credit goes to YouTube channel "A2D Channel" who had bought the speaker to just open and show the viewers what is encased in the plastic body 
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Carvaan is essentially just two speakers, a 2200 mAh battery which is made in China, and a 32 GB memory card snuggled within a plastic body, all of which are probably having a family reunion in there. Not to forget, its all encased in 100% recyclable plastic and packaged in 100% recyclable & biodegradable paper. If you want it to little fancier, these components are available encased in metal, but be prepared to cough up around INR 10,000.

The Company primary focus is on licensing copyrighted content for a fee, and isn't heavily reliant on Carvaan sales. In the fiscal year 2022-23, product sales revenue totaled INR 127.61 Crore, representing just 17% of the total revenue of INR 736.62 Crore.

It's noteworthy that the Company, initially rooted in the B2B sector, has successfully launched a product where it is being directly sold to the consumer (D2C) and in addition to this the product achieved profitability right from day ONE.

The Company went a step further with Carvaan Mini by making it thematic Carvaan Mini. Now, there's a Mini dedicated to Gurbani, another focused on Hindu devotional music, and yet another dedicated to Rabindra Sangeet. Additionally, there are versions tailored for Telugu, Tamil, Malayalam, and many other languages.

In February 2020, the Company introduced a variant of Carvaan Mini in collaboration with Shri Shri Ravi Shankar, named the Art of Living Carvaan Mini. However, due to the COVID-19 outbreak and subsequent nationwide lockdown, the product couldn't be distributed to retail outlets. The only option was to sell it directly from the ashram. And what happened next? Well, everything was sold out on the very first day itself.

The Company is heavily leveraging feedback mechanisms to enhance their products. Younger individuals expressed that they often only have time to listen to music on weekends. Taking this into consideration, the Company introduced Carvaan Go, which allows people to enjoy their favorite music while commuting to work, during their morning walks, or while traveling by plane or train. Carvaan Go is designed to be a convenient solution for busy individuals, providing them with music during their moments of personal time throughout the day.

Conclusion

This is classic case study of leveraging owned assets to explore diverse avenues for monetization. In this instance, the Company holding the copyright for the music has responded to consumer demand by offering speakers pre-loaded with curated music. The company by capitalising on its intellectual property and recognizing market needs, not only enhanced its product line but also maximized revenue streams.

References

Video link of  the video uploaded "A2D Channel" to watch inside view of Saregama Carvaan 

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