GMM Grammy innovates in tough market

While record labels continue to struggle worldwide - EMI Thailand had to shut down last year - and piracy remains a severe problem in Thailand, GMM Grammy has defied the global and local situations, reporting a whopping 141-per-cent growth in profits last year. It aims at recording its best operating result in 25 years this year.

The company's chief executive Boosaba Daorueng explained how the Thai music and entertainment company had managed to make an exceptional turnaround.

While sales of  CDs and other products continued to show no growth last year, partly due to music piracy, Grammy reported total revenue of Bt7.3 billion last year, an increase of 14 per cent from the previous year. Net profit was Bt502.2 million, up 141 per cent from a year earlier. Boosaba said the turnaround was due to many reasons, including its shift from physical business to "total music business".

Going beyond just selling CDs, Grammy has made more from each artist and album by holding more concerts, having its artists become presenters for leading brands, producing more live concert VCDs and selling more songs, photos and videos to the growing digital channels. And since these provide additional income that requires minimal investment, profits have soared.

Of Grammy's total music revenues, the share of CD/VCD sales has dropped from 61 per cent in 2006 to  54 per cent  last year and is projected to fall to 50 per cent this year, with the balance taken up by revenues from total music business which the industry defines as including digital, showbiz, artist management, licence fee management and karaoke. And since total music business generates additional income from existing assets, its larger contribution has meant a  lot more profit for Grammy.

The total music business strategy alone would not work if Grammy had not implemented its customer-

centric or segmentation strategy. Last year, Grammy reorganised its structure from various labels into six units: teen idol, pop idol, rock, vintage, niche markets and country. The new market approach has also been changed with more targeted, customised plans and execution. 

The rationale of the reorganisation is that Grammy has recognised that each group of consumers is different. Vintage song listeners, for instance, have a unique character. They will not follow new albums closely, but whenever their favourite performers put on a show, they will definitely attend.

"And there comes our new product - live concerts on VCD," Boosaba said.

Marketing has become customised to each album and artist. For example, bands such as Body Slam and Big Ass have more concerts and presenter roles, while the approach is different for older rock bands such as Asanee and Vasant.

"For an even newer rock band such as Restrospect, there will be more below-the-line and on-ground activities," she said. Catering to the need of rock fans, Grammy has organised "Malang Rock Day" every month, allowing fans to get together, while also allowing it to recruit new bands.

"We don't need to invest huge sums to promote the songs to the masses, but to focus on targeted audiences," she said.

Research, CRM and other tools have been applied for in-depth marketing efforts. The cost of promotion has been substantially cut while

hitting targets more accurately. Grammy has used concerts and websites to test the popularity of new bands and new music before releasing a new album. This has reduced its risk of failure substantially.

Boosaba said Grammy sees digital technology as a tool to expand its market. 

She is confident Grammy is on the right track and it now has to stay diligent and focused.