With GMM, Music goes for a song

Suwat Damrongchaitham talks about how GMM Grammy is shaping its new business model, based on the principle of "selling more for less" in a slowing economy.

Apple has shaken up the music business with a tariff of 99 US cents (Bt33.43) a song it levies at its iTunes store. This has upset some music labels who have protested the low price. However, GMM, Thailand's largest music company with a 70-per-cent market share, has cut the price even further - Bt20 a month for unlimited downloads - as part of its "Happy Vampires" campaign launched along with mobile-phone operator DTAC early last month. However, subscribers have to pay EDGE/GPRS charges to the operator.

Suwat, who heads GMM's digital business, said the Happy Vampires campaign has drawn an amazing response, with more than 300,000 people subscribing to the services within the first 30 days of its introduction.

"It will certainly hit the one-million-subscribers number within five months. By about a year, the total number should reach 3 million to 4 million, provided we launch the service with all [mobile] operators," he said.

The service name, "Happy", apparently reflects DTAC's pre-paid trademark, while "Vampires" rides on the brand of a well-known pirated-MP3 seller. But unlike what many people have derived from the press releases, Happy Vampires' principle objective is not of killing pirated sellers of music. Rather, the service has been conceived to cope with the economic downturn.

According to Suwat, GMM came up with the new digital-music business model after it found consumers had become more selective about their purchases of digital-music downloads and music CDs as the economy slumps.

"We thought ... how can we stabilise income? For this, the subscription model was the first answer.

"The next though was how to ensure the consumers keep coming every month? And, the solution was that it must be cheap, addictive and voluminous," he said.

The Happy Vampires' offer of Bt20 a month for unlimited downloads of ringtones, full songs and music videos from GMM's music bank of more than 10,000 songs, is a drastic discount compared to the normal rate of Bt35 for one song. But, Suwat said, GMM expects to earn more, rather than less.

"An average consumer purchases two ringtones a year, and thus, after sharing half of the revenue with the mobile operator, we earn Bt35 per customer per year.  But with the subscription model, we will get Bt120 per customer per year, a four-folds increase," he said.

GMM also expects more customers to buy its digital music because "now they can get all [songs] from the catalogues for Bt20, while earlier they had to pay Bt35 for one song alone," Suwat said, adding that the first month's figurers showed that 80 per cent of the Happy Vampires subscribers are new customers.

But, the GMM executive said, Happy Vampires is more of offensive, rather than a defensive strategy.

"With the Bt20 price, we kill all newcomers. They won't be able to compete but will instead be compelled to join us," he said.

"We want to be a complete entertainment portal ... the largest shop which sells content in Thailand. We want to be the iTunes [of] Thailand." Suwat said.

Similar to iTunes', GMM has opted for an exclusivity model. With the exception of True Music, which operates a large music store, GMM no longer allows other websites to host its songs. The company is also open to selling songs from other labels and selling other non-music items remains a possibility.

GMM expects its digital business to earn a revenue of Bt600 million this year, up 35 per cent from the Bt419 million it earned last year. If this year's target is reached, the company's digital revenues are likely to climb further to Bt800 million-Bt900 million next year, he said.

pichaya@nationgroup.com

Intense involvement in work will pay off in your career

"Sai Jai", or paying great attention to what you do, is a working principle that Suwat Damrongchaitham, managing director of GMM Digital Domain, has always adhered to.

"Today's young generation has a lot of knowledge. They only need to pay appropriate respect to their professions by devoting themselves to their work. It's not simply about working hard but about being enthusiastic and being ambitious," he said.

Suwat said he often "feels crazy" about the stuff he collects. He usually spends a lot of time and effort in collecting the stuff, just the way he has been since he was a child. Apart from hi-tech gadgets, GMM's digital chief is a collector of buddha images, ornamental fishes, knives, watches, guns and bicycles, among others things.

"I'm crazy about everything that one needs money to buy. Everything must be top of the line. That's why I'm poor" he said, with a grin.

But Suwat said this dedication to collecting things contributes to his work.

"We were the victims [to our emotions] earlier and hence we know what is extreme [behaviour]. It's the same principle," he said.