Music industry singing a new tune

The resignation of celebrated songwriter Nitipong "Dee" Hornak from GMM Grammy seems to be a good case study of the revolution in Thailand's music industry, driven by the dotcom society, where customers do not buy music CDs or DVDs as much as before.

The arrival of digital technology and song downloads have resulted in the drastic shrinking of CD industries, as consumers have changed their habits by paying for song downloads instead of buying CD albums or discs.

The Apple iPad pioneered the change in the industry by revolutionising both hardware and software.

A source from the creative and advertising industry said last week that the change had led to many music companies and artists updating their marketing and selling strategies by going online with the digital download business.

"The 'Grammy' case is the result of the shift in the business model and natural cost-cutting to refocus their business from the traditional way to the digital way," the source said.

The YouTube culture and social networking had turned consumers into home-grown artists with talent in many fields, the source said. Consumers now and future generations are demanding different kinds of artists and songs for their entertainment and becoming more creative on their own, the source added.

RS CEO Surachai Chetchotisak said the music industry would become more dynamic in response to the drastic changes in technology and consumer behaviour.

"I myself see the local music industry being quite competitive this year. The music industry itself will undergo a drastic change following technology and consumer behaviour," he said.

RS was highly successful in implementing its "Fully Digital Music" strategy, with very positive feedback from consumers, he said.

Nowadays, most consumers, especially young people, are more interested in new digital media, such as smart phones, tablets like the Apple iPad and Samsung Galaxy Tab, and high-speed Internet.

"We have successfully transformed our traditional music business into a digital music market, following the establishment in 2008 of the country's first online music store, Pleng.com. We will now continue to press forward to become the leader in digital-entertainment networks," he said.

Following its decision to focus on a digital-music platform, RS' revenue from music downloads has surged. Last year, out of its total revenue of Bt2.9 billion, about Bt600 million came from music downloads.

"We have been a fully digital music company for three years," he said. "Now, our online music store has 5 million customers who have generated a total of 60 million downloads. Total revenue over the three years we have been offering music downloads is about Bt2 billion," he said.

In its music business, 80 per cent of total revenue came from the digital format. Only 20 per cent came from selling CDs, he added.

GMM Grammy CEO Paiboon Damrongchaitham said in a statement that there was no conflict between famous songwriter Nitipong, who had recently resigned from the music giant, and management.

"I myself was informed by Nitipong, as he wants to explore a new career, which is independent," he said.

The reorganisation had been seen as a normal practice conducted every year by GMM Grammy, he said.

"We will make a careful evaluation of our operations and cut any surplus costs. We have offered an early retirement programme and changed our business model, which have resulted in the adjustment of our personnel structure to be in line with our future business plan," he said.

More than 100 employees joined the company's early retirement package last year, resulting in over Bt40 million paid out as compensation. However, the company plans to recruit more than 200 staff this year.

"We have closed many non-performing businesses, including our CD factory and the GMM Live concert-organising agency. Some of the staff from the folded companies had been transformed into freelancers," he said.