Tag Archives: India

Bollywood Music – the Android Opportunity

Can Indian digital music become a legitimate business? Or will it stay stuck with a 20th century distribution model?

You might say that Bollywood is already digital. You already get popular music on iTunes and amazon.com outside India. But the problem is that Apple and amazon.com are force-fitting their template for western music onto Bollywood music.

Take pricing. iTunes pricing for Bollywood songs is its standard 0.99c. Amazon.com is the same, though I saw a few songs for 0.89c. The Dabangg CD costs what? Rs. 150? For 10 songs. That works out to 0.33c per song. And the shame is that the 0.99 pricing is not because the Indian studios want that pricing. It is because Apples forces a standard template on everyone.

There are a bunch of other things that I would expect from a music service that specialized in Indian music. Don’t expect these from Apple or amazon.com. Correcting spellings, for instance. I find the “did you mean ….” in Google is very helpful. But when I am looking for music on iTunes for the movie Awaara, I don’t know how it’s spelt. Aawaara picks up something, so does Awara, but neither is Raj Kapoor’s Awaara, which is what I want. It should be so easy to build an intelligent, forgiving search for spelling Indian movies in English.

Here’s what came up when I was looking for Dabang on iTunes (instead of Dabangg).

Indian popular music is about the movies. The movie is part of the experience of the song. It is also a revenue making opportunity. Sell music videos. The cross sell opportunity between music, music videos and the movie itself is enormous. It is not being leveraged at all today.

I am sure Bollywood executives wonder about how to leverage this opportunity. Indian music is just too different. It’s not just a matter of pricing. Waiting for Apple or amazon.com to wake up to the opportunity is not the answer. So what do they do?

There is a way opening up. Because of Android, 3G and more broadband.

As I write this, I am listening to Shreya Ghoshal on iTunes/MacBook – WiFi – Airport Express – Denon receiver – Polk speakers. But most digital music is consumed through a portable player. The world’s dominant portable music player is the iPod (and the iPhone). The iPod never really caught on in India. Neither did the iPhone. Too expensive. So most of the market comprises of cellphone mp3 players.

Android is going to be big in India. People who own cellphone mp3 players today will have Android phones within 2 years. Android is the perfect platform to build a digital music player for. And its user base will have size and depth.

I think Bollywood should do a Hulu. Two or three leading studios [labels] should come together with a VC and form a company. The company’s mission should be to build a digital music business in India.

There are many models out there that could be candidates. Download with/without DRM (iTunes, amazon.com), Subscription (Spotify), Streaming and ad supported (Pandora). The technology too is mature. Scores of Indians in the Bay Area have the expertise to build digital media systems.

The key challenge is on the deal-making side of things. The ownership of copyright in India is a little more complicated than in the US. Also, the industry is more fragmented. To get a critical mass of copyright owners on board will take a lot of doing. But hopefully, the opportunity ahead is what will convince them to sign up.

IIM Ahmedabad ranked 11th by FT

The Financial Times has its Global MBA rankings for 2011 out. IIM Ahmedabad is ranked 11th. It was not ranked in previous years. So this is completely out of the blue.

The Economist recently also published their MBA rankings. IIM Ahmedabad was ranked 85th – the only Indian MBA program to be on the list. Which is better than not being on the list, but only just.

So the FT ranking is quite a shot in the arm. I have never had any doubt that my fellow alumni can stand toe to toe with the best. The faculty and research, I know, could improve. But the students are the best anywhere. Yes, they are picky and high maintenance and tend to not fit into every organization. But, at least in part, that is because they are just smarter than the people around them.

OK enough self-serving praise. If IIM A is so hot, how come it didn’t even get a rank till last year?

You have to apply to be ranked, and I don’t know if the institute applied or not. But even so, there are a few things it has ranked high on, which may depend on changes to methodology, and that may have pushed it higher in the rankings.

Take a look at the FT page I have linked to above. It allows some pretty neat analysis on-the-fly.

IIM A has ranked high on Salary Today (3rd) and Weighted Salary (2nd). Since these were computed using PPP (Purchasing Power Parity) it has ranked quite high. It also ranked high on Increase in Salary, before and after the MBA (3rd). Also on Careers and Employment.

Not surprisingly, it ranked low (92nd) on Research and International Faculty (last). It also ranked low on Women in Faculty (12%).

Now, how all this was factored into the final rankings is not something I went into. I expect, Salaries must have had a pretty high weighting in the overall rank computation. Using PPP there, helps a lot, and I would argue is absolutely the right thing to do.

Now if only the institute were freed from the clutches of the government it could do something to attract world-class faculty and focus a lot more on research. Like many things in India (the economy, for instance) IIM Ahmedabad shines, in spite of, not because of its ownership by the Government of India.

[Update: As many readers have informed me, the FT ranking is for the PGP X program which is a 12 month full time MBA that accepts students with considerable work experience (avg 10 years), unlike the PGP program which is a 2 year MBA but accepts many (most?) students straight after college (as I did). The PGP program does not qualify, because of the low work ex requirement, for the FT rankings. The PGP X program, which is new, was ranked for the first time.]

Tiger Moms and Indian Parenting

Amy Chua made waves with this piece in the Wall Street Journal. She also had a very successful Davos visit where she found herself debating Larry Summers, which is a daunting task, even on a subject that you might think you have him on the backfoot for.

Summers had a quotable quote

I think you have to decide whether achievement is the route to self-esteem or whether self-esteem is the route to achievement.

But he also said

“It is not entirely clear that your veneration of traditional academic achievement is exactly well placed,” he said to Ms. Chua. “Which two freshmen at Harvard have arguably been most transformative of the world in the last 25 years?” he asked. “You can make a reasonable case for Bill Gates and Mark Zuckerberg, neither of whom graduated.”

Now, Gates and Zuckerberg will certainly bump up the average earnings of Harvard dropouts quite a bit. I don’t have data to tell you if that will be enough to outdo the hedge fund millionaires among those who graduated. But I can guarantee that the median earnings of a Harvard graduate far exceed the median earnings of a Harvard dropout. And to Moms, medians matter, not averages.

As an Indian, I totally get where Amy Chua is coming from. Our Indian friends in the US are no less focused on their kids academics and extra curricular activities. You may think that this kind of parenting is part of the culture. It is, but it is not deep-set. It manifests itself because of economic reasons.

India, like China, is a poor country. There are no safety nets – no unemployment benefits, no healthcare insurance. If you don’t have a job, its a ticket straight to the poorhouse. The govt. hospitals don’t work and the rural employment guarantee program can only prevent starvation.

But just education doesn’t guarantee much. The dispersion in outcomes of your education is very, very wide. Even among college graduates, the average IIT graduate’s life-time income could be 10X that of an Arts graduate. I doubt that that is the case anywhere in the developed world.

And one more thing. The difference in quality of life between Rs. 4 lakhs and Rs. 40 lakhs p.a. is stark. Not like that between $40,000 and $400,000.

So if you are one of the millions of salaried, educated, middle class parents in India and you are thinking about the life your children are going to have, you are not thinking about self-esteem or creativity. You are thinking about simpler goals like how do I get my son into an engineering college? If your child shows just a little bit of promise, he will be entered into coaching classes every spare minute of the day. Or be sent to Kota. He will not have a life for two years of his childhood. Activities? Forget about it. You can’t make a living playing the flute. And no Engineering college needs you to have any extra-curricular activities.

Now imagine that you are that child. You made it into an Engineering college and then made your way to the US. How would you raise your kids? Probably the way Amy Chua did. Even though the income dispersion among college graduates is much lower in the US and even the bottom quartile of college grads have a pretty good quality of life, you raise your kids the way you were raised. It takes an effort to break away from your own upbringing. You may say, that’s why it’s cultural. But if it is, it wears off pretty quick.

The reason I don’t think this is culturally very deep set is because I can see how things can change within a generation. Even within India. Some of my friends in India would be called affluent anywhere, but in India they are in the top 1%. For their kids, they seek a more well-rounded education. Maybe they are wiser and know what really counts to get ahead. Or maybe they know that their own wealth gives their kids a safety net.

Does this parenting play out everywhere in the world? Probably not. I think there are a few conditions that are present in today’s India and China that make it so. One, the country must allow upward mobility. The economy has to be growing for there to be opportunities for talented graduates. Two, there should be a pretty sizable educated, salaried middle-class. That’s when parenting behavior becomes widespread enough to be deemed “cultural”.

TVU Immigration Scam

From The Hindu

This could become one of the largest immigration frauds to ever hit the U.S. university system

With 95% of the students involved said to be of Indian origin, hundreds may face deportation

Tri Valley University, here in the Bay Area is involved in what might be the biggest immigration frauds with student visas. From The Hindu

When they launched a sting operation against Susan Xiao-Ping Su, the head of TVU, with undercover officers posing as foreign students, she was willing to offer them I-20, or student visas, even though they admitted they had no intention to attend courses and had improper status from previous schools.

Over 95% of the students are of Indian origin.

The TVU story is over. But the website is still up. It projects a strong association with “Christian education”. It won’t be the first operation to use religion as a cover-up.

God has been with us for every step the university takes. Initially starting with engineering program, Tri-Valley University quickly develop all of its academic programs in Christian ministry, business, law and medicine with helps and contributions from many faculty members, volunteers, as well as renown professionals.

TVU appears to be very new. They applied for accreditation in 2008. No news on whether it was received or not.

The first important milestone date of Tri-Valley University’s development is June 29th, 2008, the initial contact of Tri-Valley University with our accreditation agency. Ever since then, Tri-Valley University has been structured according to the prestigious accreditation requirement for all its institution infrastructure, administration, and academic programs in spirit and practice.

Because it is so new, it probably hasn’t graduated too many students, though there may be some who have transferred credits elsewhere. Those credits will be worth very little now.

TVU exploited the scarcity of US visas and Su’s ability to award them. There are many, many people around the world who want to get into the United States, somehow, anyhow. H1-B visas are already scarce. USCIS ran out of the 2011 quota on Jan 26. That F-1 visa is worth something, even if the education around it is a sham.

A similar thing happened in the early days of the IT boom in India. There weren’t enough engineering graduates coming out of colleges for the IT Services companies. Which led to the rise of the donation college – colleges that essentially granted you a degree in exchange for money. The quality of education itself was almost immaterial. The smarter colleges focused on getting employers to come for campus hiring. Then stick some kind of entry criteria at the admission level so that you aren’t admitting totally unemployable students and the virtuous cycle of good students – good jobs – more good students starts working in your favour.

Some day, there will be a shakeout in the engineering college industry in India. Supply will catch up. Salaries offered on campus will diverge. And the game will be over for the fly-by-nighters. But then the owners never really invested too much in education anyway. The students will be left up the creek without a paddle.

It didn’t have to be this way. If accreditation agencies in India took their job to be anything other than making money for themselves, you could still ensure quality education while growing supply. But then, that wouldn’t be India, would it.

[Update: ToI has the best piece on the TVU scam]

A Leg Up for Indian English

http://video.ted.com/assets/player/swf/EmbedPlayer.swf
In the mornings when I drop off my daughter at school, I generally have BBC on the car radio. (It’s Disney if I pick her up. That’s the deal with her. I can subject her to BBC in the mornings if I let her listen to Disney in the PM.)

For the longest time, BBC has had reporters in India or Pakistan or Africa who speak English like the locals do. So I’m used to hearing English spoken in a nice Indian accent on BBC. Which is perhaps why, I did not notice this till today – nowadays, even newscasters on BBC World News have Indian accents.

Today’s news, for instance, was anchored by someone with a British accent, presumably in London, and someone in India with a pucca Indian accent.

A few years ago, I had written a piece on The Future of Business English, predicting that Indian English would become more and more acceptable. That piece was more about words and phrases. But its the same with accents.

The acceptability of Indian accented English will be propelled by two things – India’s economic importance and the greater interconnectedness of the world.

The rise of Indian as an economic power is most important. Nobody cares about the culture and heritage of country that is poor. But as soon as that very country’s economy starts growing it presents opportunities. Suddenly, every one wants to learn what they can about the country, its language and culture. That’s the way of the world.

Now if this was all there was to it, China would be far ahead. But that will change. Western democracies have a natural preference for democratic India. And English is an Indian language. It’s a big window into India. English is not a Chinese language.

Greater interconnectedness comes from many things. Immigration is one. Indians form the largest (or one of the largest) groups of immigrants in the US, Canada, UK and Australia. Some come as college students. Others with the Indian IT Services industry. With the years, the number of Indian-born immigrants embedded in all walks of life in these countries keeps going up. And guess what, every one of them speaks in this accent that gets less and less strange to the natives, as the years go by.

The explosion of video on the internet also helps. You don’t have to depend upon the fare network TV is dishing out. You can go to TED Talks where you’ll find many Indian speakers. Or some Indian born exec at Google talking about the next big thing from Google.

But Indian accents on American TV still hasn’t caught on. We’re seeing a whole bunch of Indian faces – Aarti Sequeira on Food Network, Archie Panjabi on The Good Wife and Reshma Shetty on Royal Pains. But by some odd coincidence, they all speak in British accents. Outsourced, on NBC, has lots of Indian accents, but then its setting is India (though it is shot in the US). CNBC in New York has an anchor with an unalloyed Australian accent, which is a step forward. But BBC is way ahead. They are truly global. (sidenote: they announced that they are shutting down their BBC Hindi service on shortwave. Apparently, shortwave costs too much.)

In the meanwhile, us Indian-Americans, we’ll just keep rolling our R’s. And our kids will grow up having fun at our expense.

Investment Hates Uncertainty, Especially in the Law


A couple of unconnected things are throwing dark shadows over this dream run that Foreign Direct Investment into the Indian economy has been having. One, the Income Tax department’s claim on Vodafone for $2.5 B related to its acquisition of a controlling stake in Hutchison Essar. Two, the Andhra government’s crusade against the microfinance industry.

In both cases, the governments (central and Andhra) have good reason to act as they are. In the Vodafone case, there are grey areas when it comes to one offshore entity selling off a stake in an Indian company to another offshore entity. The microfinance industry has been charging rates on loans which become debt traps for poor villagers. Perhaps some regulation is in order.

But the way this is being done creates problems. When you change the rules of the game after investments have been made, future investors worry about making investments. FDI is the good sort of investment. It doesn’t turn tail and run when the markets are down. But if we are to encourage it, we have to take the regulatory uncertainty out.

Rumored Candidates for NEC Director

Candidates being suggested to replace Larry Summers as Director of the National Economic Council – basically, the President’s top economic advisor – include Indra Nooyi and Diana Farrell.

Indra Nooyi is one of the many CEOs whose name is being heard as candidates. On the one hand this would correct a certain absence of people with experience in the private sector, in the Obama administration. On the other, the NEC Director is really a job for an economist. So we’ll see.

Another candidate is Diana Farrell who is currently one of the two Deputy Directors in the NEC. In the past she has been Director of McKinsey Global Institute, McKinsey’s research arm. While she was there she researched and wrote extensively on Offshoring and global labour markets.

Indian Balance of Payments and Offshore Services

The RBI is concerned about India’s Balance of Payments. One of the reasons ascribed to the growing problem is the slow down in the Indian Offshore Services industry. From today’s FT

One reason, the central bank said, for the deterioration in the balance of payments was a decline in an “invisibles surplus”, caused in part by falling revenues to India’s prized outsourcing sector.

For my book I crunched some data from the RBI website. As you can see, on the Current Account, India depends a whole lot on the Offshore industry.

Without the Offshore industry being where it is today, the import regime could not have been as easy as it is today.

But I am a little confused on the timing of this. Given that last quarter was very good for most of the top companies, isn’t this now no longer a concern? Or is it that RBI data gathering and analysis lags public companies announcing their results by a quarter?

Real estate prices in India and California

Real estate in India looks really inflated to me. Two data points – one in Mumbai on very expensive flat in South Mumbai and another on a more modest flat in the Chennai. The annual rent on both is between 1.5 and 2% of the price of the flat. Yields on Indian government 10 year notes, is currently close to 8%.

One can draw two conclusions from this:

– It is far, far better to rent than to buy real estate in India. On a 2 cr. apartment the difference between buy vs rent is 12 lakhs per annum (and the peace of mind that GoI bonds give you)

– People who buy real estate at these prices are counting on capital appreciation and definitely not rental income. How much higher can it get?

On the other hand, in So Cal, a friend who thinks it is a good time to buy real estate in California, is making 8-10% just on rent (after costs).

Maybe those Mumbai fat cats should think about investing in California real estate. A much better long term bet, good rental yields and easy to manage long-distance.

I wonder if there is the makings of a business in channeling this investment from emerging markets with super high real estate prices to developed economies where post the financial crisis, real estate is quite depressed.