Despite the mounting threat of disruptive technologies, SET-listed GMM Grammy Plc, Thailand's leading entertainment company, remains adamant its music business will continue to drive revenue as the industry shifts to streaming platforms.
Phawit Chitrakorn, a member of the group's executive committee and chief executive of GMM Music, said the music industry has changed considerably in the past few years, and is fully embracing streaming as demand for variable audio and video platforms grows.
Digital files are the main revenue driver as they are more accessible than CDs or DVDs.
Digital revenue for GMM Grammy's music business mostly comes from bundling commercial sales with leading global streaming platforms such as Tencent's Joox, Spotify and Apple Music.
Mr Phawit said streaming music offers a freemium (free and premium) platform to users.
"I insist GMM Grammy's music business will remain the main revenue driver for the group, continuing healthy growth while operating with sustainable profit margins," he said.
GMM Grammy develops new music content in response to consumers' changing behaviour. But even though tastes may change but consumer interest in music never flags, said Mr Phawit.
"Listening to music is the cheapest entertainment people can access. GMM Grammy is hopeful new technology represents an opportunity for the music business," he said.
Mr Phawit said the music industry sees relatively low competition compared with the past. GMM Grammy itself also boasts a massive music library and content for every platform.
He predicts that Thailand's music industry will move in tandem with global trends and GMM Grammy's music business will be carried forward by the tide of trends.
"I believe streaming platforms will make money for Thailand's music industry, and exceed 50% of the total market in the next 1-2 years." He said.
According to Joox Music Thailand, Thailand's digital or streaming music has 1.2 billion baht in total market value, mainly driven by increasing internet bandwidth.
The top five streaming music applications in Thailand are Joox, Line Music, Apple Music, KKBox and Sound Cloud, according to McKinsey's music market report 2016.
Official statistics about the market value of Thailand's music industry are not available, but industry experts estimate it at 7-8 billion baht.
According to the International Federation of the Phonographic Industry's annual global music report 2017, digital revenue in the global music industry contributed to half of total revenue in 2016 of US$15.7 billion (520 billion baht), with the streaming segment rising in popularity.
In 2016, global recorded music revenues rose by 5.9% from 2015 to $15.7 billion.
The digital revenue grew by 17.7% to $7.8 billion, driven by a sharp 60.4% growth in streaming revenue, the largest increase in eight years.
Even though the streaming music industry is on the rise, Mr Phawit is still optimistic that physical recordings such as CDs, vinyl or DVD are not dying.
He said the people are purchasing physical recordings for nostalgia, not for listening purposes, which is why prices are going up today.
GMM Grammy still launches CD and DVD in the form of compilation albums sold at 9,000 7-11 convenience stores, B2S stationery shops and online store Mangpong nationwide.
Mr Phawit said the music and entertainment company will survive globalisation by being adaptable, and the more adaptive they are, the more successful they will be.
"As a big entertainment company, GMM Grammy is always adapting to prove that we can tap into people's behaviour," said Mr Phawit. "The most important thing in this era is to blend with in people's digital lifestyle as much as possible."
Mr Phawit said GMM Grammy is trying to integrate with people's lifestyles while restructuring the organisation to stay fresh, using massive music libraries and content to make money.
"I don't think the music industry is disrupted by technology but it's the fact that we all must adapt to. Music will be in every dimension of daily life, not for only entertainment," he said.
For long-term adaptation, Mr Phawit said GMM Grammy's music business will focus on three factors.
First, the company will focus on enhancing music-related products and shift towards various media such as TV series while creating artist lifestyle programmes and innovative show business.
Second, the company will focus more on service-based business than traditional business to reduce the risk of economic uncertainty.
Third, GMM Grammy will gradually move to become a content provider and be ready to provide music content on all streaming platforms in the future.
Compared with the past, popular artists in the music industry today are defined differently.
Mr Phawit said the popularity in the past meant artists' music must be on top-list radio billboards while today popularity depends on viewership on video or audio platforms.
"The viewership on YouTube might not be an accurate indicator of success but it can indicate that people know about an artist's content."
Mr Phawit forecasts that both audio and video streaming platforms will be more intense in terms of listenership competition next year and new players will have more personalised features on each platform to attract and to be more interactive with audiences.
Mr Phawit said GMM Grammy will try to secure leadership on video platforms in terms of revenue and popularity.
He said GMM Grammy Official's 10 million YouTube subscribers is only one of the successful channels under GMM Grammy, the others being Genie records, Grammy Gold, GMM25, ONE31 and GDH.
"We are setting content to serve various audience targets and we will earn as much digital revenue as we can."
