The love for music is the driving force behind fans adapting and growing with technology. Although local repertoire will continually dominate a country’s charts, with the help of technology, no music from a particular country is limited to its place of origin anymore. Language barrier which was once believed to be the primary reason for building a connection doesn’t hold true now. Digital audio now makes up more than 50% of revenue in 38 markets.
Through innovation and technology, the availability of music has expanded across horizons. So much so, that record companies have now licensed over 45 million tracks to hundreds of digital services around the world. On average consumers spend 17.8 hrs listening to music each week globally, that accounts for 2.5 hrs a day. 86% of consumers listening to music are through on-demand streaming, where 50% of the consumers fall under the age group of 16-24 years. The most convenient method for the listeners has been through smartphones which accounts for 75% of consumers.
According to the IFPI Global Music Reports 2019, the number of listening hours have unpreventably caused a +9.7% growth in global revenue. This growth was predominantly driven by a 32.9% rise in paid streaming, that now accounts for 37% of total revenue. In which 46.9% accounts to streaming share of global revenues. Investments from record companies are one of the key factors dedicated to growth and evolution in diverse markets.
Where does India stand?
Following suit with the global music trend, the Indian audience is consuming music on digital platforms increasingly. Increasing internet penetration and mobile device proliferation backed by cheap internet accessibility are the key drivers for this trend. Smartphone penetration in India grew to INR 340 million i.e., 36% of total phones in 2018, up from 33% in 2017 and is expected to further increase to 39% in 2019.
In 2018, the Indian music industry grew by 10% to reach ₹14.2 billion. This is expected to grow at 10.8% annually till 2021, owing to the increase in digital revenues, performance right and synchronisation rights.
40% of global music revenue is owed to streaming. India’s highest share of revenue comes from licensed streaming services which have enabled domestic music labels to flourish. Also, the continuous growth of digital infrastructure has paved the way for a 50% growth in audio streaming to 150 million listeners in 2018, excluding YouTube.
India’s music streaming habits are highly influenced by its association with films and videos despite the country’s affinity to cultural music and heritage.
According to a report by IFPI, 96% of consumers in India listen to music on their smartphones, while 99% of music consumers are aged between 16-24 years. 95% of consumers listen to music through on-demand streaming. While 70% of the population listens to music while engaging in work or other activity.
On average, 20 hours a week is dedicated to listening to music online in India. 71% of online consumers consider music as an important part of their lives. Whereas in the US, 90% of the population listens to music averaging about 32 hours a week.
On-demand entertainment services are at the cusp of an inflexion point in India. The digital on-demand content market in India is still undergoing an evolution. Experiments with multiple monetisation models such as subscription or advertisement based is a challenge because of the unwillingness of consumers to pay for content. OTT players have adopted different pricing strategies to make a shift in consumer habits. Advertising on music streaming apps remains low with just one minute of advertising per 60 minutes of consumption in some cases. Advertising on music streaming is yet to find traction due to comparisons drawn with other digital platforms that assure return on investment to advertisers.
An opportunity to combine radio ad sales with streaming music sales could result in growth in this segment.
YouTube as the leading and convenient source for users to listen to music has been a poor contributor to revenue generation. Other OTT platforms such as Gaana, JioSaavn, Google Play, Apple and Spotify are backed by their two ways of freemium and premium services.
Gaana, one of India’s leading music streaming platform has crossed 100 mn monthly active users (MAU) in March 2019. JioSaavn similarly, recorded 104 million MAUs, as of 29th April 2019. While Spotify reported having 100 million premium subscribers out of 217 million MAUs in their first quarter of 2019.
What challenges India’s growth?
Despite heavy internet penetration in India, the biggest challenge lies in how much people are ready to pay for music. An estimated 250 million people watched YouTube in 2018 and massively pirated content online. This challenges the music revenue system heavily in India.
When Spotify came to India in February 2019, it was redesigned with a fresh set of exclusive features. Such as music recommendations in multiple Indian languages. Also, like everywhere else, Spotify was made available with an ad-supported free-subscription tier, as well as premium tiers.
However, for the first time ever, the streaming platform adopted a ‘pay-as-you-go streaming model’ wherein users could pay for a single day’s access to its ad-free Premium tier, also payable via local mobile wallet service PayTM.
One day of Spotify Premium access in India cost INR 13 ($0.18), while a week cost INR 39 ($0.55) and INR 129 ($1.81) for a month. A 3 month’s subscription was accounted to INR 389 ($5.47) and a 6 month’s, INR 719 ($10.10). Premium Spotify in India for 6 months was an approximate equivalent price of one month ($9.99) in the USA.
That said, Amarjit Singh Batra, CEO, Spotify India, commented,
“Of the more than 350 million smartphone users in India, less than 1% are willing to pay for music.”
The subscription model in India was created to keep in-sync with the consumer behaviour of the country which chose to either consume music without paying and/or especially through the most convenient free site, YouTube.
With indigenous music streaming platforms like JioSaavn and Gaana, a tussle between these OTTs was unprecedented. JioSaavn’s Premium subscription that was available at INR 999 a year was slashed to INR 299 in March 2019. Gaana, on the other hand, which offered an annual plan at INR 399 was also cut down to INR 299, if paid through PayTM.
Apple Music and YouTube Music Premium are priced at INR 120 a month and INR 99 a month respectively.
Indian audio streaming apps together reached around 5 billion streams per month towards the end of 2018. This was a growth of around 50% from the previous year. 50% of listener-ship was outside the top eight metro cities. 75% of music consumed pertained to music released in the last 12 months.
Understanding the price-sensitive nature of Indian consumers, the growth in audio streaming is expected to grow by 75% by 2021. Backed by telecoms and services offered by these platforms, there could be a better way to create revenue if the premium users shifted to paid methods of music streaming. If the current base of 1% of paying subscribers, shift upwards to 2-3%, digital revenues can propel the Indian music market towards INR 20 billion and beyond.
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