While presenting the Budget, Minister of Finance Nirmala Sitharaman had declared her government’s resolve to increase and augment the reach and capacity of BharatNet. This WiFi infrastructure provides internet connectivity to people in areas where there is little or no private internet connection. Delhi Metro, for example, provides network connectivity to its commuters on stations and within its coaches.
Before understanding why music streaming companies are jumping in joy at the minister’s proposal, let’s look at data consumption in India.
Currently, internet penetration in rural India is just 40%. This means out of every 100 households in rural areas, just 40 of them have an internet connection.
However, according to various estimates, 60% of all video consumption takes place in these areas! This may surprise you but data companies like Airtel have been quietly generating a large portion of their revenues from rural internet consumption. For example, Airtel’s Wynk Music has a very large user base in the rural areas. The company says that it has a user base of approximately 150 million here; the total user base is 340 million, approximately according to industry sources.
Enthused by the performance of Wynk Music, Airtel recently launched Wynk Tube in May to grow its music portfolio.
Meanwhile, other companies like Amazon and Spotify are observing the moves of Airtel with a great deal of interest. As BharatNet improves its reach and bandwidth in the coming months, these companies have started offering specialised products to their potential rural consumers.
Budget and Bollywood Industry
The Union Budget 2019 has delighted the cinema producer community also.
When it was first presented in February 2019 by Union Minister Piyush Goel, the government had promised a single-window clearance scheme for Indian filmmakers. This declaration was welcomed by the entire filmmaker community as it promised to remove red tape involved in getting clearances.
Earlier, this kind of single window clearance was available to only foreign filmmakers.
Another major proposal by the Government of India was with regard to the camcording of movies by unauthorised persons.
The anti-camcording provision in the 2019 Union budget will go a long way in stopping movie piracy. The Government expects that the Media and Entertainment industry is likely to touch the 3 lakh crore figure mark by 2022 and everything needs to be done to nurture this industry.
The single-window clearance proposal is expected to boost India’s tourism prospects as well as spur employment in the Indian film industry, which will naturally benefit all the sectors related including music too.
Over the past few years, the average Indian cinemagoer has benefitted greatly from ongoing reforms in the cinema industry. Earlier, the average VAT was 50% while currently, it stands at 12%. In December 2018, the Union Finance Ministry had reduced the GST of all tickets costing more than Rs. 100 from 28% to 18%.
The anti-camcording provision and reduction in GST rates on cinema tickets will further induce the cinema goer to watch non-pirated stuff.
However, many M&E executives still feel that the government is not giving adequate attention to this sector.
For example, live entertainment events still attract 28% GST which makes this entertainment vertical quite expensive for the consumers. BookMyShow, a leading live entertainment player wants this tax to come down from 28% to 18%.
An interesting feature of the 2019 interim budget is the creation of a data pool powered by Artificial Intelligence. This database will help scores of movie and music producers to gather precious insights and generate extremely valuable content. Big Data and AI will also help advertisers get meaningful insights. These findings will later help the advertisers to better plan their ad campaigns.
In short, the 2019 Union Budget promises to revolutionise the Indian music industry. Movie producers can now spend more time making movies and investing in better music, rather than handling red tape.