According to the FICCI report, growth at the music label level was 20%, led by digital revenues, which now contribute 83% of their revenues. YouTube accounted for 40% of the digital revenues for labels. Physical music sales fell by 50%. India reached 19th position in the IFPI world rankings of music markets. According to IFPI, streaming accounted for nearly 40% of global music revenues, making it the biggest source of income for the music industry by a significant margin. As market leaders Spotify and Apple Music continue to grow, streaming will dominate music consumption going forward, especially now that smart speakers are making music streaming at home more convenient.
Film music contributed over 80% of total revenues of the Indian music industry
In India, songs related to movies have the highest share in terms of revenue and account for over 80% of the music segment’s revenues. The three most popular genres among internet users in India are new Bollywood music, older Bollywood music, and Indian classical music.
Licensed streaming services have enabled domestic music labels to flourish. Local artists from across the country are securing a sizable fan base and Punjab leads the non-film music industry. Saavn has its own Artists and Repertoire team in New York City and collaborates with independent artists on marketing campaigns through its Artist Originals program, while Hungama runs a similar initiative called Artist Aloud. Sofar Sounds, a VC-backed music events start-up headquartered in London, UK operates in 12 cities in India and has played a substantial role in putting independent Indian artists on the digital map.
Physical format music sales fell 50% in 2018
The contribution of physical sales to the Indian music industry reduced 50% to just 4% of label revenues in 2018. This is much lower than the global share of around 30%.
In 2017, SaReGaMa had launched Carvaan, an audio player with pre-loaded songs and other features like USB and FM radio. It has seen a significant uptake of more than 1 million units since its launch. The revenues from these sales have not been included in the sizing of the music segment.
Paid audio streaming (net of telco bundling) crossed INR 800 million
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). Smartphone penetration in India grew to 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.
However, only 1-1.5 million listeners paid for music, generating INR 800 million in revenues. The wide availability of music on services such as YouTube (we estimate around 250 million people watched music on YouTube in 2018) and the large consumption of pirated content present considerable challenges in persuading users to pay for the benefits of streaming.
Over 96% of music consumers consumed music on smartphones
Smartphones and computers remained the universal choices for listening to music across all age groups. 96% of users used their smartphones to listen to music, the highest rate worldwide, followed by computers (92%).
India generated 5 billion music streams in December 2018
Indian audio streaming apps together reached around 5 billion streams per month towards the end of 2018, a growth of around 50% over the prior year. 50% of listener-ship was outside the top eight metros. 75% of music pertained to music released in the last 12 months.
Indian internet users spent over three hours a day listening to music
Indian internet users surveyed by the IFPI spent 21.5 hours listening to music per week i.e., approximately three hours each day – which is more than the global average of 17.8 hours per week. Indian internet users in the 16-24 years age group listened to 23.9 hours per week on average. 81% of users engaged with free audio streaming services.
Three out of four listeners used pirated music
76% of internet users admitted to using pirated music in the last three months. The Indian music industry faced a loss of INR 15 billion due to piracy through illegal sites. Of the time Indians spent listening to music, 13% (i.e., three hours each week) was used to hear illegal downloads, as compared to the global average of 7%. In China, where there have been crackdowns on piracy, the figure is 8%.
Stream-ripping is the most popular form of music piracy in the country, with 72% users using stream ripping to obtain free downloads of music.
The availability of swift remedies, including blocking orders, to tackle these pirate services is crucial to protecting Indian music and other creative industries. Furthermore, app stores and ISP’s that host such services need to be proactive in recognizing this form of infringement and work with industry bodies to curb piracy.
Advertising on music streaming remained negligible
Advertising fill ratios on music streaming apps remained low, with just one minute of advertising per 60 minutes of consumption in some cases. That is a loss of opportunity given that the year ended 2018 with around five billion music streams per month as per industry estimates. Advertising on music streaming has not yet found traction, mainly because compared to other digital platforms, the ability of some platforms to demonstrate return on investment to advertisers is lacking. There is an opportunity to combine radio ad sales with streaming music sales, which could result in growth in this segment.
The music segment can reach ₹19.2 billion by 2021
Bundling of music will drive growth
Given the price-sensitive nature of Indian consumers, bundling will drive growth of audio streaming in the next few years, and most consumers would accept the base no-frills package offered to them by telcos and other platforms. Bundled streaming consumption could grow to over 75% of the total market by 2021.