Over the last 20 years, the global recorded music industry fell from US$ 25 billion in annual revenues to US$ 14.1 billion in revenues in 2014 and finally displayed promising signs of growth after 2014. The industry grew by nearly 4 percent in 2015 and continued to be on an upward trajectory through 2016 and 2017 with 9 percent and 8 percent growth, respectively. The growth in the global recorded music industry was largely a result of disruptions in technology and digital media, and record companies’ active licensing strategies.
Technology has directly influenced all spheres of the music industry with its effect being felt across the industry value chain. While the advent of digital production tools/software has augmented the way music is produced, the rise of audio OTT platforms has provided stakeholders such as artists, music labels, and consumers a new medium to present, market, and consume millions of soundtracks each year.
The last few years witnessed the global recorded music industry traverse a challenging yet exciting path. While the industry has been surrounded and affected by issues such as piracy and the value gap, it has shown promising signs of growth over the last two to three years.
Digital consumption including streaming of music has been steadily growing and is the largest contributor to the overall growth and revenues of the global recorded music industry. The increase in digital distribution and consumption of music was led by greater outreach of smartphones globally—primarily owing to discounted rates of handsets, lowerdata tariff rates, enhanced connectivity,and increased internet penetration.
The affordability of smartphones along with improved internet access at reduced cost has directly influenced the consumption of music using digital means.
An overview of the Indian recorded music industry
The IFPI – representing the recording industry worldwide, found in a recent survey that Indian consumers spend 21.58 hours per week listening to music, higher than the global average of 17.89 hours per week – clearly making India a music-loving country.
The Indian recorded music industry has emerged as a major growth driver for the revenues generated in the global recorded music industry in the last few years. Owing largely to the rapidly evolving technological landscape, the growth and revival of the domestic music industry took the overall revenues to US$131 million or INR 850 crores in 2017.
Despite operational and regulatory hurdles such as piracy of music, the value gap, challenges in monitoring commercial exploitation of music, and lack of awareness pertaining to copyrights and royalties, the Indian recorded music industry is currently ranked 19th, globally in terms of revenue.
Breaking into the Top 20 markets in the world is indeed a significant step for the Indian recorded music industry. A key driver, the Hindi film industry (Bollywood) has ruled the Indian recorded music industry for decades together where Bollywood film producers prioritised good music for their movies to register good opening week returns in terms of revenue.
The way forward for the Indian recorded music industry
1. Restricting Piracy
There is rampant piracy in the digital music industry, hampering the industry from realizing its true potential. While there has been an increase in the overall consumption of music, the revenue leakages have also increased. This is largely due to the P2P applications or sharing applications. Estimates point to a US$ 250 million loss each year because of piracy in India.
Therefore, there is a need for a strong anti-piracy programme, wherein all industry stakeholders come together to curb this burning issue. Collaboration with technology companies could help the industry manage copyright and safeguard content from infringement.
2. Audio OTT boosts the regional industry
Bollywood has ruled the recorded music industry for decades, however, in the past couple of years, a new trend has emerged. In 2016, Hindi film music contributed to 70 percent of consumption on streaming services such as Gaana, JioSaavn, etc. However, about two years later, this figure has dropped to 50 percent. In the meantime, consumption of regional music has grown from 5 percent to 25 percent within the same timeframe of two years.
The three major languages that produce content in significant numbers and have sizeable industry players that command significant market share are Punjabi, Telugu, and Tamil. Punjabi singers have been engaged in many recent Bollywood movies and retro hits in Punjab are remixed to suit the taste and preferences of a younger demographic.
Regional music such as Marathi and Gujarati has also had an influence on the latest music creations in Bollywood. Furthermore, initiatives such as Vyrl and Sofar Sounds have recently propelled the overall growth of independent music in the country.
Per discussions with industry participants, the share of international music has decreased by half during this tenure. More penetration to tier 2 and tier 3 cities has led to this shift in consumption pattern.
3. I-POP Consumption
The greater outreach of audio OTT platforms has had a positive influence on independent music penetration in the traditionally film-dependent music scenario in India. Easy and affordable access to independent music on audio OTT platforms has been instrumental in bringing about this effect.
In the past two years, the consumption of independent music in India increased marginally; however, if a comparison is made between the consumption (percent of overall stream) for the said two-year time period and the five-year period prior to that, the number has doubled. According to the industry participants, I-POP (singles from artists) contributes from 18 percent to 22 percent in Hindi music, based on the releases. Sources in industry analysed this number to be more than 90 percent in case of Punjabi music. Other regional languages, except Bengali and Assamese, have not seen a lot of I-POP consumption.
4. Audio OTT audience moves towards paid streaming
Paid subscription will be an important revenue driver. There has to be an effective anti-piracy mechanism, including the legal regulations, to ensure that the transition from pirated content to free subscriptions and then to paid platforms is steady.
5. Unlocking social media and blogs for music
Conversion of users can be driven through social media as once people are inside these applications, they generally dig deeper. Hence, the longer the people stream on these platforms, the more music they are likely to listen to, and thus, the more the product becomes a ubiquitous part of their lives.
Further, curated and customised playlists are becoming increasingly popular with music listeners as these playlists provide users an important tool to sort, save and discover music. An example of this, the online music streaming service ‘Mixcloud’ allows listeners to access playlists and podcasts made by artists themselves.
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