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Piracy & value gap – key challenges faced by the Indian music industry

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It is no secret that the music streaming platforms have taken over the world. According to the Digital Music Study 2018, a report released by the Indian Music Industry and the International Federation of the Phonographic Industry, India, too, has recorded over 100 million active music streaming users.

The growth of the streaming business in India has been positive with digital sales accounting for 78% of the total sales revenue. However the overall conversion rate from free users to paying users is a mere 1%.  Blame it on the wide availability of free music on services such as YouTube and the large-scale consumption of pirated content.

According to the Digital Music Study, more than 52% of the respondents, who took the survey, cited that the availability of music on YouTube is what prevents consumers from paying for streaming services, while a few (38%) mentioned downloading free music. Respondents, who denied paying for streaming subscriptions, would opt for licensed alternatives in case of absence of pirate services and free content on YouTube.

Music Piracy chart 2

 

It has become imperative to take steps to curb this loss of revenue due to piracy. The report read,

“Industry experts are optimistic that music consumers in India will pay for content if sufficiently incentivised, but clearly more needs to be done to facilitate this change. The threat of digital piracy to a thriving music economy is obvious. There’s a pressing need for effective anti-piracy policies and measures with a focus on converting piracy users into legitimate music consumers. More users in India use piracy to download music than in any other country in the study. Stream-ripping is the most popular form of music piracy in the country.”

The music industry in India has a potential of being one of the biggest music markets in the world. However, it faces dire issues of stream ripping which is one of the most common method for pirating music in India. As per the study, 72% of respondents use stream ripping to obtain free downloads of music. YouTube is the main source for stream ripping, typically through websites like Convert2mp3 and Flvto.biz.

The epidemic of piracy needs to be contained by implementing certain legislative mechanisms which will prevent steam ripping and other forms of piracy. The study suggests availability of swift remedies, including blocking orders, to tackle these pirate services which is crucial to protecting the Indian music industry and other creative industries. Also, various app stores and the ISPs which host such services need to be proactive in recognizing this form of infringement and work with industry bodies like IMI and IFPI in curbing stream ripping.

The report points out,

“One of the most successful anti-piracy methods is website blocking. In some areas of India, orders have occasionally been made against ISPs to prevent their users from accessing certain sites such as the 2012 Calcutta High Court ruling ordering hundreds of ISPs to block access to 104 copyright infringing websites. IMI, in association with IFPI, has made several attempts to take down major infringing sites, such as those shown below.”

Even with such measures, there are hurdles when it comes to tackling piracy-related issues. According to the report, ISPs based outside of Indian territories refuse to act despite clear and large-scale infringements, citing their domestic protection towards user generated or user uploaded content, often claiming the protection of the Safe Harbour privileges in the US law. This makes the case for website blocking more important: if infringing sites based outside India refuse to cooperate with rights holders, then the most effective method of relief is to block access to those sites from within India.

 

Also read: 96% of Indian music consumers listen to licensed music in 2018

 

Piracy isn’t the only threat to the future sustainability of the music industry at large, value gap is a major problem affecting the industry’s revenue stream, specifies the study. Value gap refers to the growing mismatch between the values that user-uploading services like YouTube extract from music and the revenue returned to the music community – those who are creating and investing in music.

Music Piracy chart 1

 

Internet users in India spend almost as much time listening to music on video streaming services such as YouTube as on audio streaming services. The IFPI study states:

“Video streaming took up 45% of all hours spent listening to on-demand streaming services, with YouTube alone responsible for 36%. However, video streaming services only generated 29.8% (₹169 Cr.) of the industry’s streaming revenue (₹850 Cr.) in 2017, or 19.9% of total Indian recorded music revenues. Given the fact that 97% of the users use YouTube for music, the fact that video streaming generates less than 20% of the industry’s revenue is still a drop in the bucket.”

To uproot threats such as piracy and value gap, a tighter legal framework must be placed so that services that are responsible for the distribution of music can be held accountable for their wrongdoings. This move will benefit creators, producers, consumers and innovative digital services alike, and it will stimulate growth and competitiveness in the digital economy, the study opined.

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