The Indian music streaming market deconstructed

It’s a well-established fact that consumption on music streaming platforms has increased significantly over the past few years in the global music industry. India has been streaming music for 19.1 hours/week, which is higher than the global average of 17.8 hours/week, helped undoubtedly by the rise in the number of streaming platforms over the years.

After Saavn (now JioSaavn) launched in India, three more home-grown apps (Gaana, Wynk, and Hungama), and five international apps (Apple Music, Amazon Prime Music, Spotify, YouTube Music, Resso) have established a presence in the Indian streaming market.

With a total of nine music streaming platforms in the Indian market currently, the question is whether there’s overcrowding in the streaming market or whether India’s vast population gets serviced well enough to rapidly grow streaming numbers.

That said, before Spotify’s arrival, in March 2019, Gaana had just crossed 100 million monthly active users (MAUs), becoming the first domestic platform to garner that number.

No sooner had Gaana made the announcement than JioSaavn reduced their annual subscription rate by 70% (INR 999 to INR 299). Gaana followed suit by reducing their annual subscription rate from INR 399 to INR 299, if paid through the PayTM wallet.

“The entire fin-tech ecosystem such as wallets, UPIs etc., work closely with companies like ours to make consumer offers giving a certain value benefit to them in terms of cashback or discounts. So if you go to PayTM, for example, it is making an aggressive offer to consumers by providing a cashback,” says Siddharth Roy, CEO, Hungama.

Expeditiously, Spotify did not shy away from introducing reduced rates. In fact, over 2019, they introduced several tiers, including those at launch, followed by the Premium Family plan, and annual plan for INR 699.

The price war had just become evident and the competition palpable.

But did this action draw in more users than before?

“While audio streaming subscriptions are still at a nascent stage in India, wherein a little over 1% of users pay for music, there is definitely immense potential if the subscription plans are right. We’ve seen the impact of having locally relevant subscription rates,” says Amarjit Singh Batra, MD, Spotify India.

In so much as the penetration of internet users and music consumers in India lies in Tier II and III cities, it is a challenge to convert these users to a paying consumer base.

Prashan Agarwal, CEO, Gaana, says,

“At Gaana, our paid subscriptions are still a single-digit percentage of our overall user-base, despite having grown by 3X since last year.”

“We are in the stage of habit formation. We are working intensely with platforms, credit card companies, banks etc. to convert the consumers into paying subscribers. Today, in the larger OTT ecosystem, we in our own ways are continuing to work towards growth, and bringing out larger paid communities in play. It takes a collaborative effort to build that,” says Siddharth.

While modes of payments for music are not necessarily, direct; bundled payments and advertisements have led to the success of the streaming market to thrive in India so far.

Prashan adds,

“We registered a significant interest from advertisers looking to tap into a highly engaged audience with personalised ads, unlike most traditional media that disrupts audience engagement with multiple ad breaks. Advertising revenues dominated our overall revenue pie in 2019, and we expect double digit growth in 2020.”

Decorating the numbers

While increasing consumption numbers is a good sign for the industry, a spurt in growth will now come from the convenience in using OTT platforms, which depends on enhanced technology. Tech is veritably breathing life in music streaming facilities services to usher in more MAUs.

“We designed a product for India, rather than just bringing in what Spotify globally is; right from language on boarding to local playlists, the localisation of the app definitely enabled more users to experience it,” highlights Amarjit.

Gaana has evolved through enabling various Avant-garde streaming features such as in-app voice assistant, switching to video (Gaana Video) from audio, Smart Downloads, etc.

“Our innovation streak has translated into a meteoric rise in user-base to over 152 million, and the average time spent per user per session has risen significantly to around 40 mins per day on our app,” says Prashan.

Also, with music production so rampant, the Indian music industry is a flourishing business. Supposedly, the chances of making money should be unimaginable. Sadly, with just over 1% of paying consumers, the odds look bleak.

“I see that the current consumer base is going to increase to 500 odd million, consuming some form of content. It would not remain a matter of smartphone or internet penetration, but more users would come to consume content due to preference,” surmises Siddharth.

Proof of this came in 2019, when the biggest trend in the Indian OTT audio streaming was the rise of regional music’s share in the Indian music consumption landscape, with Punjabi, Hindi, Tamil, Telugu and Malayalam ruling the charts.

“Regional music consumption on our platform has registered more than 25X growth in the last 2.5 years,” says Prashan. 

Similarly, Amarjit highlights,  

“While critical factors such as India hosting the world’s youngest population, increased awareness about legal music, streaming options, and discovery of several artists; music beyond films are driving market opportunity.”

The fructifying non-film genre as spotted by Amarjit is a classic example that Vinit Thakkar, Senior Vice-President, Universal Music Group India & South-Asia, points out,

“Our artist-first music label (Vyrl Originals), has helped to create culture & a category of non-film music in India and we see that this effort has resulted in more original content options for the consumers. Consumers are now discovering and seeking new artists and original content across all platforms including audio streaming services.”

Looking at 2020

To talk turkey, Indian music streaming platforms in 2019 witnessed an opportune market. For the years to come, Spotify, Gaana, and Hungama collectively believe that the audio streaming industry will continue to grow to its full potential.

Ultimately, brands that are building user experiences, and have invested long term, will survive and thrive.

That saidPrashan is confident that

“50% of India’s population will benefit from the growth of music streaming and on-demand seamless access to music of their choice in the next half-decade.” 

With the consumers being smart and abreast with the latest trends, the need to, constantly, create engaging content is a pressure for OTTs. Avenues where music surfaces, platforms where discovery takes place and how music gets noticed is what enhances user-experience. Hence, converting momentary users to dedicated consumers.

The success of short-format video content platforms viz., Tik Tok, along with thriving music streaming platforms proves the Indian music industry is standing at the cusp of an incredible growth curve.

“India’s social demographics and economic potential present a huge market opportunity. While India has a strong audio OTT supply side, we believe there is enough room for growth in the market and there’s always an opportunity for brands as long as they appeal to consumers,” concludes Amarjit. 

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