Online music platforms are yet to find the right note in India
Music providers such as Spotify, Google Play and other local companies, all have to contend with the fact that it is a price-sensitive market
Singer Ananya Birla from Mumbai says that online music platforms are the cornerstone of her career. Last year, she achieved 150 million streams for her songs through digital platforms including Apple Music, Amazon, and homegrown Gaana and JioSaavn.
This is why Ms Birla is extremely upbeat about the launch of Sweden’s Spotify in February.
“There is a lot of competition but they have made a great start and people are really excited,” she says. “Online is basically how everyone is consuming music.”
Spotify, which is the world's largest paid music streaming service, has stepped into an already crowded market in India, Asia’s second most populous country with a large millennial segment.
Apple has a significant head start, having launched its music service in India in 2015, Google Play Music followed in 2017, and Amazon Prime Music also entered the market last year.
There are also local platforms: JioSaavn by Reliance Industries, the conglomerate controlled by Asia's richest man, Mukesh Ambani; Wynk, owned by Bharti Airtel; Gaana, backed by China's Tencent Holdings; and Hungama, which has a partnership with Chinese smartphone maker Xiaomi.
India leads the weekly average in music streaming, according to the Indian Music Industry. Internet consumers in the country spend almost 21.5 hours a week listening to music, compared with the global average of 17.8 hours weekly, says Spotify.
Although, all music providers have to contend with the fact that India is a price-sensitive market, where most of the content consumed online is pirated, and many people are unwilling to pay to listen to songs. As a result, prices for these services are extremely low in the country relative to the rest of the world.
This has prompted Spotify to offer a free version of its streaming service in India, which is accompanied by advertisements. Meanwhile, its paid service costs 119 rupees (Dh6.2) – about one-sixth of what the company charges in the United States.
The strategy seems to be working, and Spotify has managed to attract more than a million unique users to its platform.
“The mobile internet revolution has led to a rapid rise in the number of connected Indians, making music streaming the preferred way to enjoy music here,” Amarjit Singh Batra, the managing director of Spotify India says. “We want users to find the best music from India and the world, and empower Indian artists to find new audiences in India and worldwide.”
Spotify has described its entry into India as part of its global growth strategy. In preparation of the launch, the service worked closely with Indian musicians and experts, to understand the music preferences in the country.
The company is tapping a major potential market in India. Smartphone use is growing in the country as cheaper handsets become available and data costs plummet amid fierce competition between telecom operators. Global technology company Cisco forecasts the number of smartphone users in India to double more than 800 million by 2022. The trend is helping to propel consumption of music online.
“India is one of the countries where digital music sales have overtaken physical sales,” according to a report by global consultancy EY. Sales of digital music account for about 65 per cent of all music sales in the country, according to its survey.
Meanwhile, companies such as Spotify are trying to capitalise on the forecast that the number of online music users in India are expected to grow ten-fold to reach 273 million listeners by 2020, from 27 million in 2015.
“Music companies are thus increasing their focus on
monetising digital music content to drive their revenues,” says EY. Despite this, EY says that revenues are relatively low and music only accounts for about 1 per cent of India’s media and entertainment sector.
A fundamental reason for this is piracy, which remains a big challenge in India, according to analysts and industry insiders.
“Piracy, both physical and digital, although declining at the global level, remains a perennial challenge in India’s music industry,” says EY.
Another hurdle for the sector is high acquisition costs of music. India’s music consumption is driven by its Hindi movie industry, Bollywood, and the consultancy says that it is expensive to acquire rights for them.
But, “the biggest issue is the general music consumer’s apparent unwillingness to pay for music”, EY says. With just 1 per cent of Indian users on streaming platforms paying for content, the industry largely relies on the ad-based model.
Neeraj Roy, the founder and chief executive of Hungama, one of India’s biggest homegrown music streaming companies, says the environment is ripe for growth of online music consumption, given India’s demographics, the rise of smartphone use and the scale of Bollywood.
“You’re essentially looking at a very vibrant community which is suited aptly for a massive amount of digital media and entertainment consumption,” says Mr Roy.
Hungama, which started operations seven years ago and has more than 60 million active monthly users, says there is a rapid rise in its numbers as the sector expands. The service reported a 48 per cent growth in its users last year over the previous year, and an average 22 per cent increase in the amount of time each user spent listening over the previous year.
Hindi language songs make up close to half of the music streamed on Hungama, while the four major South Indian languages, including Tamil and Telugu, accounted for more than 13 per cent, and English language music made up 13 per cent.
With companies such as Spotify entering the market, it is competitive, but the market is vast, Mr Roy says.
“It’s a very large opportunity,” he says. “In the next four to five years you could probably have 700 million to 750 million users who would be active streamers.” Spend may be lower than many other countries, but the number of potential users is far bigger, he says.
But Mr Roy says most of the companies that are now in India “have by and large the same sort of content”, and therefore, he believes that ultimately there is room for “three or four active players”.
“It becomes very difficult for new entrants to make inroads and gain traction,” says Mr Roy.
Spotify, which has more than 200 million users globally, has come up with a range of offerings to woo Indian users. Its music recommendation engine is available in Hindi, Punjabi, Tamil and Telugu, for example. Spotify also has a team of Indian music experts putting together and regularly updating playlists to cater to listeners in the country. These playlists include the best music from the most popular Bollywood films.
In India, Spotify offers more than 40 million songs and 3 billion playlists.
While just over a million users, this is a good start, analysts say. But Spotify still has a long way to go to catch up with companies such as Gaana and Hungama, which have tens of millions of users each.
But many in the industry are positive about having a new platform to help promote and generate revenues for India’s music sector.
Ms Birla says she believes that Spotify’s launch in India will help bridge the gap for the country’s music industry and listeners with the global music scene, boosting the broader industry.
“The launch will be a great boost for the amazing talent we have in India to break through on a global scale,” says Ms Birla. “I think we’ll see a lot of global music superstars emerging in the next few years.”
Updated: March 9, 2019 07:24 PM