The news of Spotify’s launch in India within the next 6 months caught everyone’s attention, but the road is not as simple as it seems. New reports state that three of the biggest Music labels in the world – Universal, Warner and Sony are yet to license Spotify to use their music in India. Having said that only Sony Music has a greater grip in the Indian market because of its Bollywood music.
Negotiations with labels are on-going and they are taking their own time in contrast to Spotify’s speedy attempts. The streaming service had earlier angered majority of labels in India when they tried to strike direct licensing deals with artists. All parties have moved on since and even though conversations are on, the outcome seems positive. Only T-Series have gone on record saying their deal with Spotify is on.
The labels are worried about Spotify’s performance with respect to ARPU and ad-funded tier.As a market India is quite complex with a population of 1.3bn people,various regional music markets and a lack of unified taste.That being said, India ranked 19th biggest music market in the world. Spotify also needs to be prepared for going head to head with home grown streaming services like Saavn backed up by Jio and Gaana which receives funding from Tencet. Other streaming services like Apple Music, Amazon Music and Google have already found an audience here. IFPI data shows that subscription streaming revenues more than trebled in India in 2017 (to $33.7m) and ad-funded streaming revenues fell down 29.5% (to $27.6m).
Besides North America, Europe and Latin America, Spotify has failed to grow with the same intensity in other parts of the world. Out of 845m people living in these regions, Spotify was only able to garner 2.3m users and 1.1 m subscribers. During the same period Spotify added 18.7m users and 10.9m subscribers across Europe, North America and Latin America
On 13th November Spotify made its entry in Middle East and North Africa (MENA) in 13 territories including the United Arab Emirates, Saudi Arabia, Kuwait, Oman, Qatar, Bahrain, Algeria, Morocco, Tunisia, Jordan, Lebanon, the Palestinian Territories and Egypt taking Spotify’s overall reach to 78 markets. With pricing under $5 for premium services in countries like UAE, Saudi Arabia and Egypt the company has a huge growth potential in these regions.
Universal Music Group and Sony Music Entertainment are two major labels who are also shareholders in Spotify. The combined equity owned by these two labels equals to 6.35% which is roughly $1.51B less than 730M at Spotify’s peak market cap value.