Age of Streaming in India

In India, majority of the population has access to the radio with about 86 cities having more than 245 FM stations and more to be auctioned in 294 cities in the coming years. There is demand for all kinds of music led by Bollywood, International, Regional and Folk. With the entry of music streaming services, a wide array of music is now easily available to the consumers. COO of Red FM, Mrs. Nisha Narayan once remarked, “Thirty years ago, radio was sleek plastic you could carry around. Now it is FM on your cell phones. Pretty soon – and I don’t know how soon – it could be digital FM or streaming audio, or something that hasn’t been invented yet, playing off your iWatch or wedding ring. And I guarantee this: you won’t be thinking, “gee whiz, look at that technology”. You’ll be saying, like the Count in Pirate Radio, there will always be poverty and pain and war and injustice in this world, but there will, thank the Lord, also always be... the Beatles”

As an evident from the global markets, Digital is the future of the Indian Music Industry. Formats such as streaming and downloads are getting high traction with streaming services growing faster. With a gradual decline in the download revenues of services like ITunes, streaming services are seeing a jump in their customer base. One of the major advantages of a streaming service is that streaming offers ease of consumption to the listeners with anytime, anywhere access and no storage requirements/cost. As such, streaming is better suited to consumer demand and preference.

Revenue Models of Music Streaming Services in India

According to a report by Deloitte, There were an estimated 27 million online music users in India in March 2015. The number of online music listeners are expected to grow to 273 million by March 2020. Most of this growth would be driven by youth in the age group of 18 to 35 years and almost 85% of these users would access the music through connected mobile devices. This would be driven by the preference of consuming the music services anytime, anywhere.

The consumer traction for on demand music is promising and hence music streaming services are adopting hybrid models to monetise this opportunity. Two most widely used models are ad-supported content and subscription for services. India will see the evolution of the ecosystems around both subscription and ad models; however, most of the music service providers, such as Saavn, are adopting hybrid models (freemium models). These players are providing a huge music library for free to the consumer to generate traffic and monetize through ads. While providing select content or services to premium subscribers. The Deloitte report on Digital Media: Rise of On-demand Content mentions, Shift towards subscription for premium services like offline and high-quality downloads is observed since 2014. Though subscription users were very less as compared to the free users, the average revenue generated per user from subscription service is much higher. While subscription adds to the revenue of the streaming service, digital music industry ad revenues are expected to mirror the growth rates to be seen by total digital ad revenues in India by 2020. These revenues would come majorly from display ads followed by video and audio ads. At the same time, the paid subscriber penetration among online music users reached a mark of 10-15% from 1% in 2016. As of now, Saavn has a staggering number of 2,43,900 daily active users in Delhi followed by 1,17,350 daily active users in Mumbai.

Indian Record Labels and Streaming Services

Record labels in India were horrified when everything started getting digitized and music streaming services started attracting a big chunk of traffic. However, over the course of time, they have realized that music streaming services can be their biggest allies and one of the major sources of revenue in the coming years. Labels like T series, Saregama India Ltd, Sony music have all joined the band wagon and tied up with streaming platforms. However, streaming platforms like Saavn have started bypassing record labels and promoting high profile artists after recording them themselves. With its innovative programs, such as Artist in Residence, Saavn Originals and Live at Saavn, India’s Spotify is approaching the Indian Industry in their own manner.

With high competition, streaming services are looking at enriching their customer experience in various ways. From providing all kinds of music to hosting live sessions, music streaming services are doing everything to engage with their consumers. In a conversation with Deloitte, COO of Saavn, Mr. Mahesh Narayanan said, “The consumption of digital content in India is exploding right now, as Indians continue to opt for smartphones in the hundreds of millions. We'll likely see our next phase of user growth come from Tier 2 & 3 cities across India. We are just getting started here.”

Music Streaming Services – Marketing

In the race to become the most popular streaming service, platforms in India are introducing other innovative ways to reach their consumers. Saavn came up with its Artist in Residence program wherein they asked the artist to record and make music exclusively for Saavn and in turn, Saavn will promote their music across its digital space. Likewise, Saavn Originals aims at conceptualizing, producing and promoting independent music (likes of Prateek Kuhad, Raghu Dixit, the F16’s, Dualist Enquiry). This has helped Saavn become popular as a streaming platform for independent musicians and fans alike. When Ranbir Kapoor partnered with Saavn as a creative collaborator, the music streaming platform saw an immediate hike in its daily active users. Commercials aired on television featured Ranbir Kapoor as the face of Saavn and subtly passed on the message of the convenience of a music streaming service like Saavn. Gaana, being the closest to Saavn, has added various unique features in the recent past which includes original content programming like talk shows and music reviews with top celebrities (likes of Asha Bhonsle, Shankar Mahadevan, Ashish Vidyarthi). Amazon Prime Music is expected to make their entry into the music streaming market of India in early 2018.

Factors contributing to the widening base of online music listeners

The rise in demand for multimedia compatible devices and better network coverage at low mobile data prices has accelerated growth of music streaming services in terms of their consumer base. According to a report by Deloitte, Smartphone devices across the globe grew at a CAGR of 17% as compared to 9.5% growth in all mobile devices. Smartphones crossed 2 billion mark in 2014 and are expected to reach 4.6 billion by 2019. This increase in the number of mobile devices coupled with better network coverage is making it easier for consumers to access music and video content on the go.

Popular Music Streaming Platforms in India

Since the entry of music streaming services in India, major players like Saavn, Gaana and Wynk are   seeing a rise in their consumer numbers on a daily basis. Over the course of time, Indian consumers have realized the convenience of music streaming services and to top that, these are entirely driven by the preference of the consumer. With a big library of music, consumers are also looking at the experience of using the streaming services. While Saavn has a vast library of music including independent artists under Saavn Originals, Gaana’s collection majorly attracts Bollywood fans and fans of some popular international artists. While Gaana boasts of a variety of music under many genres, Saavn’s interface is less clattered and more user friendly. Wynk, Bharti Airtel’s music streaming service has a steady consumer base however it falls back in providing a library as vast as Saavn and Gaana.

The growth of streaming services is indicative of consumers preferring legitimate streaming over pirated music, primarily, for a superior, convenient, multi-device hassle free experience. Music streaming services in India are finding more consumers and competition on a daily basis which inspires them to keep altering the entire experience of streaming online. If the potential of these music streaming services is scaled, this industry will be a major contributor to the total digital revenue of India.