Demystifying Music Streaming Services Adoption In India

It was year 2008, when for the first time i purchased my own iPod. I used to download my favourite songs from saavn.com and similar websites, to load my iPod with hundreds of songs. It was a lot of effort but good fun listening to music in school, at home & while travelling.

Fast forward year 2021, today i have access to millions of songs in my pocket. Online music streaming services in India are now in plenty and its demand has exploded. Listeners can listen to their favourite artists and music across different genres like Bollywood, Rock, Jazz, Pop, & multiple languages (regional & international) simply from their mobile, 24x7.

• People are multi-tasking, switching between household chores and professional engagements, to the sound of music
• Just like the rest of world, India too has transitioned from physical forms of music consumption such as vinyl, cassettes and CDs to digital forms such as mp3s on portable devices
• India’s music streaming market is dominated by local players such as Gaana, followed by JioSaavn, Wynk Music, Spotify & Hungama. International players like Spotify, YouTube Music, Amazon Prime Music, Google Play Music have also entered the Indian market recently

Is the music streaming services adoption growing in India?

With nearly 450 million smartphones powered by cheapest data packs, the online music streaming industry in India is witnessing a phenomenal growth like over-the-top (OTT) video streaming players.

As mobile continues to drive affordability and accessibility, more number of Indians are streaming music,” said Prabhu Ram, Head, Industry Intelligence Group (IIG), CMR.

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. These offers & cash backs are adding fuel to the fire (thanks to Fintech ecosystem in India which make consumer offers giving a certain value benefit to them in terms of cash back or discounts & easy payment options like UPI, Wallet, Gpay etc.)

According to data firm Statista, the Indian music streaming market will be worth $663 million in 2021 and jump to $1.1 billion by 2025 at a CAGR of 14.2%. The global music streaming giants are now calling the Indian market a “sleeping giant” they took too long to discover.

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.

Another aspect of the music streaming industry that is gaining momentum, particularly due to the Covid-19 pandemic, are online performances and concerts. “The music streaming industry made great use of ‘Live Streaming’ concerts from the comfort of their homes given the guidelines and safety protocols,” says Sinha, who launched Gaana Originals for this purpose. This rise of online performances has also led to artists interacting with their audiences on a more regular basis, leading to stronger online fan communities.

Concerns for music streaming services in India

The conversion from free users to paying users is still minuscule at about one per cent on various music streaming apps in India. This needs to be solved as advertisements alone can’t help these services survive in the long run.

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.

Piracy is another concern flagged. The data cost being high in India until a few years ago was another factor that dissuaded people from making the shift to music streaming. The dearth of loyalty or stickiness factor is another worrisome factor in the Indian music streaming space.

Poor internet connectivity is also a concern, for streaming quality music. Apps have optimised their technology to enable listeners enjoy music over 2G/3G (especially for non-metro/tier 1 cities)

What does the competition look like?

Gaana claims more than 185 million active users, while rival JioSaavn claimed 104 million in April 2019.

YouTube Music has hit three million downloads within a week of its launch in India earlier this month. Swedish music streaming platform Spotify garnered over one million users within a week in March & two million users within a month.

The international player Spotify has differentiated itself by offering personalisation and localisation as a core experience. With its three billion playlists, as one of its biggest differentiators saying how one of the oft-received comments from its users is about how “Spotify understands them”. Being a market leader in podcasts globally is another that Spotify is banking on to differentiate itself. Their listeners clock in 86 minutes every day, which is 35 percent more than people do on Gaana (63 minutes) and almost double the time consumed by those on JioSaavn (49 minutes). They are the best in driving engagement amongst the users.

Similarly, YouTube Music relies on the YouTube recommendation engine, along with its machine learning capabilities, which enables it to become “more personalised than ever”. YouTube also offers music and playlists in 10 regional languages.

If the ambition is to become a broad, pan- India player, then local content is a necessary strategy in India. YouTube & Spotify will aim to offer more and more local content, multi-lingual music scene thrives in India.

Spotify, Apple Music and Amazon Prime Music will leverage their global learnings, library and sophisticated curation algorithms to advantage. However, local players like JioSaavn (catalogue of 45+ million songs spanning 30 languages) and Gaana have a great understanding of the dynamics of the Indian music industry, both Bollywood and regional — as well as Indian’s music consuming habits and may have an edge on this score. The familiarity of the user experience also gives edge to the old players in the market compared with new entrants.

Both international as well as homegrown players know that regional music, which comprises 39% of all streams, is the way to win

Bharti Airtel’s Wynk, with a current user base of 65 million, regrets missing out on the early podcast band wagon. But today, they’re trying to catch up with the growing consumer demand.

Industry experts agree that personalisation, exclusive content, gamification, live streaming, and innovations like karaoke will be key differentiators for music streaming apps in India.

What are these music streaming apps doing to grow user base in India?

Spotify is looking for partnership model to grow fast — exploring bundling options with Ola, Uber etc., they can look for other avenues of B2B tie-ups such as fitness chains, public transportation, retail outlets, malls, coffee chains, etc.

They are also targeting college students through a campus ambassador program to ensure good app penetration and stickiness. They have also been a marketplace with ready infrastructure for Artists. They are leveraging it to run artists live sessions during the pandemic to strengthen the marketplace model and attract artist’s social following as well as help Artists earn some money.

Gaana, targeted towards mass audience in India, has partnered with Google Playstore to launch an instant app for listeners who want to experience the app without actually downloading it. Smart move to acquire new users even after having the largest market share. Gaana also launched HotShots, similar to Tiktok platform when TikTok was banned.
Gaana users grew exponentially in 2016 with Jio 4G launch and benefited from it (thanks to regional content also)

JioSaavn launched JioSaavn Pro Rewards, a series of lifestyle deals for JioSaavn Pro subscribers. This helped them grow their user subscriptions.

Bharti Airtel’s Wynk offered free subscription to Airtel subscribers as part of “Thanks Programme” to grow their user base. YouTube Music is heavily promoting their music service on their parent platform YouTube.

Free trials for a specific period & promoting share feature in app to gain social media coverage, has also been a consistent strategy deployed by most players in the market for early growth.

Who are these listeners on music streaming apps?

Spotify — Hyper targeting their core target group Gen Z and millennials who are from Tier 1 & 2 cities

Gaana — Majority of their users are less than 35 years old and around half of the users are from non-tier 1 cities, because of their focus on regional markets

JioSaavn — 80% of their users are below 35 years and 55% are male

Wynk — 60% of their users are below 35 years & 75% users are male

In 2018 alone, the internet population in India grew by more than 100 million. 52% of that crowd are under 25 y.o. Streaming services are expected to have more users below 35 years age group.

How does the product adoption lifecyle look in 2021?

Innovators (2.5%): These are the young tech savvy population who are financially well off. They want to try new music streaming apps in India and quite risk takers in terms of adopting a product. They’d be between 18–25 years age bracket and majorly based out in metro cities in India. For eg. HotShots launched by Gaana was targeted towards innovators.

Early Adopters (13.5%): They are influenced by innovators. These would be the users who would be working and between the age group of 18 -30 years age bracket and based out of tier 1 and tier 2 cities in India. Users who use Spotify, Google Play Music, Apple Music can be the early adopters.

Early Majority (34%): They are the users between the age group of 18 -40 years age and based out of tier 1, 2 and 3 cities in India. Mostly they would be using the free subscription module or some promotional offers, gaining trust before subscribing. Users who use Gaana.com, JioSaavn, Wynk are the early majority

Late Majority (34%): They will subscribe only when need arises and look for for return on investment. People more than 40 years of age & technology averse would be more likely to be the late majority to adopt to music streaming platforms in India.

Laggards (16%): They will be the last group of users to subscribe. These users are likely to be from non tier-1 & 2 cities and don’t own smartphones or have internet connection today.

Users in India currently belong to the early majority group in the product adoption lifecycle. The paid subscription % is in single digits for all the players & users are still getting habitual to the music streaming services.

What Next?

We are in the midst of a music and larger audio revolution worldwide. India is at the center of it with a projected 400 million digital music/audio streamers by 2023. Consolidation is inevitable in the music streaming industry, going forward. So far Gaana is winning the battle as per market share and reach & Spotify is the clear winner in driving engagement with their superior technology and global brand.

We’ll have to wait and watch who emerges as the winner in the this decade!

Sources:
1.)https://tech.hindustantimes.com/tech/news/online-music-market-in-india-expected-to-surpass-273-million-by-2020-report-story-z1oHFpinGaovvt8jibOJAJ.html
2.) https://www.musicplus.in/the-indian-music-streaming-market-deconstructed/
3.) https://www.fortuneindia.com/technology/spotify-the-sound-of-streaming/105483
4.) https://www.thehindubusinessline.com/info-tech/indias-music-streaming-market-gets-louder/article27021205.ece
5.) https://growthninja.substack.com/p/growth-hack-study-2020-spotify-in