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A man listens to music as he waits for his train at Churchgate railway station in Mumbai
Reuters/Navesh Chitrakar
India’s listening.
SWITCHING TRACKS

Why two music-streaming giants have entered India in less than a month

By Ananya Bhattacharya

International music-streaming platforms have turned up the volume in India.

Less than three weeks after Stockholm-based Spotify launched its app in India, Google-owned YouTube Music entered the country on March 12, with premium plans starting at Rs99 ($1.44). The new entrants will now compete with Apple and Amazon Music, besides homegrown rivals Gaana, JioSaavn, and Hungama.

The heightened interest in India’s music-streaming segment comes at a time when the over-the-top (OTT) industry is having its moment in the sun thanks to increasing smartphone and internet adoption, coupled with sliding data prices.

The on-demand video industry is already the rage in the country, and experts believe music streaming is the next frontier. But tapping into the space is getting more challenging.

“The competition is getting stiffer with YouTube also launching (a) music (streaming app) now. Once a differentiator, catalogues today don’t matter as much since music companies are happy to license their titles to whoever,” Jehil Thakkar, partner at Deloitte India, told Quartz. With the gold rush for big libraries ending “there needs to be some element of original programming hidden behind a paywall. Why consumers will choose one app over an another will be because of exclusive content or enhanced user experience.”

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The OTT boom in India is being fuelled by Reliance Jio, the telecom firm promoted by India’s richest man, Mukesh Ambani. With its nearly-free data charges, Jio has made streaming popular not only in big metros but also smaller Indian towns.

While video-streaming apps like Netflix, Amazon Prime Video, and Hotstar already have millions of subscribers, experts believe music-streaming platforms could achieve greater success.

That’s because unlike most apps, which are immersive, music apps can work in the background. You can be on WhatsApp or on Facebook and still consume audio. You can even use the app to play songs while driving. This offscreen format “is a massive blue ocean that is not being explored,” said Gautum Raj Anand, founder and CEO of Hubhopper, an artificial intelligence-based platform for podcasts, content aggregation, and publishing.

Already, Indian consumers spend nearly 21.5 hours a week listening to music, compared with the global average of 17.8 hours, according to a recent report by Deloitte and Indian Music Industry (IMI), a trust that represents recording industry distributors in India.

Consider this: Spotify garnered 1 million users in India within a week of its launch on Feb. 27. “Whether the growth converts to revenue numbers is a different question,” said Yugal Joshi, vice-president of Texas-based consulting firm Everest Group.

Will Indians pay?

India’s $150 million music-streaming market is estimated to touch $400 million by 2023, according to Noida-based TechSci Research. However, as of today, nine in 10 Indians are unwilling to pay for the service, said Karan Chechi, research director at TechSci Research.

The companies entering India now are well aware of this trend. That is why Apple Music has plans starting at Rs120 ($1.74) per month in India versus $10 in the US. Spotify, too, is wooing Indians by giving them way more free features than anywhere else in the world.

ServiceSingle-user plansLibrary
Apple MusicRs12045 million
JioSaavnRs9945 million
SpotifyRs11940 million
Google Play MusicRs9935 million
Amazon Music(Comes bundled free with Amazon Prime, which costs Rs999 per annum)30 million
GaanaRs9930 million
HungamaRs9910 million
WynkBundled with mobile plan for Airtel uses. Rs99 for Android and Rs120 for iOS3 million

Despite keeping prices low, paid subscribers for these services are few. “It took us a long time to even embrace e-commerce. Paying for services will take even more time,” said Hubhopper’s Anand.

Who’ll top the chart?

Honing regional language capabilities, adding sophisticated tech like personalised recommendations, as well as making the service available across various devices will help players take a bigger bite of the pie.

For now, JioSaavn, which comes preloaded on JioPhones—the “effectively free” handset that turned the tide away from smartphones to feature phones—has a stronghold. But the industry is too young to declare a clear winner, analysts say.

(Data from Kalagato did not include Apple Music and Amazon Music, and Spotify and YouTube Music were not in India yet.)

Unlike videos, which are capital-intensive and thus expensive to produce, the barriers to enter music streaming are far fewer. It won’t be surprising if even more companies enter the fray. But the saturation won’t last long as consolidation will kick in, experts say. By December last year, Jio and Saavn had already merged to become a $1 billion entity. Subsequently, it grew massively to become second only to Google Play Music, the free internet provider Jana found in a survey.

A bigger share of India’s music-streaming users even moved to JioSaavn at the expense of Google Play Music, data show.

Even though freebies will reign supreme in the short run, subscriptions are the way to go to create a captive audience as the market matures, experts said, adding that this will make room for more players to co-exist.

“Subscription models put power back into the hands of consumers, and companies have no choice but to constantly keep them engaged through exclusive content,” said Sandeep Murthy, partner at VC firm Lightbox. “This creates room for many players to co-exist, which is clear from the success of local platforms like ALTBalaji and the virality of original Indian content that has been popping up across others.”