2012 Recap: Digital Music Landscape in India [Digital music sold more than physical]

Digital ecosystem in India is comparatively nascent with respect to US and western economies and gradually the industry has been gathering steam with 120 million Internet users and 27 million smartphone penetration. Be it travel, shopping, hiring cabs ,recharge and music, Indians are using and paying through web (or atleast have started to).

While ecommerce including recharge and cabs are still in nascent stage, digital music industry has come a long way.In 2011, overall digital sales of music overtook physical sales for the first time ever, currently around 50- 55% of music sale happens through digital route.

Physical Vs Digital Music in India
Physical Vs Digital Music in India

A study conducted by Nokia revealed that globally, music is the third most popular app to download (29%), next to games (38%) and social networking  (35%). In India, music is the most downloaded  application and the second most used application after social networking. 34% of the smartphone users  like to download applications because they feel the need to download the latest music releases.

Global music industry and Apps
Global music industry and Apps

Current players and their growth in 2012

By the end of this year, digital music is expected to account for Rs 640 cr in revenues compared to Rs 220 cr from physical music sales with 80-85%  revenue coming from mobile. Currently around 10 players are distributing music digitally  in India including Saregama, Hungama, Flipkart’s Flyte, Saavn, Gaana, Dhingana, Hungama, iMusti, NH7, and recently launched Apple’s iTune.

In 2012 Indian digital music industry saw debuts of Flipkart’s Flyte and Apple launched iTunes store featuring comprehensive selection of local and international music from all the major labels and thousands of independent labels.

Players operating in this space have also been witnessing robust growth in terms of unique visitors and amount of time consumers spending on music streaming sites like Gaana.com. Speaking about Gaana’s growth, Avinash Mudaliar,Business Head,Gaana.com mentions that the site currently has almost 3 million unique visitors a month who spent 22 minutes on the website, on an average.

Gaana anticipates to have 5 million active users across all platforms including recently launched mobile apps. Hungama, which recently took HTML 5 route to allow its users to stream music and store music files on the cloud, has 20 million users via various touch points. Regarding the paid transactions, Siddhartha Roy, COO of Hungama mentions that “Total number of paid downloads including mobile and web at Hungama touched 75 million across digital entertainment content in the form of music tracks, music videos, movie streaming and more”.

To tap the global markets (especially of bollywood and regional movies/music), Hungama recently launched its services to UAE and Singapore. On the other hand, launched in February 2012, Flipkart’s music store Flyte had crossed 600,000 downloads in August and claimed to achieve INR 1 crore of revenue per month.

Founded in 2007, California based Dhingana is accessed by millions of users across more than 220 countries every month and has collection of over 500000 songs across 35 different genres. With 15 million monthly active visitors worldwide, Dhingana claims to be the largest on-demand, streaming Bollywood and Indian music service across the globe, claims Dhingana. In October, the company raised $ 7 million in series B funding led by Lightspeed Venture Partners.

Earlier in July this year, independent artists focused music streaming and discovery platform NH7 partnered with Flipkart’s owned Flyte to launch digital music downloads featuring independent music/artists. Currently, the platform manages 100 artists and claims all of them is making more money than they used to earlier.

Outlook Digital Music Industry: 2013

Consumption of music through digital download and streaming is set to increase in coming years. FICCI –  KPMG report estimates digital music industry to grow at an expected CAGR of 22% till 2016. Some projections suggest that digital music will account over 60% of the entire music industry in 2013 and consumption would largely be driven by mobile and wireless connections.

Increasing rise and adoption (downloads) of music apps have changed the revenue generation pattern for digital music distributors in past one year  and will continue to do so. Nokia Global Study suggests that in India 4 out of 10 smartphone users prefer to download music to access latest music tracks, and number expected to rise via smartphone focused apps in 2013.

Recommended Read: India Online Landscape in 2012: Total Recap.

[This article is part of our 2012 Recap series, and is supported by CCAvenue.]

2012 Recap/ 2013 Trends
CCAvenue is India’s largest payment gateway solution powering thousands of eMerchants with real time, multi-currency, multiple payment options online payment processing services. The solution is powered by proprietary technology that integrates transaction-processing, advance shopping cart, auction payment collection facility, mobile page, risk assessment and fraud control, smart analytical dashboards, financial reporting and order tracking and many more features.

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