Online Music Industry in India: A look at Past, Present and Future


Online Music Industry in India: A look at Past, Present and Future

The internet is known for the convenience and comfort it brings at our fingertips. Be it shopping, travel, insurance or food, the web empowers us to do all these things with a simple click. While online shopping is just taking off in India, online music distribution has been around for some time and has grown over the past 5 years. Digital consumption, distribution and availability of the catalogue in the digital space are only a logical progression and evolution of the Indian music market.

According to a FICCI-KPMG Indian Media and Entertainment Industry Report 2012, the Indian music industry achieved a 19 % year-on-year decline in sales of physical music which was compensated by a significant jump of 24 % year-on-year in digital music consumed last year. Physical sales of music continue to slide with digital music consumption on a steady rise. This phenomenon was more pronounced in the urban centers where mobile and Internet penetration is higher; however regional markets were less affected.

Indian Music Industry: How it started

In India, the idea of online music started gaining a foothold around 2006-07, when music companies such as Saregama HMV, T Series and Sony BMG started digitizing their tracks, the online music market also started growing. During 2007, Saregama forayed into Hindi music download business with competitive price tag of Rs.10 per track download. In April 2008, Motorola attempted to tap the delivery of music content on the Internet and mobile through acquisition of Asian online and mobile firm- Soundbuzz. However,Motorola closed down its Soundbuzz’s business within a year (May 2009).

Meanwhile, illegal- free downloads of music continued on large scale through various sites and choked the growth of early entrants like Saregama. Later in October 2010, Hungama Digital had launched music download service, and recently Flipkart’s Flyte went live. Others such as imusti, Saavn, Gaana, Dhingana, Hungama and NH7, have joined the streaming league recently.

Indian Music Industry: The Growth

Consumption of online music has seen consistent growth during the last 2-3 years and mobile presents itself as an even more exciting domain, which has grown incredibly well. The explosion of smartphones and high speed 2G and 3G connections in urban markets has largely contributed to this. According to a survey by Neilsen released in June this year, there are 27 Million Smartphone users in Urban India across 1 lakh+ towns. Currently, mobile contributes around 85-90 % to the total digital music consumption in India.

As per FICCI-KPMG study, the online music industry crossed one of the most important milestone 2011 when digital sales overtook physical sales for the first time ever, currently around 55-60 % of music sale happens through digital route.
Players operating in this space have also been witnessing significant growth in terms of unique visitors and amount of time consumers spending on music streaming sites like Speaking about Gaana’s growth, Avinash Mudaliar,Business Head, said

“We currently have almost 3 million unique visitors a month who spend 22 minutes on the website, on an average”. By the end of 2012, Gaana anticipates to have 5 million active users across all platforms including recently launched mobile apps.

Hungama that offers streaming as well as download services to consumers also boasts of robust growth. During calendar year 2011, the company claimed to have 20 million subscribers and has been witnessing 9 million traffic on month on month (MoM) basis . Siddhartha Roy, CEO, Hungama said “Total number of downloads including mobile and web at Hungama touched 75 million”. To tap the international markets with Indian movies (Bollywood and regional), Hungama had 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 generates Rs. 1 crore of revenue per month.

Indian Music Industry: Challenges

Almost all music streaming websites in India enjoy good traction though turning traction into profitability has been a challenging game. And this challenge has not only been faced by Indian streamers but well positioned global players too. According to a recent PrivCo report, Spotify, one of the popular music streaming sites in US and across European nations had incurred loss of $ 59 million in 2011, which is up from $38 million the year before.The report suggested that  something must change soon on Spotify’s business model if the company is to survive.

Sharing his thought about ad supported streaming services in India, Roy said

“It is tough to build ad based online destination for listening music as ad supported structure is very less”. For instance, eCPM rates are extremely low and brands (advertisers) still do not shell out significant amount for advertising on streamer’s platforms.

In download businesses,  besides  bandwidth constraints, unavailability of micro-payment tools is a big challenge, typically to enable a song download from Flyte or Hungama, consumers need to pay around Rs.10-15. And to pay such small amount it is unlikely that consumer would use his/her credit or debit card. However, emergence of mobile based IMPS payment could solve this payment hassle to some extent.

Indian Music Industry: The Road Ahead

Consumption of music through digital route is set to increase in coming years, FICCI –  KPMG report estimates digital music industry to grow at an expected CAGR of 22% till 2016. Currently, most of the consumption via streaming and download are audio based; however it may see a shift towards video.

Online streaming of music has also been facilitated by record labels such as Saregama and in future more labels would join the streaming business. This clearly shows that record labels acknowledge the fact that their largest target audience is now online and they are looking at it as a major revenue channel.

Though Flyte and Hungama have widened the horizon of choice for music lovers to get their music online, it remains to be seen how they will manage to get past the  fierce competition from free online streaming sites, pirated music download portals and prominently catching up mobile music download segment.

What are your thoughts?

Comment (1)

  1. Amit Gupta

    mai songs likhata hu and online music bussnes karna chahata hu

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