On the surface of it, the worldwide music business has good reason to prioritize other nations over India.
In the latest annual league table of recorded-music revenue generation, compiled by global music-biz body IFPI in 2017, India ranked at a lowly number 19. The $130.7 million accrued by labels and artists in the country that year was up 13.6 percent from 2016, but represented a per-head (capita) yearly spend on recorded music of just $0.10. That was the lowest per-capita number of any monitored country in IFPI’s annual report — beneath the likes of China, the Philippines, Peru, Thailand, Indonesia and Russia.
Talk to most people in the music business this week, however, and they’ll tell you India is getting everyone pretty hot under the collar. That’s because the world’s biggest audio streaming subscription platform, Spotify, launched in the territory on Wednesday (February 26th) — and appears to be banking its future on the region.
“As Spotify grows, our goal is to bring millions of artists and billions of fans together from every country and background,” said Daniel Ek, co-founder and CEO of Spotify, which is now available in 79 countries worldwide. He added, “Not only will Spotify bring Indian artists to the world, we’ll also bring the world’s music to fans across India.”
In the lead-up to Wednesday’s launch, Spotify endured a very public falling-out with Warner Music Group, one of the “Big Three” major music companies, ostensibly because WMG did not like the look of the payments it’s going to get from Spotify in India. You can see why: A subscriber to Spotify’s Premium tier in India will pay the equivalent of just $1.67 a month, less than a quarter of the typical price a U.S. citizen would be expected to shell out. In addition, say my sources, Spotify’s free tier in India, which is available on-demand and on mobile, is expected to pay labels and artists somewhere close to $0.00035 per stream, around a tenth of what those same music rights-holders see from a play in the States.
Why, then, is Spotify so excited about what India could mean for its future? And why does the majority of the global music industry seem to share in this enthusiasm?
A new report from Deloitte, compiled with India’s local recorded-music trade body, IMI, supplies some answers. For one thing, total streaming revenues generated by the record industry in India reached $87.4 million in 2017, up 61 percent year-on-year. Within this figure, subscription/paid-for streaming payouts more than trebled, up to $33.7 million, despite India’s ad-funded streaming monies falling 30 percent to $27.6 million.
There are particular high hopes regarding the changing spending habits of India’s 1.3 billion-plus population. According to figures cited in Deloitte/IMI’s report, just 6.4 percent of India’s eligible population streamed music via locally available services (YouTube, Gaana, Apple Music, Amazon Music, Wynk, JioSaavn) in 2018. When you consider that the equivalent number in the United States was 47.3 percent, the future potential for record labels — and, especially, Spotify — in India starts becoming clear.
Other underlying factors in India also point to very bright prospects for music rights over the next half-decade. According to stats from India’s government, the number of smartphone users in the country reached 404.1 million at the end of 2017, and is expected to more than double by 2022, to 829 million.
David Bianchi is the U.K.-based co-founder of Various Artists, which recently took over management for Indian composers Vishal & Shekhar. The duo’s most popular songs, made famous by Hindi, Telugu and Marathi movies, have racked up hundreds of millions of YouTube streams. “With Apple Music and now Spotify going into India, it’s getting really exciting,” says Bianchi. “There’s more than 1.3 billion people in India, and it’s a market with a growing middle class that’s already over 15 million people bigger than the entire population of Britain. The potential numbers out there are preposterously good.”
His enthusiasm is shared by Mandar Thakur, COO of India’s third-biggest record company, Times Music. He says, “India is at the very edge of explosive growth. By sheer numbers, India is a country with a burgeoning young and upwardly mobile demographic which is still getting used to credit cards and mobile wallets. The runway here is very long on digital consumption.”
There are, however, serious challenges the global music business will have to overcome if India is going to reach its exciting potential.
The first, and perhaps most daunting, of these challenges is piracy. According to IMI estimates, around $250 million in potential revenue is lost by the record industry in India each year to copyright infringement. As Shridhar Subramaniam, president of Sony Music India & Middle East, recently pointed out, “The legitimate music market [in 2017] was a mere $130 million. So we lose twice as much to piracy [as we earn from legal services].”
According to IMI research, 76 percent of internet users in India still admit to accessing pirated music in India. That appears to make it the worst culprit in the world; the equivalent number in China is 64 percent, while in Mexico it’s 55 percent.
The hope for the music business is that piracy can be eroded in India by services like Spotify, just as it has been in the Nordics — home of the infamous Pirate Bay. Norway was a global hub of piracy activity as recently as 2009, when 80 percent of people under 30 admitted to using illegal file-sharing sites to obtain music. Just six years later, according to local experts, Spotify had helped to “virtually eliminate” this problem.
The other greatest issue for the music business in India — for U.S.-run record companies, anyway — is the dominance of Bollywood music, the rights to which are often bought outright by movie studios, and treated as a secondary product.
“The biggest challenge the music industry faces in India is the fact that it needs to jump out of the shadows of its own legacy Bollywood film industry,” says Times Music’s Thakur. “No music industry can scale without stars or music that isn’t necessarily part of a film.”
According to IMI figures, this transition is already taking place: In 2016, it says, Hindi/Bollywood film music claimed 70 percent of all streaming consumption on audio services in India. By 2018, however, this figure had dropped to 50 percent.
“The North Indian — Punjabi — music industry is demonstrating that it’s booming without the shadow of film, and its own stars are now crossing over into the mainstream,” says Thakur. He says Times Music recently acquired the rights to one of the world’s largest Punjabi music labels, and that the results on streaming services have been “simply stunning.”
He adds, “What is most exciting for me is not just the sheer surging consumption of music in India, but the creativity that exists in this market. India has a more than 100-year-old, melody-based music culture, and the English language is very widely used. That fosters an unbelievably talented young pool of artists and songwriters with the potential for global exposure.”
He points out that, as recently covered by “Rolling Stone,” three out of the five most popular artists in the world on YouTube today are Indian.
“Spotify might now deliver a proliferation of non-Bollywood music, enabling India’s fast-growing pop-music artists to break through across the world,” says Thakur. “In doing so, Spotify, combined with YouTube and other services, could now help foster a musical movement, a cultural transition of sorts, that caters to a increasingly worldly-wise demographic.”
Tim Ingham is the founder and publisher of Music Business Worldwide, which has serviced the global industry with news, analysis and jobs since 2015. He writes a weekly column for “Rolling Stone.”