Online music streaming business started on a wrong note, both globally and in India. Revenues have been a major concern, analysts of Generator Research stated that players like Spotify will never be able to make a profit in their current state — and that’s largely because of the hefty royalty fees they have to pay out to artists, the labels that represent them and rights management groups.
The report further stated music subscriptionsstreaming services like Spotify, Rdio, Pandora et al hand over 60-70 percent of their revenue to record labels and other interested parties, and Generator Research says that’s unsustainable.
This was one of the reasons why we saw Indian streaming startup Dhingana closing down and later getting acquired by Rdio. T-Series, one of the biggest record label for Dhingana refused to renew its license as it couldn’t see much traction.
In fact 2013 wasn’t that great for the streaming business in the country. To start with Nokia pulled its plug on Nokia Music’s Indian website, and later In.com closed its music streaming service though it was not an individual decision to close only the music streaming service.
Right now the Indian streaming business largely revolves around players like Saavn, Gaana, Hungama including Guvera opening in India and Airtel joining the party with Wynk. While revenues are still a question, we have seen some interesting business tie-ups and developments in the space: Saavn tied up with Twitter to introduce a tweet-based online radio station for its users, Saavn’s partnership with Snapdeal to offer free premium subscriptions to Snapdeal’s customers and Gaana introduced mobile apps that allowed users to access categorised music according to language, artists and genres.
To understand how the online music streaming business will evolve in 2015, Lighthouse Insights spoke to the experts of the industry (some of whom chose not to respond). Listed below are the edited excerpts.
Neeraj Roy, MD & CEO, Hungama Digital Media Entertainment
India crossed the 300 million internet users’ mark in December 2014, and in the coming year the growth in internet usage is likely to increase at a faster pace. The Indian market is at an interesting inflection point at this stage, backed by eco-system driven by the easy availability of low-end smartphones and telecom players aggressively offering data plans - all of this in addition to the fact that the new Government too has taken initiatives to reach out to its citizens via online platforms.
The current environment has created a market of data consumers, seeking for content related to either information or entertainment. Several studies have indicated that entertainment constitutes a major share of time-spend on internet enabled services, and in 2015 we are likely to see a significant increase in consumption of internet based entertainment products.
With 4G services likely to launch in 2015 and expected to become mainstream in 2016, the streaming of music and videos will provide newer avenues to creators and publishers of content. I am sure that this will also drive new innovations in the sector.
Snehal Shinde, VP - Emerging Markets, Rdio
With physical sales dropping in double digits and online download sales declining year over year, music streaming is going to be the future. We have seen a few new players entering the market and there are a few services who are still holding ground but not able to have a significant revenue impact yet.
I think the key is to ensure that, as a service, you should not give away everything for free but provide a restrictive yet engaging ad supported music streaming experience. As more and more services follow this model, we should see good conversions to paid subscribers and in-turn help content providers make significant revenues.