New Delhi: Bollywood may be uniformly bowing down to the increasing reach of digital platforms in the country, but the real beneficiaries have been the music labels which have long struggled with issues of piracy and consumers not wanting to pay for music content.

According to the FICCI-KPMG Indian Media and Entertainment Industry Report 2017, sale of music rights generated robust revenues for filmmakers in 2016, who were able to recover, on an average, about 5% of the production cost of a movie, attributed majorly to an increase in syndication and digital consumption of music and the fact that major music labels have tied up with various music streaming platforms such as Gaana, Wynk, Hungama and Saavn for music licencing.

For years, musicians in India have reiterated the social and economic implications of piracy, including loss of the copyright owner’s revenue, inadequate reward for artistes and funding of anti-social and anti-national activities.

However, the transition to legitimate digital music consumption hasn’t been easy.

“The fundamentals haven’t changed, people have always loved music. What has changed is the form in which we consume music," said Vikram Mehra, managing director of music company Saregama India. “Earlier the entire world used to consume music through cassettes and CDs, then came this animal called digital which gave rise to rampant piracy and was always seen as a threat to our business. But very soon we realized that along with piracy, there was a huge advantage that digital brings to the table which is to take our content to people in all corners of the world which was very difficult to reach otherwise. It’s thanks to the power of digital that today we have people downloading a Saavn or Gaana application, say, somewhere in Uganda to listen to a Kishore Kumar song."

Mehra added that globally, physical sales had touched 38-39% of all music purchases, while in India the figure remains 10% for now. Saregama, whose streaming growth is currently inching upwards of 30%, is definitely not the only music label to benefit from the reach of over-the-top streaming platforms. T-Series president Neeraj Kalyan affirmed that along with video streaming platform YouTube and mobile WAP (Wireless Application Protocol)-based delivery by telecom operators for services like caller ring back tones, music streaming players have helped consumers move away from pirated music platforms.

“It is important to understand the reasons for music piracy," said Prashan Agarwal, chief operating officer at Gaana, the online music streaming service operated by Times Internet Ltd. “First is the lack of willingness or ability to pay (for content). Music streaming services combat that by offering free unlimited music streaming along with data costs which are already diminishing." Then there are accessibility issues for users due to geographical location or unfavourable distribution networks but streaming allows the same content to be available to everyone instantly.

Besides, Agarwal added, streaming services help curb piracy by offering an on-demand unlimited library allowing unique personalized engagement with content and supporting numerous other devices and platforms anytime and anywhere.

In fact, music streaming firms which work on yearly licencing arrangements with music labels gaining access to their entire library are making money through two means currently. The first kind of streaming is free and advertisement-supported which forms the majority of what Indians consume in terms of music. It essentially means the customer can come to the app free of cost and listen to any number of songs and revenue is earned from advertisements. The quality of sound remains as low as 64 kbps. Then there is a paid tier that offers high-definition sound and unlimited downloads and works on paid subscription.

“Right now, the streaming market is not mature, we hardly have about 90 million customers who are streaming music in a country of 1.3 billion. As against the Chinese market where today 800 million customers are streaming music on the same population base," Agarwal said, adding that there is huge room for growth and they should be looking at 400 million people streaming music in about three to four years in India. “The effort of all over-the-top streaming firms is to broaden the market, make sure discovery becomes easier for more and more customers and they experience the app in terms of convenience, access and content, and then graduate them to a paid tier."