How digitization saved India’s music industry from covid-19

Photo: iStock
Photo: iStock


  • Digitization has changed India’s music listening habits, attitude towards paid music, raising hopes for independent artists

In a year when a global pandemic brought music performances to a stand-still and sales of music records collapsed, digital streaming emerged as the saviour for India’s music industry, the latest data from the International Federation of Phonographic Industries shows.

Digital streaming revenues rose 21% in 2020 to $153 million, slower than the 26% growth recorded in 2019 but enough to push the overall music industry growth to positive territory despite a collapse in other revenue streams. Overall music industry revenues grew 5% to $180 million last year.

The dependence of the industry on digital streaming has been growing even before the pandemic. In 2016, less than half of music industry revenues came from digital streaming. By 2019, digital streaming accounted for nearly two-thirds of overall revenues.

The changing revenue mix has allowed India’s music industry to weather a global storm that ravaged several other industries over the past year. It also reflects shifts in listening habits of Indians, and their willingness to pay for something that they were used to consuming for free in the not-too-distant past.

Beating Piracy

Prior to the digital push from the music industry, the biggest drag on revenues was piracy, with the problem more acute in some emerging markets such as India. The digital push and the proliferation of easy-to-use music streaming apps has helped widen the reach of licensed music and curbed piracy.

Physical copies were much more prone to privacy compared to online versions with digital signatures. In a pandemic year, when physical copies became harder to procure, streaming services widened access to music.

The rising number of streaming apps are likely to increase consumption of licensed music and reduce piracy further in the years ahead, said a recent KPMG report.

Changing Habits

The KPMG report suggests that the audience for music rose manifold during the pandemic-induced lockdown as people were forced to shut themselves in their homes. Music seems to have become the antidote to both boredom and melancholy in an unusually tough year.

The loss of music streaming while traveling, commuting etc. was compensated by phenomenal growth in streaming while people were engaged in household chores, workouts, or simply studying or working from home, their survey showed.

Tapping this opportunity, Spotify, an audio streaming app that launched in India in 2019 created its “At Home" hub to cater to these new activities listeners engaged in, a Spotify spokesperson said.

Freemium Model

Although more people in the country are paying for music than before, the dominant revenue stream is based on a ‘freemium’ model. Most digital music subscribers listen to music on ad-supported audio and video streams, the latest IFPI report said. According to the report, 28% of the total audio streaming revenue in 2020 came from premium subscriptions. Ad-supported audio and video streaming accounted for 45% and 27% of digital streaming revenues respectively across the music industry.

The freemium model works better than the earlier model of physical records since it prevents piracy, and allows music brands to make some money from ads. But it is vulnerable to economic dislocations such as the one caused by the pandemic last year. Most streaming apps therefore keep prices competitive to draw in people to subscribe to ad-free music, often with offline availability options.

Subscription Challenge

“Digital streaming accounts for 85% of our revenues for now but we have just scratched the surface on other various revenue streams such as public performances," said Blaise Fernandes, president of the Indian Music Industry. The prime target for raising streaming revenues remains subscriptions.

While still accounting for a small share of the streaming pie, willingness to subscribe has been growing. A global survey conducted by the market research firm YouGov in November 2020 found that the share of respondents with a paid music subscription was higher in India than in many other large economies.

The YouGov survey is based on an urban online poll and may not be representative of the entire country but it tells us that the market for subscriptions is already fairly significant in India.

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