India is gearing up for a big data push driven by the availability of 4G signals and affordable smartphones. This will be a boon for many sectors that have not yet got their due in the country. One of them will be the music streaming industry. Globally, revenues from streaming accounted for 32% of $15 billion digital revenues in 2014, up from 25% in 2013.
But India is a different story altogether. There have been many services here for many years but no one pays for music. In its annual report on the digital music sector 2015, IFPI, the global recording industry body, says, “India continues to underperform, with a market decline of 10.1%”. And they have good reason to say this. Till the beginning of this year, there was no company that had a decent paid subscriber base. In fact, Dhingana, which was the first to bring the hugely successful Spotify subscription model to India, had to shut down in early 2014.
On the other hand, 2015 seems to be changing music preferences in the country. Everyone from Saavn to Gaana and Airtel’s Wynk now come with paid packages and there seems to be a growing base of users who are willing to pay to be able to store songs on their devices, better bit rates and an overall superior experience. And when Apple announced the availability of its radio services in India, there was another surge, thanks mostly to the fact that subscription rates in India were much cheaper than global ones.
But is there another way to make money out of a music streaming service? In 2014, the subscription services segment of online music streaming in the US alone recorded $799 million in revenues, according to MarketResearch.com, and accounted for 73% of the market’s overall value. The remaining 27% would have been from ad-supported streaming. This is the segment that is seeing accelerating growth globally — up by 38.6% in 2014, a significantly higher growth rate than the 16.6% increase in 2013.
And it is this model that Guvera, one of the latest entrants in the domestic market, is trying to tap into.
Since its India launch in November 2014, this ad-funded service from Australia has 6 million users in the country thanks to its 20 million odd tracks.
Ananya Amin, head of business development in Asia for Guvera, says his company offers expertise in advertising solutions that let brands make the best out of their service natively. So on the app you see a lot of branded playlists and events driven by them.
“Guvera has always known that emerging markets are not as willing to go for a paid service. So we just focus on the ad-funded and brand-funded model and let brands advertise natively on the platform while the users get free access,” Amin explains. Even Guvera has a paid Platinum service, but Amin is clear that this is not something he wants to promote in a geography like India at the moment because of the limited credit card penetration.
Amin says the entire ecosystem will grow thanks to the 4G uptake in the coming months. “We are seeing a shift in the way people consume data and the content they use the data for. And while video and music top data use, our customers get buffered tracks that consumes less data when you are listening to a song again,” he adds. The company promotes branded channels as their “primary monetisation model”. “It is also a transformative experience for brands and we provide a non-disruptive brand experience,” he says on the channels companies like Maruti Suzuki, Amazon and Harley Davidson are using to reach out to prospective customers.
Meanwhile, the monetisation push is likely to happen with mobile wallets like Paytm and FreeCharge which will let users buy a song or an album in one click. The two-step credit card process, for those who have it, often becomes a barrier for impulsive purchases the online space thrives on. Here, services will need to crack the pricing model ensuring that they get a million people to buy a song at a throwaway price in a flash, than get them to make a larger purchase decision.