The Indian audio streaming market has grown by leaps and bounds over the last couple of years, fuelled by increased smartphone penetration, cheap data plans, and the proliferation of audio streaming platforms — both home-grown and international. According to Research and Markets, the audio OTT market in India was valued at Rs. 57.48 billion in FY22 and is expected to reach Rs. 119.11 billion by FY27, expanding at a CAGR of 15.68% during the FY23-FY27 period.
To make the most of the opportunity, Swedish audio streaming and media services provider Spotify, which now has completed four years in India, wants to go ahead and tap ‘Bharat’, that is, tier 2 & 3 markets that house a potential addressable market of over 300 million. Neha Ahuja, head of marketing, Spotify India, says, the platform understands it has to handhold audiences here and the process has started already. Take its series of ad films featuring Deepika Padukone, in which the actor shares steps to download and use the app.
The streaming service plans to introduce ads in its podcasts and is tweaking its subscription packs to woo more users and will add mini-premium packs for Indian users this year. India, according to industry estimates, has about 48 million monthly active users of Spotify currently.
Globally, approximately 60% of its users avail of its free services and 40% the paid services. Eighty-six per cent of its ad revenues come via the paid segment and the balance from the free subscription segment. “In India,” says Arjun Ravi Kolady, head of sales, Spotify India, “premium users do drive a significant part of our business but the contribution of ad revenue to our overall business has also grown significantly over the past two years.” Indeed, Spotify founder and CEO Daniel Ek acknowledged the company’s struggle with paid subscriptions in the country.
Samit Sinha, managing partner, Alchemist Brand Consulting, says the overwhelming majority of Indian users will opt for free (or nominally priced) streaming, as they tend to prefer ad interruptions over having to pay a subscription fee. “Spotify’s overall revenues will continue to be dominated by ad revenues in the foreseeable future. There have to be really useful value-added features for premium subscribers like exclusive content, smart playlists, AI-driven introduction to new music that aligns with the listener’s tastes, for subscription revenues to become a significant part of Spotify’s overall revenues.”
Sprucing up programming is also part of the plan with original podcasts being a key focus area. This entails strengthening the creator ecosystem. Ahuja says, “We are investing a lot in building the creator side of podcasting. Programmes like ‘Spotify Level Up’ really handhold the creators by mentoring and educating them.” One in four music listeners on Spotify in India tunes in to podcasts, she adds.
This year, advertisers will get a foothold in its podcasts. Kolady says, “We want to make sure that when we actually bring the ad solutions to the market, they are well rounded, there is measurability and better targeting.”