With consumers spending less than 10 minutes a day — 9.7 minutes to be precise — watching music channels (both Hindi and English) — and nearly three times that or 25 minutes listening to music via streaming apps, the acquisition by Zee Entertainment Enterprises’ (ZEEL) of five music channels run by 9X media for Rs 160 crore in an all-cash deal is a surprise. In fact, consumers spend more time — around 12 minutes a day — listening to the radio than they do watching music channels. But then, as Jehil Thakkar, partner, Deloitte, points out, music apps are more popular in urban India while in the smaller towns viewers do watch music channels. “As such, a strong television broadcaster like Zee, with a bouquet of channels, can attract advertising by bundling the music channel with others. The role of music channel is that of a platform driving content, especially if the parent, in this instance Zee, has its own music label and film production company,” Thakkar explains. Punit Goenka, MD and CEO, ZEEL, observes the music genre has a share of around 6% of the total TV consumption. “To put it in context, music as a genre on television is three times the share of English television viewership,” Goenka said.
According to a Ficci-KPMG 2017 report, music channels contribute about 5% or Rs 1,125 crore to the total TV advertising revenues of Rs 22,500 crore. Advertising revenues earned by the radio industry are in the region of Rs 2,250 crore, while music streaming apps together earn around Rs 200-250 crore. Nevertheless, music streaming apps are growing in popularity. Gaana has a monthly user base of over 40 million, a near three-fold growth in the last one year. The number of active monthly users, across music streaming apps, was anywhere between 50-60 million in 2016, according to the Ficci-KMPG report.
Prashant Agarwal, COO, Gaana, observes that with data becoming cheaper, listeners are migrating to music apps. “Consumers can choose what they want to listen instead of being a passive listener in the case of TV or radio,” Agarwal explains. The ZEEL management claims that in addition to strengthening the bouquet of channels, the music channels will complement the music label and movie production businesses. The popular Bollywood news portal, SpotboyE, is also a part of the transaction. Goenka asserts the acquisition is in tune with the company’s music play, “given we are now the largest acquirer of new music in India through Zee Music Company”.
However, media planners point out that in terms of revenue both music channels and music streaming apps continue to struggle. “Both the platforms are struggling but TV is slightly better placed since the ad inventory of music channels are bundled with movie channels,” explained a senior media planner. Also, as music apps continue to struggle to generate subscription revenue, the focus has shifted to generating enough usage, so that these platforms are able to charge a sustainable ad rate, said a senior media planner. While the cost of creating original content — radio jockey and video jockey lead talk shows, podcasts and music videos—is more or less similar at `80,000 to `1 lakh, TV commands the highest advertising rates. Also, music rights must be paid for separately. And again, music channels pay the most to acquire songs since they need video content, compared to private FM broadcasters or a music app, which buy audio rights. The cost of a ten-second ad spot on a music channel such as Mastii and 9XM is close to Rs 1,000, while music apps such as Saavn and Gaana charge anywhere between `150-250 cost per thousand impresssions (CMP) for a ten second ad spot. A ten-second spot during prime time— between 7 am to 11 am and again 6 pm to 8 pm — ranges between `500-800 depending on the number of stations a private FM player operates.