Coming of the boom — Music Streaming in India

Origins and Evolution

India is a very music-friendly nation with just new movie songs numbering around 10,000 every year. But until early 2007, the Indian music lover had little to no options to stream music. Music streaming in India was restricted to desktops and laptops, with YouTube being the only player. Saavn (now JioSaavn), changed this by launching a web application in 2009 which allowed users to stream music over the Internet. And in early 2010, things began to move as Saavn, which was until then a web application, had just launched an Android mobile app to capture the newly evolving smartphone market.

Fast forward to 2020, and there are around 8 major players in a highly competitive market with more players, notably music labels such as T-series, expected to join the fray. The industry has an estimated size of USD 280 million, and contributes to around 67 percent of the revenues for the music industry. It has been projected to touch USD 400 million in the next 3 years at an astounding growth of almost 30 percent CAGR. The adjacent chart shows the market share of these players as of 2018. As of 2020, Jio has acquired Saavn, establishing it as the clear market leader.

But this game has just begun…

Saavn launched in India as a web application, with its first foray into the B2C segment. At this point the streaming industry was exclusive and novel. The industry has since come a long way, with the advent of technology and more players. The picture below shows a possible user segmentation for the music streaming industry

Product Adoption Lifecycle — user segmentation

With over 150 million users across the streaming platforms currently, which is just over 10%, the music streaming industry is poised for explosive growth.

The industry is still in its growth phase, and is using a plethora of growth hacks to reach the early majority users.

The Chasm

30 years ago, when Compact Discs were introduced, they started a digital revolution in the music industry, which led to the death of vinyl and magnetic tapes. The CD based music industry saw a pattern of growth similar to that of the streaming industry as they both distribute music in the digital world. The user segments were similar as well. While the Innovators and the Early Adopters were of the same nature, the CD revolution faced two key roadblocks to widespread adoption:

1. CD players needed high upfront investment; and
2. A CD could only store limited data (790 MB), and based on the format of the data the number of songs varied drastically (for e.g. a CD could store only 7 files in the .aac file format!)

The music industry had a mammoth task overcoming this. The second problem was partially solved with the introduction of the .mp3 format which allowed the user to store more data. But this triggered the problem of piracy, which troubles the industry to this day. And also, the problem was only partially solved as the user was still expected to carry all his music along every time! CD-based music distribution could not cross this chasm, and that’s where streaming stepped in.

Fighting its own battle

The leading players are working relentlessly at solving the following key problems, and this will turbo-charge this growth phase of the streaming industry, leading to widespread adoption by the early majority:

Indian streaming services have come up with a multitude of tactics and strategies to overcome these problems and achieve increased adoption. Some of the key initiatives are:

1. Providing quality gradient streaming from 60 kbps to 128 kbps
2. Allowing users to download over non-metered connections and store music offline
3. Partnering with smartphone manufacturers (Gaana pre-loaded on Xiaomi phones, Saavn on Jio phones, the Play Music application on all Google phones etc)
4. Lowering subscription rates (Saavn has lowered its monthly subscription to Rs. 99 from Rs. 220 in 2012)
5. Curating content to cater to different types of users (“most played”, regional playlists by artist etc.)
6. Creating original content to drive loyalty for e.g. Saavn runs podcasts by celebrity hosts on topics of interest for various demographics

With the advent of established international players like Spotify and large music labels like T-series, the streaming industry will see a host of innovative solutions that will propel its growth.