Audio OTT Economy in India: The rise of Spotify India

With this read, we take a look at the rise of Audio OTT Economy in India – we understand the reasons and try to outline how the future is for space. We also take a look at players like Spotify India, Ganna, YouTube Music, Jio Saavn, Amazon Music, etc…

Did you spot the rise of streaming services yet? Is the buzz around it audible to you? Airtel Wynks at you, while Times network plays Gaana on your requests when you can’t watch everything on-the-go with Youtube. Streaming in its Prime has disrupted the storage, entertainment i.e. music and video industry with its value-addition to a user. Subscription model gives autonomy to users to consume more with less and curbs piracy to some extent from the creator’s POV. The impact is so big that Google decided to kill its Google Play Music and invest in Youtube Music to join the streaming bandwagon & monetise the premium ad-free features for its subscribers.

(Trivia: Google has a dedicated page called Killed By Google: Google Graveyard for all its dormant product offerings)

Top Players in the Audio OTT & Streaming space
Fast Facts:

According to a recent Deloitte-IMI (The Indian Music Industry) report, audio OTT players like JioSaavn, Spotify, Amazon Prime Music, Wynk, Apple Music and YouTube Music contributed over 70% of the revenues of the domestic music industry in 2018. The figure is even higher for the US market by at least 10% points. It has grown by 20% to a behemoth $8.8 B industry. Revenues from streaming in India have more than tripled in the last 5 years as it has gone from $30 M in 2014 to $109 M in 2018. As per a consumer survey by IFPI, the average time spent by an average Indian internet user is 21.5 hours per week listening to music. It is 21% higher than the global average time of 17.8 hours per week.

Audio OTT & Streaming Services TAPS into a Content Rich Ocean

Non-linear audio content has a significant demand amongst today’s millennials. A testimony to this fact is that there are over 200 M subscribers to music streaming services. It can be understood and remembered by an acronym, I’d like to call as TAPS.

Talk Shows (Ted talks audio, interview series, professional webinars)

Audio Books (Audible by Amazon)

Podcasts

Storytelling

There is a gradual shift to content consumption in the audio space. Quality of content that adds value in terms of career building, personality development, enriching stories and interview podcasts have tremendous growth potential. Think of the immense rise of Ranveer Allahbadia whose real name is less popular than his Spotify podcast The Ranveer Show & Youtube channel ‘The Beer Biceps’ with over 5-M subscriber base. There are other associated forms within music and linear audio content that may or may not be limited to Audio OTT players.

Spotify: The Alpha of Audio Streaming Services

Spotify has truly transformed the way an artist and a fan connect with each other. It has got such a headstart in this niche space that the BigTech giants like Apple & Amazon Music collectively have got 122 M subscribers which is still shy of Spotify. It has two business models: Paid Premium Service and Ad-supported Freemium model. Spotify’s ecosystem has got four pillars since the recent acquisition of Anchor, Gimlet Media and Parcast in a hefty sum of over $400M.

  1. A leading streaming app – Spotify
  2. A podcast creation tool – Anchor
  3. A pool of talent for original content creation – Gimlet & Parcast (Podcast, Audio, Radio Re-imagined)
  4. An advertising platform

Spotify’s CEO Daniel Ek recently gave a statement on music (product for Spotify) must be churned more regularly and it was met with a mixed response from the creative community of musicians and artists across the globe. But from a business standpoint, it makes sense as higher churn leads to more releases which fits well in Spotify’s New Music Friday.

  • Monthly Active Users: 286 M with a 31% growth Y-o-Y(embed link)
  • Subscribers: 130 M (Q1 FY 2020)
  • Podcast titles on the platform: 1 M+
  • New features like Canvas x Instagram Stories integration has given it immense popularity
  • RADAR, its flagship global Emerging-Artist Program
  • Launch of Spotify Kids in 12 markets like US, Canada & France

Spotify India has been a new kid around the block in Indian OTT space. But it has exceeded growth expectations & forecasts after it launched ‘The Spotify Originals’ a series of podcasts. It includes 22 Yarns, a cricket related interview series with Gaurav Kapur as the presenter and Bhaskar Bose, a series of crime-related stories. I am a huge fan of these podcasts and can’t wait to hear their second seasons since they’ve been approved.

Podcasts: Sun Raha Hai Na Tu…

Ranveer Allahbadia says “I believe the COVID-19 outbreak has been a tipping point for podcasts. Not only have I seen more creators move to create podcasts, but have also seen a massive uptick in the listeners of my podcasts. In the last three months, my podcast has grown by 400%”

Spotify India MD, Amarjit Singh Batra also concurs with this opinion by saying that Podcast consumption has increased during Covid-19 lockdown despite a fall in transit times and people hear them while doing household chores. The top categories accessed are health and wellness podcasts in these pandemic times.

Spotify is a global leader in the podcast space and it realizes that the Indian market is still in a nascent stage for its adoption. Hence, they’re keeping it free to access for now but after an audience is built and they have the numbers to scale, Spotify might plan to make them premium soon. It would be exciting to note whether a quality-driven content consumer who is value-conscious as well would be willing to pay for a subscription? Or Spotify goes the Amazon way to bundle its services under an umbrella subscription scheme?

Spotify’s hopes are relying on huge potential of

  1. 12 newly announced Spotify Originals – Podcast Series’ (stories with 24-episodes of 15-minutes conversational format)
  2. UGC: User Generated Content using Anchor
  3. Opportunity to host & connect advertisers with creators to monetise the platform
  4. Investments, partnerships & licensing with local players in vernacular language storytelling as a long-term play (currently in Hindi & English)
Is Everything Sunny for Spotify or Some Dark Clouds Exist?

An overview of Spotify India’s journey is so far is very optimistic and they have been nailing any challenges to perfection. The near-future appears totally sunny (promising) for Spotify India but there could be some challenges ahead in the form of:

  • The Monetisation Conundrum: Gap between consumers’ willingness to pay for subscription fee & actual subscribers
  • Retention Rate: User attrition or conversion after using multiple trial versions
  • Password sharing & multiple device logins which Netflix, Prime also battled with
  • Cross-Promotions of original content on Spotify: dependence on social media & Youtube
  • Reliance Jio Effect: What if’s from JioSaavn investments in Audio OTT & content licensing
The Author

The piece was written by Geetesh Makkar, a recent pass-out of SIBM Pune. This is his third industry analysis, the first one was about the Men’s grooming category. The second one was about the growth of Ed-tech. If you like the piece, share it on WhatsApp or tweet us on Twitter.

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