Can Spotify Stand Out In India’s Crowded Music Streaming Market?

Spotify is the newest entrant, albeit late, in India’s crowded music streaming market that is yet to get people into the habit of paying.

The Stockholm-based company, whose service was finally made available both on web and mobile application on Tuesday, will not only be competing with its global peers such Apple Music, Google Music and Amazon Music in the country, but will also go head-on against domestic players such as JioSaavn, Airtel Wynk, Gaana, among others.

Spotify’s premium subscription, that offers features like offline playback and the ability to play songs on connected devices like televisions and speakers among others, are available starting at a monthly plan of Rs 119, or about $1.67, compared to $9.99 in the U.S.

To be sure, there are already at least a dozen music streaming platforms in India that expanded aggressively as data became cheaper, but only less than 1 percent of the subscribers pay for music and nearly 14 percent are bundled users—who pay for services as part of data packs, while the remaining 85 percent are free users, Deloitte said in a report.

India, where more than a third of 1.3-billion people use smartphones, is a crucial market for Spotify. The number of people listening to songs legally online is expected to jump threefold to 273 million by 2020, according to an EY report. As of December 2018, India had 150 million users.

India, however, falls under the “rest of the world” market for the company, that spans from Australia and Japan to Israel and South Africa. This market had nearly 10 million subscribers at the end of December, as per the company’s earnings report.

Challenges Aplenty

Spotify, the largest paid streaming service globally, is likely to face challenges as it eyes the Indian market—getting users to pay is just one part of it.

The company’s existing global music collection will be of very little use. “Indian market has more than 40 different types and genres of music, that means it's as many as 41 music countries,” Harish Bijoor, a brand consultant, told BloombergQuint over the phone. “They cannot go generic here, and should have more local catalogue.”

And music streaming is also diversifying in the country as the share of music from Bollywood films has come down from 70 percent to just about 50 percent, while regional music has grown from 5 percent to 25 percent in two years, Deloitte said in its report, suggesting a huge market for regional content.

Spotify, which has been laying the groundwork in India for a while now, understands this and has just started to crack the record labels market in the run up to the launch. It got into a global content deal with T-Series, which will provide the firm a catalogue of 160,000 songs, including Bollywood and regional movie soundtracks.

Striking licensing deals, however, hasn't been easy for the company. Its Jan. 31 launch was stalled because of a legal dispute with Warner Music which had sued the music streaming platform to stop offering songs from the label’s roster of songwriters in the country. The company is currently not offering songs from the Warner Music label in the country but has made songs available from Warner's music publishing unit, Warner/Chappell Music after the Bombay High Court didn't grant the injunction. Under Spotify’s current plan, it still wouldn’t be able to offer music from Warner’s record label, which represents Bruno Mars, Ed Sheeran and Cardi B, Bloomberg reported.

To attract Indian consumers, the firm has also introduced some India-centric features such as multi-language music recommendations, a playlist made for India and city-centric playlists to name a few.

Competition

If all this is taken care of, then Spotify, which plans to offer more than 40 million songs and 3 billion playlists in the country, has to get customers to pay for its subscription-based models.

While Spotify’s pricing is on the higher side, it is a rupee cheaper than Apple Music’s monthly plan of Rs 120. Others streaming platforms offer free music, and on an average charge around Rs 99 a month for ad-free access.

Pricing, however, is important in a market like India, said Bijoor. “I had expected Spotify to come at a lower price point. That could have helped it to expand faster in the country.”

Attracting subscribers will not be easy due to lack of tie-ups with wireless carriers. A standalone offering without integrated partnerships with telecom operators will make it difficult to gain meaningful market share as Indian users are extremely value-conscious, Jehil Thakkar, partner at Deloitte India said. “Unless you have a compelling offering with original and exclusive content like in the video over-the-top side, people will not be comfortable shelling out money.”

For a player like Spotify it could be a pure market share game for the next five years, he said.