However, the real challenge for the OTT music players is to convert users into paid subscribers as around only one percent streamers opt for premium services.
Competition in the Indian music streaming space is heating up and the proof of this is the number of downloads the newly-launched YouTube music app has registered. With three million downloads in its launch week in India, the Google-owned music streaming platform has gone ahead of another global giant in the music space – Spotify which came to India on February 26 this year.
Talking to Moneycontrol, Shradha Agarwal, COO, Grapes Digital, a digital marketing agency said, “YouTube, which was launched in the month of March, has crossed the 3 million-mark against Spotify, which was at the 1 million-mark in the first week of the launch. And that is remarkable because we have 150 million music streamers in India, of which, 80 million use Gaana. Crossing the mark of 3 million is great.”
So, what would be the strategy for the two international players who have entered a crowded market like India?
According to Hanish Bhatia, senior analyst at Counterpoint, "Initially, YouTube is expected to leverage its reach to penetrate the audio streaming market, while Spotify will have to spend heavily on marketing to gain the attention of users.”
“However, in the long run, partnerships are going to play a key role in market share. Gaana has already realized this and they're now expanding through partnerships. Recently, Gaana partnered with PayTM, which is offering free 12 months Gaana Plus subscription for PayTM first-time subscribers. Similarly, it has partnered with MG Motors India. MG Motors launched Hector in India and users will get free Gaana premium subscription," Bhatia added.
In fact, a 2019 CMR survey says that Gaana is the most favoured app. The survey also points out that while 50 percent of those surveyed were not even aware of Spotify, only 40 percent indicated giving Spotify a try.
“As of now everybody has the opportunity to grow but global companies are going to make it tough", said Agarwal.
“Look at how Amazon and Flipkart have done in the country. Everyone has adopted Amazon and this is despite Flipkart having the first mover advantage. And these guys (Spotify and YouTube Music) bring in a lot of international content at Indian prices. Spotify, which is $10 in the US, approximately costs less than $2 in India.
"YouTube has a tie-up with all the Indian content. So, if you want to listen to 'VidyaVox cover', which is not available on Saavn or Gaana, you can get that on YouTube music,” she added.
As pointed out by the CMR report, pricing is also an important factor in this space because most Indians love listening to music free of cost. Hence to up its game, YouTube Music came up with two monthly subscription plans, along with an ad-supported version of the music app, that users can access for free.
If YouTube is available for Rs 99 a month, so is Gaana, JioSaavn and Apple music. However, Spotify is at a higher price point, available at Rs 119 a month. And the Swedish-audio streaming platform’s yearly subscription is even higher at Rs 1,189 while JioSaavn and Gaana are available at Rs 299.
Apart from pricing, Spotify also lags behind when it comes to regional content. “Spotify definitely has to pick up because it is available in only seven languages. YouTube, on the other hand, has content from all languages because of its parent company,” said Agarwal.
It is important to buck up the regional game because “the internet trend for 2019-2020 is voice, regional, and video".
"Now if you look at the number once again, of the 560 million users, urban users generally consume content in English. After saturating the urban consumers base, the growth of users has to come from the regional space,” explained Agarwal.
She added, “In fact, the YouTube fan-fest that happened this year was spread across multiple cities and focussed as well as promoted regional content. Earlier, it was only in Delhi and Bombay.”
However, the real challenge for the OTT music players is to convert users into paid subscribers as around only one percent streamers opt for premium services. “There is growth (in the music streaming space), but we will have to see how many of these would be subscription. Nine out of 10 users are only using the free service right now. The growth really needs to be seen there,” said Agarwal.The silver lining here is that Indians have a large appetite for music consumption. According to a Deloitte report, Indians spend nearly 21.5 hours a week listening to music, as compared to the global average of 17.8 hours. This is precisely why the Indian market is a gold rush for the OTT music players.