Even today, conversations among music executives often hark back to 1999, when the popularity of CDs brought annual global recorded music revenue to its all-time high of $14.6 billion. Yet for India, one of the industry’s most exciting markets today, such nostalgia is arguably irrelevant.
“India was never a CD market, and we never really had a download business either,” Shridhar Subramaniam, Head of Sony Music India, told me. “We had a brief cassette era, and one of our biggest revenue streams up to around four years ago was ringback tones.”
Rather than relying on record sales to determine market viability, however, artists and labels are now privy to the sheer volume of consumption on streaming services, and this is precisely India’s biggest selling point.
The country recently surpassed the U.S. as the world’s second-largest smartphone market, which is estimated to reach 450 million users by 2020. Moreover, 96% of these phones are expected to be manufactured domestically, which has direct ties to music streaming: three of India’s largest streaming services—Jio Music, Wynk Music, and Gaana—are run by local telecom and internet companies (Reliance Jio, Bharti Airtel, and Times Internet, respectively).
Coupled with falling data rates, the rise of mobile is bringing over 60 million people in India onto streaming services every month, but revenue projections are still surprisingly low. KPMG estimates that the Indian recorded music business will reach $300 million in annual revenue in 2019—a mere 4% of the $7.65 billion that the U.S. recorded music industry alone earned last year.
Piracy is also still a rampant issue in the country, with over half of internet users accessing unlicensed services on a monthly basis. This doesn’t necessarily mean that Indian music and media are cheap or undesirable. Apple, Amazon and other big-tech behemoths have reportedly been in talks to acquire the catalog of Indian movie producer Eros, which is potentially valued at $1 billion.
What will it take to close the gaps among music consumption, revenue and value in India, and how can both local and international artists get involved? Part of the solution is technical and product-oriented: outfitting streaming services with cleaner data, detecting and shutting down piracy sites, incrementally introducing paid tiers. The other, larger, more difficult part is cultural. The current Bollywood-centric market in India prioritizes hit songs and box-office sales over artist development, and meaningful change will have to come as much from inside these dominant structures as from outside.
THE BOLLYWOOD MONOPOLY
In the U.S., while music revenue from sync licensing (placement in film soundtracks, ads, video games, etc.) is steadily growing, it’s still considered an “emerging” part of the business in terms of volume. India paints literally the opposite picture: the local music industry is essentially synonymous with Bollywood, which releases over 1,000 movies annually, and soundtracks account for nearly 80% of the country’s revenue. The dependence is mutual, as films won’t have solid opening weeks without good music, and enthusiastic moviegoers often show up to theaters just to hear a hit song.
Those labels who prioritize Bollywood, therefore, capture the most market share. In this respect, the three global majors—Sony Music Entertainment, Universal Music Group and Warner Music Group—face tough competition from what some call the "local majors." Zee Music, whose digital assets are managed by Sony, already captures an estimated 30% market share of Bollywood soundtrack sales despite just three years of operation. T-Series, which recently signed a long-term licensing agreement with Amazon India, runs the most successful YouTube channel in the world by number of views, eclipsing 22 billion in total to date. Times Music—housed within media conglomerate The Times Group, alongside Times Internet—runs the popular Bollywood and regional record label Junglee Music, and also acts as the national representative for Warner/Chappell Music.
“There’s a sort of love-triangle situation, where third-party Bollywood music distributors like T-Series and Zee also produce movies of their own, and have artists signed to their own rosters that they promote as playback singers in their films,” Nirmika Singh, Executive Editor at Rolling Stone India, told me. “It essentially allows the labels to build their own monopoly.”
Sony is the largest and oldest foreign-owned label in India, celebrating its 20th anniversary this year and controlling an estimated 25% of India’s music market, thanks to continuing acquisitions of Bollywood films and regional repertoire. In contrast, Universal focuses primarily on marketing Western and other international repertoire, while Warner has the smallest presence of the global majors, relying on Sony and Times Music for publishing and distribution.
One can attribute international music's relatively low penetration into the Indian market in part to government regulation. For several decades, India’s FM radio market was completely regulated by the national public broadcaster, All India Radio (AIR), and it wasn't until 1999 that the government began rolling out private radio licenses. The country’s first international radio station, Radio Indigo 91.9, is a mere 11 years old.
“In the U.S. and other markets, FM radio provided substantial support when physical sales dwindled,” said Atul Phadnis, Chief Content Officer at Gracenote, which has over 300 content and data employees in Mumbai. “We didn’t have that support system here in India because the government wasn’t sure how to unleash its wider radio licensing regime across multiple cities. Now it’s growing by leaps and bounds with the flurry of mobile and streaming activity coming in, but we still have to catch up with a 20-year growth deficit.”
Moreover, the concept of long-term copyright ownership is still surprisingly new for musicians in India. It wasn't until 2012 that key amendments were added to the Indian Copyright Act that assigned music copyrights to the composers and songwriters themselves, rather than to the film producers. That doesn't seem to have impacted dominant industry practices: as prolific Bollywood composer Pritam recently told Rolling Stone India, “we are given a package deal and once we are paid the money, our rights are gone. So, everyone tries to clinch as many projects and earn as much money as possible.”
As a result, even the Bollywood composers themselves embrace monopolistic practices, treating the business like a zero-sum game. Pritam asserted that he “won’t be in a happy space” if he ever has to share soundtrack credits with other composers—a mindset that brings bad news for production companies that want to maximize their chances of nailing a hit with a diversified music roster.
"India is much more song-driven than artist-driven, because of the emphasis on film,” Mandar Thakur, COO of Times Music, told me. “What ultimately creates a thriving music industry is an artist-driven approach."
STREAMING: CHALLENGES TO BETTER DATA, AND BETTER PAY
While streaming services are still quite Bollywood-centric, the genre’s share of music is decreasing with the overall transition to digital. According to Prashan Agarwal, COO of Gaana, international music is the fastest-growing category on the service, the number of monthly streams having gone up from 22 million to nearly 110 million over the past year. Overall, whereas Bollywood music still captures up to 95% of the physical market, its streaming share across services dips to roughly 60%, leaving more wiggle room for international, Indipop and region-specific repertoire. “We were seeing a lot more search terms for specific artists or types of music that none of our original content providers were actually giving to us,” said Paramdeep Singh, Co-Founder and Executive Chairman of streaming service Saavn.
From a behavioral perspective, India is not a recommendation-oriented streaming market, but rather relies more on search and discovery, particularly around popular Bollywood actors and music directors. Hence, one of the most important features for successful streaming services to include is a cross-media search and linking capability (e.g. showing associations among artists, music directors and movies)—but "there are no standards in the Indian market right now for a metadata structure, in terms of including the right artist, album and track names,” Brian Hamilton, SVP and General Manager of Music & Automotive at Gracenote, told me. “We are seeing services put multiple singers and actors into a single tag or field, which is inefficient and inaccurate.”
The proliferation of regional repertoire—India has 22 official languages, all of which are reflected in the country’s media output—also poses a unique data and marketing challenge to streaming services. This is perhaps why international players like Google Play and Apple Music have yet to gain the same traction as those services built on home soil (Rdio and Guvera also had significant stakes in the Indian streaming business, before they shut down). Distributors like Sony's The Orchard and Believe Digital have helped usher regional repertoire into the digital age, regularly signing deals with content owners like Muzik 247 and Aditya Music India.
Despite this growth, the scale of consumption and revenue is still too small to yield substantial returns in the present day. The market industry standard for royalties is 0.0011 cents per stream, and there was no track in the country that hit even one million streams until this past June.
That being said, simply blaming the Indian population for their unwillingness to pay for music is “a misreading of the market,” said Thakur. “People certainly have spending power. They’re paying regularly for mobile and cable bills, and for video subscriptions on Netflix and Amazon Prime.”
Both streaming services and major labels are becoming more proactive in promoting paid subscriptions. In November 2016, Saavn, which has over 20 million active users worldwide, transitioned to a paid-only tier that charges $1.50 a month in India and $4.99 a month in other territories. In August 2017, Sony Music India implemented a 24-hour streaming paywall for the Bollywood single “Phurr,” co-written by Pritam and America’s own Diplo for the film Jab Harry Met Sejal.
“The first job is to engage directly with these new listeners through access models and cheaper plans, but once we get them into this free world, we need to think more seriously about how to upsell them,” said Subramaniam. “We need to start putting more restrictions on the free tier in 2018, and creating barriers not to entry but to access.”
The paywall move drew some criticism from the industry, in terms of its long-term impact. “The strategy in itself can work, but this is a half-hearted attempt, releasing the third or fourth song from a film behind a paywall,” said Anurag Bedi, EVP at Zee Music. “We, as an industry, need to make a wholehearted attempt towards this by doing it for day one or song one.”
INDIES: WORK WITH THE BOSSES, OR START FROM SCRATCH?
Creating a more thriving ecosystem for independent, non-film musicians in India begins with defining the playing field in the first place. “The meaning of ‘indie’ in India is still very amorphous and ambiguous,” said Nirmika Singh. “Are you talking about non-Bollywood music, or music not backed by major labels, or a particular kind of sound? It becomes especially difficult to identify any kind of specific indie sound because the national dailies and bigger publications are always looking at Bollywood.”
In reality, many independent artists have already woven themselves into Bollywood's fabric, doubling as playback singers or session musicians for soundtracks in order to make a living. Movie producers have also become more open to placing up-and-coming artists in their soundtracks (contrary to what the legacy, monopolistic composers may prefer). “We’re using Bollywood more and more now as a marketing platform, as opposed to just a content creation platform,” said Subramaniam. “Designing soundtracks is finally starting to become more creative than transactional.”
Outside of the Bollywood ecosystem, there exist a handful of online tools for emerging artists to self-release and interact directly with their fans. Saavn has its own A&R team in New York City and collaborates with independent artists on marketing campaigns through its Artist Originals program; fellow service Hungama runs a similar initiative called Artist Aloud. and raise money. Crowdfunding site Wishberry has become a popular option for creative entrepreneurs in India, including but not limited to music.
While TV and radio remain the primary marketing channels for Bollywood music, YouTube is gradually planting its flag in the ground as a third force to be reckoned with: over 500 independent YouTube creators surpassed 100,000 subscribers in 2016, and there are currently 14 creators with over one million subscribers. The video platform recently launched a #SeeSomethingNew campaign to shed light on emerging talent in India, and brought its FanFest event series to Mumbai past March.
Given relatively paltry streaming royalties, many in the industry also point to India's live events circuit as a riper opportunity for indie artists to break into the market. Local promoters are also often willing to shell out major cash to court international acts—such as White Fox India, which notoriously spent $4 million on Justin Bieber’s concert in Mumbai this past May.
Yet, as with Bollywood, an ingrained cultural obstacle stands in the way: the majority of live music in India is club-centric, where alcohol is the main showrunner and the venue itself is just "a bar or restaurant that gets converted into a dance floor,” said Aneesha Kotwani, founder of Wavlngth, a concert promotion company focused on bringing international artists to perform live in India. “There are very few purely performance-oriented venues. As a result, your sound system and ambiance really aren’t built for enjoying music, and there’s a good chance that a large percentage of your audience knows nothing about your lineup.”
Many local indie bands have also vocally complained about not getting paid on time, or at all, for their shows—a problem that certainly exists in other countries, but is amplified in India with the excessive focus on ancillary revenue rather than on the music itself.
Festivals have been sprouting up across the country, but the scene is still less than a decade in the making, and may already be facing saturation. Local promoter and management company OML Entertainment co-organizes EDC India and the Bacardi NH7 Weekender, while Road to Ultra recently stopped in Mumbai and Delhi. Sofar Sounds, a VC-backed music events startup headquartered in London, operates in 12 cities in India and has played a substantial role in putting independent Indian artists on the digital map.
Not all festivals have found the same success. Rock ‘n India, which drew the likes of Metallica and Iron Maiden as headliners, shut down in 2012 after four years due to low attendance and subsequent sponsorship pullout. By its fifth year, NH7 Weekender began introducing a regular Bollywood contingent to its lineup (popular Bollywood composers Vishal Bhardwaj and Ram Sampath are among the 2017 headliners in December), which drew backlash from indie purists.
“Most indie music fans don’t want any Bollywood representation at these festivals,” said Nirmika Singh. “They see that as selling out on the part of the organizers. Of course, the organizers need to take care of the business side and finances have the last word at the end of the day.” (OML Entertainment did not respond to a request for comment by press time.)
Alongside Wavlngth, there are a small number of companies dedicated to fostering more organic relationships across country lines, such as Border Movement, which runs regular exchange programs and workshops between Germany and South Asia. "Bringing in more international artists is all about trying to build a music culture,” said Kotwani. “Right now, there's not really a music culture in India per se, in the sense of robust communities of people who are growing up listening to genres like house, garage or jazz. Our goal is to pave the way for future generations in India to build more vibrant scenes around this type of music."
Yes, local underground communities are beginning to establish themselves on the world stage: Mumbai and Bangalore have thriving rock and hip-hop scenes, Calcutta is reviving its rich jazz history and the growth of EDM festivals has catapulted Indian DJ-producers like Nucleya into the global spotlight. For most in India, however, music culture (and recorded music revenue) remains inseparable from film culture, prompting more labels, streaming services and artists to speak out and provide proper support and credit where credit is due. Such work will be necessary as a growing number of international music companies look to India as their next frontier.
