Gaana, one of the latest music streaming apps, is leading the market in India
An estimated 41 million people worldwide are now paying for music subscription services. Music continues to be a portfolio business, with revenues being generated from a diverse range of channels including music subscription services, CDs, vinyl LPs, downloads and performance rights licensing. Within this portfolio, the key drivers for growth have been the steady rise of streaming and the decline of physical and download revenues.
The combined ad-supported and subscription streaming revenues now account for 32 per cent of global digital revenues. Revenues from streaming are further divided into subscription services and ad-supported streaming. The latter’s revenue are seen as accelerators of growth globally – up by 38.6 per cent in 2014, a significantly higher growth rate than the 16.6 per cent increase in 2013. YouTube alone has more than one billion users and music related content makes up a very large proportion of its use. A consumer research report published by Ipsos, conducted across 13 of the world’s leading music markets in 2015, shows that 57 per cent of internet users have accessed music or music videos on internet video sites such as YouTube in the last six months, compared to 38 per cent for music streaming sites such as Gaana. Another 26 per cent came from download services like iTunes. Music streaming apps have become a big phenomenon in India, an almost fixed annexure on every smartphone screen. As per the latest comscore report (May 2016), Gaana received 16,99,000 traffic followed by Saavan which received 11,83,400. Raaga received 5,46,000.
Music-streaming firms point to the potential of generating ad revenue from scaling up their user base and the fact that the number of paid users is growing phenomenally. For music streaming to work for both record companies and artistes, the business model needs scale with lots of users. India is arguably the best market to achieve such scale and is proving its worth as we move into the second half of 2016. Users can pay a monthly subscription fee and their access to music is ad-free, with offline access over multiple devices. However users, largely in India do not hesitate streaming content with breaks and listening to ads as long as they do not have to pay the monthly expense making streaming apps a large ad spend market for brands across portfolios.
