Five debatable statements about the future of the Indian music industry
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View this email in your browser (|ARCHIVE|) http://hotpodnews.com/presents.... A Newsletter about Big Ideas in Music and Technology, by Cherie Hu This is issue #62, published on September 13, 2019 Happy belated National Day of Encouragement (https://dayofencouragement.org/) ! You got this!! :D
I’m super excited to share this week’s essay with you; it’s chock-full of my higher-level takeaways and questions from my two-week trip to Mumbai and my experience at the All About Music conference. It’s also quite long, so for the sake of your reading experience, I suggest you open this email in a new tab by clicking here (https://mailchi.mp/cheriehu/india-music-industry) (and use that link for sharing!).
I’ve also published several subject-specific pieces about the Indian music industry on my Patreon page (https://www.patreon.com/cheriehu) (e.g. about A&R, brand partnerships, “willingness to pay”) — links to which you can access by scrolling down to the “My writing elsewhere” section at the bottom of this email.
Special shout-out to Noelle Li for being the latest member to join the $40/month tier — your support is much appreciated! 🙏 Five debatable statements about the future of the Indian music industry
The lowdown: * India is undoubtedly home to one of the most exciting and fast-changing music markets in the world today. * But — surprise, surprise — the needs and incentives of local artists, record labels and streaming services aren’t perfectly aligned, and they often disagree with each other about where the biggest opportunities for growth really are.
After writing a few (https://www.billboard.com/articles/business/8462090/india-beyond-bollywood-youtube-streaming-services) articles (https://www.forbes.com/sites/cheriehu/2017/09/23/how-india-the-global-music-industrys-sleeping-giant-is-finally-waking-up/#2fc90b8630bf) about the Indian music industry from across the world, I had the incredible opportunity to make my first-ever trip to India a few weeks ago, to learn more about the local music landscape on the ground and exchange thoughts on its future with dozens of colleagues and friends, old and new.
I spent a total of two weeks in Mumbai — exploring everything the city had to offer culturally, as well as getting down to business at the All About Music (http://allaboutmusic.in) conference. I moderated a panel there about the future of “non-film” music — which could be loosely defined as music created outside of the promotional machine of Bollywood films, but is actually a lot more complicated than that, as we’ll get to later. My job as a moderator was ultimately pretty easy because the panelists — streaming execs Soumini Paul (Hungama) and Prashan Agarwal (Gaana), artists Nikhil D’Souza and Neha Bhasin and artist managers and promoters Dev Bhatia (UnMute) and Ankit Khanna (DNH Artists) — were super candid about the challenges of their respective roles, and agreed to disagree on several points. Spending a few weeks there really solidified my impression that the impact of India’s music culture and history far eclipsed its current dollar value.
In fact, shortly after I got back to the U.S., Deloitte and local trade body Indian Music Industry (IMI) released a fascinating report titled “Economic impact of the recorded music industry in India (https://www2.deloitte.com/content/dam/Deloitte/in/Documents/technology-media-telecommunications/IMI%20report_singlePage.pdf) ,” which argued just that.
The IFPI’s most recent Global Music Report claimed that India’s recorded-music sector generated around US$156 million in 2018. While this outpaced annual growth in global recorded-music revenues by 2.5x, it’s still paltry in proportion to the national population — amounting to around 11 cents in recording revenue per capita — and is only around 1.6% of what the U.S. recorded-music industry made that same year.
Yet, as with anywhere else in the world, the health of India’s music ecosystem is intimately tied to that of several other “partner industries,” including broadcast TV, FM radio, films, on-demand audio streaming and live events. As Deloitte and IMI articulated in their report, music’s indirect financial contribution to these industries exceeds $1.2 billion annually — an eight-fold increase over the direct revenue that music companies are seeing. Put another way, if the Indian recorded-music industry were to grow by 10% from today’s levels, that would translate to around $114 million in incremental revenue for “partner industries” as well (see below).
Source: “Economic impact of the recorded music industry in India (https://www2.deloitte.com/content/dam/Deloitte/in/Documents/technology-media-telecommunications/IMI%20report_singlePage.pdf) ” (Deloitte/IMI)
Okay, so we’ve established that there is a huge, and literal, value gap around music in India. So what comes next?
The Deloitte/IMI report offers several concrete suggestions spanning both the public and private sector — from cultivating friendlier “creative cities,” to investing more in music export schemes, to streamlining governmental efforts around copyright protection and enforcement — that I recommend you read through.
In today’s newsletter, I hope to complement that large-scale perspective with my much smaller-scale experience of talking with music professionals on the ground, and highlight widespread arguments about the future of the local industry’s growth that I think are inconclusive.
Below, I’ve included five claims that I heard repeatedly in some form at the All About Music conference and in one-on-one conversations with industry stakeholders. Each section synthesizes the key trends that would inform people’s reasoning on both sides of the table. For some of these statements, their “debatability” is obvious and certainly not unique to India; for others, there seems to be an imbalance in which side of the argument gets more publicity and support.
My account is not the most comprehensive or authoritative by any means, but hopefully will offer a helpful outline of the issues that Indian music-industry professionals are thinking about, especially if you are relatively new to the market. Because India is growing and evolving so quickly, it’s a really effective vantage point for understanding region-specific issues that will ultimately have global relevance — especially as artists, record labels and streaming platforms chase increasingly global ambitions.
(If, after reading this newsletter, you’re interested in following local writers who are covering the Indian music scene more regularly on the ground, I highly recommend Nirmika Singh (https://twitter.com/nirmika?lang=en) , Amit Gurbaxani (https://twitter.com/thegroovebox) , Anurag Tagat (https://twitter.com/anuragtagat?lang=en) and Bhanuj Kappal (https://twitter.com/bhanujkappal?lang=en) , and the sites Music Plus (https://www.musicplus.in/) and Loudest.in (http://loudest.in) .) 1. The biggest growth opportunity is in advertising
Naturally, I heard this argument the most from the music team at YouTube, whose parent company is one of the world’s biggest advertising juggernauts.
YouTube was a highly visible sponsor at All About Music (see their logo blown up behind my head in the above photo), and many of the solo talks and keynotes were simultaneously celebrating the independent achievements of local artists and giving YouTube an overwhelming amount of credit for their successes.
To be fair, YouTube and India do rely on each other more than ever. Nearly 15% of YouTube’s total monthly active user base is in India — i.e. 265 million (https://www.livemint.com/industry/media/youtube-hits-265-million-monthly-active-users-in-india-1554815017118.html) out of 2 billion (https://variety.com/2019/digital/news/youtube-2-billion-users-tv-screen-watch-time-hours-1203204267/) — and the country is purportedly one of the video platform’s fastest-growing markets.
On the other hand, a report (https://www.musicplus.in/indian-music-industry-cross-%e2%82%b919-2-billion-2021/) from the Federation of Indian Chambers of Commerce and Industry (FICCI) found that YouTube accounts for 40% of record labels’ digital revenues in the country. Hence, before going to any audio-first streaming service at the moment, labels tend to turn to YouTube first to break artists online. (It’s worth noting that at the major-label level, YouTube views are increasingly bought indirectly through advertising (https://www.billboard.com/articles/business/8520387/indian-rapper-badshah-video-one-day-youtube-record-sony) — a behavior that takes credibility away from viewership metrics, but makes YouTube money.)
At large, India’s digital ad spending is projected to approach $1.9 billion by the end of this year, according to Dentsu Aegis (https://www.exchange4media.com/digital-news/digital-advertising-to-grow-at-32-in-india-to-be-worth-rs-14281-in-2019-dan-e4m-report-94041.html) . That’s over 10x the annual revenue of the local recorded-music industry.
A source at YouTube told me that if the music industry could capture even just 1% of that projected $1.9 billion digital-ad spend, the size of the music market would already increase by 12%; capture 10% of that ad spend, and music market size would more than double.
While that math is technically correct, it’s also unrealistic. Firstly, YouTube’s parent company Google is fighting with the likes of Facebook, Amazon and ByteDance to get a slice of local ad revenue, leaving little room for any “pure-play” music companies.
Secondly, if you zoom out beyond music, companies and investors in India might actually be getting less excited about ads, not more, because they aren’t seeing the returns that they expected. Even though India has twice as many internet users as in the U.S., the former isn’t seeing anywhere near the same correlation between the growth of its internet population and ad revenue, even compared to neighboring countries in East and South Asia (see below). As Juro Osawa and Shai Oster wrote (https://www.theinformation.com/articles/in-india-many-internet-users-but-little-ad-revenue) for The Information, that’s because “Indian internet users lack the spending power to make them attractive advertising targets.” Source: “In India, Many Internet Users, but Little Ad Revenue (https://www.theinformation.com/articles/in-india-many-internet-users-but-little-ad-revenue) ” (The Information) According to IMI’s Vision 2022 report (http://indianmi.org/be/wp-content/uploads/2018/10/VISION-2022.pdf?curator=MusicREDEF) — which lays out several stakeholders’ proposals for how to make India a top-ten music market within the next three years — many music execs are making it a priority to talk with advertisers in just one specific capacity: convincing them to take their budgets away from illegal downloading sites and other channels that promote piracy.
That’s definitely an important effort, with more long-term implications in terms of training consumers (and owners of these piracy-driven businesses) about the importance of copyright protection. But given the margins on digital advertising, it likely won’t be a genuine bedrock for the future industry’s growth. 2. The biggest growth opportunity is in audio subscriptions
Anyone working in music should be familiar with this argument. In the global aggregate, revenue from paid and free streaming channels has now successfully offset the decline in physical sales, and has maintained a state of annual growth for the recorded-music sector since 2015. Given this backdrop, I understand why specific markets with low paid-streaming penetration, including India, would also want to increase subscriber rates on their home turf.
But for India in particular, even streaming insiders admit that it’s going to be a long, uphill battle. According to a second study (http://indianmi.org/be/wp-content/uploads/2019/02/Audio-OTT-Economy-in-India_web_v3.pdf) by Deloitte and IMI about the audio over-the-top (OTT) streaming economy in India, only around 1% of total music-streaming consumers in the country are paid subscribers. This conversion rate doesn’t even take into account the millions of people listening to music on YouTube for free, which would otherwise drive down the rate to a fraction of a percent.
When I asked professionals in the Indian streaming sector for their personal opinions about where the market was headed, they said reaching even a 10:90 paid:free ratio within five years would be an optimistic estimate.
Of course, some kind of floodgate might open in the market that does away with this conservative stance. But many label execs also posited that local streaming services are more incentivized to increase the size of their user base — which correlates directly with higher company valuations, which helps to drive acquisitions and/or going public — rather than grow their paid subscriber count. Again, this slight tension in incentives and success metrics between labels and streaming services is not unique to India, but is heightened in the country given the relatively lower recording revenues.
Importantly, a bigger opportunity around subscriptions might already be underway outside of the immediate recorded-music sector.
One cliché-but-true quip that I heard a lot during All About Music was that Indian music consumers “don’t like to listen to music; they like to watch music.” This partially explains not only why Bollywood has dominated the national music landscape, but also why video-first platforms like YouTube are so popular in the country.
An important corollary — which I actually did not learn until doing my own research after my trip — is that this distinction also translates directly what consumers are willing to pay for. In the report “A billion screens of opportunity: India’s Media & Entertainment sector (https://www.ey.com/Publication/vwLUAssets/EY-a-billion-screens-of-opportunity/$FILE/EY-a-billion-screens-of-opportunity.pdf) ,” analysts from EY estimated that the media subscription market at large grew by 262% year-over-year to around US$200 million in 2018, the majority of which came from video subscriptions. There was little to no conversation at All About Music about how record labels and other music companies could potentially take part in this video-driven subscription upside, instead of focusing solely on audio. 3. People aren’t willing to pay for music
I wrote a more detailed post on Patreon (https://www.patreon.com/posts/willingness-to-29522399) unpacking this argument, but thought I would summarize it and share some additional thoughts here.
“Willingness to pay” is a concept that naturally comes up in most conversations about growing streaming subscription revenue in high-piracy music markets like India. The usual assumption is that if revenues for a given product are low, so is the typical consumer’s willingness to pay for that product.
But many execs speaking at All About Music — who, to be clear, have a vested stake in the outcome — struck down this claim.
The most fascinating example to me that goes against this assumption of a low willingness to pay for music is the success of local label Saregama’s Carvaan (https://www.saregama.com/carvaan) — a retro-looking MP3 player preloaded with 5,000 different songs from Saregama’s catalog, with additional Bluetooth, USB and WiFi connection capabilities (pictured below). The most expensive model, dubbed “Gold (https://www.saregama.com/carvaan/carvaan2.0gold/hindi/buy-now) ,” costs Rs 12,990 (over US$180) — nearly 11x the cost of an annual Spotify subscription in India. It kind of reminds me of how Sony just released a new version of the Walkman (https://www.cnn.com/2019/09/06/tech/sony-walkman-40-trnd/index.html) on its 40th anniversary; both are PR-friendly attempts to cash in on nostalgia, to which I normally react with skepticism about how much traction they’ll actually get with consumers.
But miraculously, Saregama was reporting over one million total sales (https://www.thestatesman.com/business/saregama-carvaan-hits-1-million-sale-mark-1502714483.html) of Carvaan devices by the end of 2018, and is now selling them at the rate of over 100,000 devices a month. In interviews, company execs have projected the total market for Carvaan devices in the long run to surpass 25 million (https://www.medianama.com/2018/06/223-saregama-sells-389000-carvaan/) units, which ultimately equates to billions in sales for Saregama.
Hence maybe Indian consumers are willing to pay for music, if the branding and user experience are both compelling enough.
In the wake of Carvaan’s success, a few other labels aside from Saregama are also trying to strengthen their own standalone brands and cultivate direct relationships with customers on their own terms, instead of relying too heavily on mass-market radio and TV audiences or algorithmically-driven streaming audiences. For instance, Universal Music India is investing heavily in its VYRL Originals (https://www.youtube.com/channel/UCye6Oz0mg46S362LwARGVcA) brand of non-film music, and is planning to extend the brand into a regular live events series.
However, this is in fundamental tension with many of the numbers being published around streaming penetration, which suggests the precedence of utility as a motivation to pay. For instance, according to the aforementioned EY report, as much as 60% of consumption on digital media services (across music, video and other formats) comes from telco bundles. The firm projects that this proportion will only grow over time to around 75% of consumption by 2021, covering over 375 million total subscribers. One key challenge for local content owners in the future will be balancing the emphasis on utility and convenience that comes with bundling, with successful communication of the value of music as a standalone art form. 4. “Non-film” music is an innovative departure from Bollywood soundtracks
Going back to the point I made briefly at the top of this newsletter: the phrase “non-film” is broad, multilayered and rather complex, and not everyone who is technically a “non-film” artist identifies with that designation. To sum up the sentiment I encountered on the topic, both during and after my All About Music panel: the source of innovation in major “non-film” music is not in the content, but rather in the business model.
It’s imperative for labels to invest more in non-film music if they want to cultivate an actual “music industry” that’s self-sustaining, instead of being essentially synonymous with Bollywood. Universal Music India is one of the most aggressive investors in mainstream “non-film” music, with its VYRL Originals brand as well as a new joint venture with Mass Appeal India (https://www.universalmusic.com/mass-appeal-and-universal-music-india-to-launch-mass-appeal-india/) . Devraj Sanyal, MD and CEO of Universal Music India, claimed at All About Music that the non-film songs under VYRL Originals are getting just as much of a marketing push as Bollywood tracks across all channels, including radio, TV and digital.
But critics say that this investment in non-film isn’t actually pushing the sound of Indian music in a meaningful way yet.
The VYRL Originals YouTube channel (https://www.youtube.com/user/EMIRecordsIndiaVEVO/about) claims that the music being churned out by the brand is “in line with contemporary Bollywood music with great production values, albeit without the canvas of a film.” While positioned as an asset, critics told me that this characterization might actually limit innovation. Many of the tracks, they say, simply package already-established artists from the Bollywood scene in new clothes, and “sound like” a typical Bollywood soundtrack anyway.
(Admittedly, perhaps because I don’t have years of cultural context to help, I am somewhat confused by the phrase “sounds like Bollywood,” because Bollywood is not a genre of music. As Times Music COO Mandar Thakur said (https://www.billboard.com/articles/business/8462090/india-beyond-bollywood-youtube-streaming-services) at the 2018 edition of Midem, Bollywood is instead a marketing and promotional ecosystem centered around films that “packages and sells [music] down the pipeline to the end touchpoint, which is the cinema screen.”)
That said, “sounding like Bollywood” could likely be intentional on Universal’s part. As with any music signed to any label, the “non-film” music at Universal that “sounds like Bollywood” could end up being licensed to films, TV shows and other types of video content in the future — generating renewed sync revenue for the label, while ultimately making the designation of “non-film” inappropriate. Plus, the mainstream entertainment consumer usually gravitates toward what’s already familiar to them.
Another trend that stood out to me is that the vast majority of truly independent artists I talked to — namely, not affiliated with a major label or with the Bollywood industry — did not identify with the term “non-film.” They didn’t feel defined by that strong of a dichotomy between Bollywood and “everything else.”
In this vein, the way that it’s used by its most vocal proponents, “non-film” seems to refer specifically to a major-label business strategy to reduce dependency on Bollywood and make quicker returns on investment in catalog, rather than an all-encompassing category that’s truly inclusive of independent artists as well. It refers first and foremost to an emerging, licensing-driven business model, rather than to any new kind of content. 5. India’s first Billboard chart-topping hit will come from Bollywood
This past Monday, after six months of operation in India, Spotify revealed its list of most-streamed acts (https://www.billboard.com/articles/news/international/8529497/k-pop-punjabi-pop-indian-streaming-bollywood) in the country. Aside from the fact that BTS made it into the top five, the results are not super surprising: seven out of the top 10 overall are well-known Bollywood composers or playback singers, while the top foreign act (Shawn Mendes) is towards the bottom of the list at No. 9.
One could understandably think that the top streaming tracks on Spotify would also be the most likely to achieve international success as well. In general, many people in the music industry think that Bollywood soundtracks, because of their already-existing blockbuster status in India, are the best-poised to travel beyond the country’s borders and gain truly global fame.
Personally, I would push back on this argument. Even non-film major-label content falls short when it comes to international awareness; for instance, for all the buzz in Western markets around India’s burgeoning music industry beyond Bollywood, I did not hear one word about VYRL Originals until going to Mumbai.
The VYRL brand is relatively new, but this may also be endemic of a larger organizational issue that Chartmetric’s Jason Joven wrote (https://blog.chartmetric.io/spotify-direct-deals-vs-major-label-artists-a-first-look-61133cd6b562) about blog in August 2018: major labels in general have a “lack of incentives … to advocate outside of their home markets. The territory-centric corporate structure of the major labels encourages local executives and staff to focus on domestic repertoire … [and] on their own culture, language and promotional networks.” The ongoing rise in regional music consumption on streaming services — which now accounts for 32% of streaming consumption in India, according to KPMG (https://home.kpmg/in/en/home/insights/2019/08/india-media-entertainment-report_2019.html) — only further exacerbates this difference in focus.
One potentially disruptive exception to this trend could be Mass Appeal India. The label’s first signee, renowned Indian rapper Divine, will shortly be releasing his debut album (https://www.timesnownews.com/entertainment/news/people/article/rapper-divine-on-his-debut-album-kohinoor-is-my-personal-story-its-raw-and-honest/488338) , which features a packed slate of hip-hop performers, producers and engineers from the U.S. and other international countries.
Amidst the organizational complexities within major labels, I also know that tech platforms like YouTube are actively looking into the role they can play in introducing local artists to international audiences, particularly with respect to expanding their distribution. Local streaming service Saavn is also trying to build bridges across geographic borders with its in-house Artist Originals label, bringing the likes of Marshmello (https://www.youtube.com/watch?v=UhYRlI_bpJQ) into the fold.
In general, I think the artists and labels in any market that are most likely to break internationally are not necessarily the ones with the most scale. Rather, those with the most flexible infrastructure and with the clearest incentives to think globally from the outset, in addition to locally, will benefit the most from India’s ongoing climb into the world’s top ten international music economies.
Thanks to Yash Bagal (https://www.linkedin.com/in/yashbagal/) for his research assistance on this piece! ✨ If you’d like to support even more thoughts and conversations on music and tech, I encourage you to become a paying member of the Water & Music ecosystem on Patreon (http://patreon.com/cheriehu?utm_campaign=Water%20%26%20Music&utm_medium=email&utm_source=Revue%20newsletter) . For as little as $3/month or as much as $40+/month, you can access a wide range of perks including: * A closed, members-only Discord server * Exclusive essays * Previews and bonus material for my freelance articles * Monthly video hangouts with me
You’ll also be supporting the expansion of the Water & Music team as it continues to grow in the coming year. Thanks so much for reading! ✨ My writing elsewhere
If this newsletter piqued your interest and you’d like to read more of my thoughts on the Indian music industry, I published five other related posts on Patreon over the past few weeks, most of which dive into a specific area of the Indian music landscape. Here they are, in the order in which they were published: * Four initial observations on India’s music industry (https://www.patreon.com/posts/29430220) * Where is the artist development in India’s music industry? (https://www.patreon.com/posts/where-is-artist-29590053) * Willingness to pay for music in India: It’s not low, but it’s complicated (https://www.patreon.com/posts/willingness-to-29522399) * The heavily skewed music-tech startup landscape in India (https://www.patreon.com/posts/heavily-skewed-29834313) * Why brand deals are primary, not supplementary, revenue sources for Indian artists (https://www.patreon.com/posts/29907465)
What I’m listening to
Coincidentally, a bunch of funk: * September 21 is in eight days (https://www.youtube.com/watch?v=Gs069dndIYk) . * I’m seeing Vulfpeck at Madison Square Garden in a few weeks, and am getting pumped by binge-replaying some (https://www.youtube.com/watch?v=F7nCDrf90V8) of (https://www.youtube.com/watch?v=le0BLAEO93g) my (https://www.youtube.com/watch?v=u8fWZ9FjIK4) all-time (https://www.youtube.com/watch?v=Nq5LMGtBmis) favorite (https://www.youtube.com/watch?v=WQm4R0LM2mE) videos (https://www.youtube.com/watch?v=wvpLjcXU3hY) from (https://www.youtube.com/watch?v=KQRV0c1KXYc) them (https://www.youtube.com/watch?v=KXvncV79LXk) . * I’ve also been revisiting Louis Cole’s music, including these two (https://www.youtube.com/watch?v=dAH4zGd_W1s) anthems (https://www.youtube.com/watch?v=IxEIQQkhyeI) for modern adulthood.
Epilogue
Directly related to the Indian music industry: WHY DID PAID-FOR VIEWS EVEN COUNT TOWARDS YOUTUBE’S MUSIC CHARTS IN THE FIRST PLACE?? (https://www.musicbusinessworldwide.com/youtube-bans-paid-for-plays-from-contributing-towards-its-music-charts/)
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