With India booming into the mobile technology markets, investors are scrambling into the subcontinent to take a share of the soon to be gargantuan market share. In 2014, India was the second largest mobile phone market, with shipments of 275 million units equating to 14% of the world market. India, due to its relatively low smartphone penetration rate of scarcely 30% in 2014, has become the ideal terrain for investors, both exterior and homegrown.
With more people buying smartphones than ever before, India has been swept with an app-craze. Retail businesses have been moving their focus to mobile platforms and by-passing the traditional desktop primary method of eCommerce. Fashion discovery and retail portal Voonik have grown 10 times in the last six months. The numbers coming in are staggering; the apps have been downloaded an estimated 9 billion in 2015 alone. eCommerce has been an obvious benefactor of the boom, but music streaming is an area of the market that is heating up.
Two of the biggest players in the music entertainment industry for Indian smartphones are Saavn and Gaana. With a Spotify inspired look to them, these apps champion the free streaming model, their catalogues boasting a large variety; from the latest Bollywood hits to an expansive English catalogue whilst heavily representing India’s large spectrum of languages. Saavn recently announced a major win in a $100 million Series C round led by Tiger Global. Founded in 2007, with offices in India yet headquartered in New York, Saavn is rounded to value at $300-400 million, claiming 14 million monthly active users, up at 27% increase since January 2015. Gaana, upholding also a vast catalogue of Bollywood, English and regional Indian music titles, currently holds the title as No. 1 music streaming app according to data from Google trends and App Annie, managed to race past Saavn within two years of its launch. Heavily backed by media firm Bennett, Coleman and Co. Ltd since the beginning, Gaana has clocked over 22 million downloads across Android and iOS and 16 million monthly active users. Media experts consider both Saavn and Gaana to be leaders for the music consumption, locking horns with two new marketing campaigns running simultaneously. These two companies, children of the intense digitisation of India, have pioneered the Indian music industry which hadn’t existed principally due to piracy.
As India becomes more hyper-connected, piracy is becoming increasingly an issue with Internet access improving on both smartphones and desktops. India predominantly works on a 2G network plans to make 3G accessible to the entire country within the next couple of years, inevitably making the piracy platforms more accessible. In 2014, India got placed onto the ‘International Piracy Watch List’ by the US government, suffering extremely high rates of camcording piracy amongst others.
As co-founder and CTO of Saavn, Anurag Gupta, commented in an interview for NDTV, “Even now about 98% of music online is pirated. But then there has been some serious change too. People are looking at legit options now to download music, even if there are not a lot of people involved in tackling piracy.” The freemium model is the obvious answer to the pricing conundrum and Saavn are offering generous packages at only $3.99 per month for their pro services. They also offer India-only packages starting at $2.37. As the freemium model is still relatively new in India, supported principally by Saavn and Gaana, we are still waiting for the results to come in (Gaana still isn’t profitable) however there are hints of it working mainly shown in the increasing number of active monthly subscribers.
Despite Saavn and Gaana both offering a service under the freemium model, the results are still yet to come in. With Spotify still to be introduced into the Indian market, we will still have to wait till we see the full impact of the freemium model on the music market in India and how it’ll effect the piracy rate. However, if we turn to the West where Spotify has pretty much been cemented into everyday culture, we can see its success and sustainability. Earlier this year, chief executive Stephen Cooper from Warner Music told analysts in the company’s earnings call, that streaming income has overtaken downloads; “There are any number of models out there, and all of those models-ad-based, subscription-based or with both, are better than piracy. To be crystal clear: piracy is zero revenue, it’s the theft of intellectual property, and it’s not good for anything. So all of these models are better than piracy.” With Europe and North America, turning their back to piracy in order to engage further with their audience and their music, there is a good chance India will do the same too.
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