Balance sheet music 🎶
India’s music labels are fighting for growth. What will it take to fast-track it?
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Last year, India’s music business made ₹2,400 crore (~$290 million) in revenue, up 10% year-on-year, per consulting firm EY’s estimates (pdf). Almost all of it came from music streaming. But the industry’s growth has slowed as music streaming suffers a crisis and subscription revenues hit a wall.
Yet, there is hope. EY estimates that the music business will grow at 15% compound annual growth rate to ₹3,700 crore in the next two years as more people stream music and pay for it too.
How will this affect India’s biggest music labels?
Music labels are jostling for an uncertain pie
Already, India’s music industry is governed by several highly skewed factors. Of all the music people listen to in India, two-thirds is film music. Consequently, music publishing revenues are only a third of the total industry’s business. Seventy percent of all music consumption comes from Hindi and Bhojpuri tracks. And nearly three-fourths of Indians pirate music, much higher than the global average of 29%, per EY estimates.
Besides, there is a vast gulf between India’s biggest music label and all its competitors.
T-Series has long dominated the industry. In 2019, it overtook Swedish YouTuber PewDiePie to become the most subscribed YouTube channel in the world, prompting him to release a terrible, now deleted, diss track. (Side note: since then, American do-gooder Mr Beast has overtaken both channels in subscribers.) Today, it has over 200 million subscribers on YouTube and an extensive library in Hindi and Bhojpuri along with significant inroads in other languages (read this edition of The Impression to know more about major labels’ investments in local language music)
Earlier this month, T-Series reported its revenues for FY23, broken down by business segments for the first time.
In FY23, T-Series made ₹1,672 crore (~$201 million) revenues from its music business, up nearly 32% year-on-year. Music accounted for more than 60% of the company’s total revenue from operations for the year, slightly higher than the previous financial year.
T-Series’ numbers make it India’s largest music label by revenue. That’s hardly a surprise for a company that has over 200 million YouTube subscribers and extensive library in film and non-film music in Hindi and Bhojpuri, the bulk of India’s music consumption by value, along with tracks in other languages.
Sony Music India is a distant second among top music labels, with over ₹745 crore in revenue in FY23, up 25% year-on-year. Not only is Sony Music less than half of T-Series in size, it is also growing slower than the market leader. Saregama, another market leader, saw 22% growth in revenue from music, its biggest business vertical. But in FY22, its music revenue was still below what it earned in FY19.
The music market is still dependent on a stagnating music streaming industry. How does the second- or third-largest label bridge the gulf between itself and the market leader?
One way to do that is to buy up opportunities. Take the storied (but smaller) rival Universal Music. In FY23, it more than doubled its revenue year-on-year to ₹555 crore. That was partly because in September 2022, it acquired a majority stake in Tarsame Mittal’s group of music firms called TM Ventures, which represents a long list of top film and non-film artists including singers Arijit Singh and Sunidhi Chauhan, composer-singers Amit Trivedi and Vishal Bhardwaj, and breakout indie acts such as Osho Jain and Techpanda x Kenzani.
Last February, Warner Music India bought a controlling stake in Tamil language label Divo, while in October, it acquired talent management firm E-Positive Entertainment. Saregama too acquired 1,500 songs from Telugu music label Mango Music in 2022. A year earlier, French independent music label Believe acquired legacy music label Venus and renamed it Ishtar.
Another bright spot is the rise in performance rights. Live concerts are booming in India, resulting in a 20% bump in revenue from performance rights for music labels, per EY estimates.
But nothing matters more than finding ways to boost money made in music streaming. Fifteen million fewer people streamed music monthly in 2023 than the year before, EY found, and just 4% of the user base paid to stream music. Yet, this relatively tiny universe of paying music subscribers is now seven million strong, up 55% year-on-year. There may be more scope for growth: music labels and streaming companies are slowly pushing more Indian users to pay for music.
But it comes with a cost.
“Many of the platforms being under financial pressure have decided to move from free to paid… all the labels have joined hands and are, in fact, helping the platforms in their journey,” Saregama India’s managing director Vikram Mehra told investors in an earnings call last month (pdf). “We have removed our conditions on minimum guarantees for platforms that have moved behind paywall.” Without minimum guarantees though, labels are facing a short-term contraction in music licensing revenues, Mehra added.
There are other pressures too. Bytedance-owned Resso, among the platforms that went subscription-only last year, closed operations in India in January this year.
But Mehra is hopeful that change is just around the corner.
“All that we need to see now over the next 12-18 months is this base of users finally going behind a paywall and generating revenue for the platforms as well as labels,” Mehra told investors in the call quoted above. “It has happened internationally. It's bound to happen in India. It's happening [in] the video streaming space in India. It will eventually start happening in the space of audio streaming too, give it 12-18 months.”
It’s a much-needed dose of optimism. Only then can music labels fight not just for a bigger piece of the music business, but also take on a gigantic leader and fix the imbalance in the way Indians enjoy music.
Last Scroll Down📲
Scan the big media headlines from the week gone by
Blitzkrieg: Despite ongoing budget cuts at Indian streaming platforms, Amazon Prime Video showcased more than 70 original titles slated for release throughout this year.
The big number: $9 billion. That’s how much streaming giant Spotify paid in royalties last year, the company said in its latest annual report.
Don’t bleep it out: India’s Supreme Court quashed an obscenity case against OTT series College Romance, arguing that stories with abusive language or swear words can’t be criminalised as ‘obscene’.
Taking sides: More top names are rushing to Disney CEO’s Bob Iger’s support in an upcoming battle for board seats. Proxy advisory firm Glass Lewis recommended that Disney shareholders vote for Iger’s proposed list of board directors over activist investor Nelson Peltz’s Trian Advisors. A few days later, Star Wars creator George Lucas also backed Iger for his gift of “creating magic”.
Small win: Zee Entertainment’s troubled founder Punit Goenka notched a win in a defamation lawsuit against Bloomberg News. The Delhi High Court asked the publication to take down its report alleging Zee’s involvement in financial irregularities worth $241 million.
Trumpet 🎺
Dissecting this week’s viral ‘thing’
WhatsApp marketing isn’t cheap. In India, every marketing message a business account sends on WhatsApp costs 70 paise, although messages from utility and services accounts cost less than half that amount (see rates here).
Still, for India’s Ministry of Information & Broadcasting to spam millions of WhatsApp users in India with a survey asking Indian citizens for feedback on the government’s performance is a costly prospect. And that’s not all; people living abroad have also reported receiving the message. Many aren’t even Indian-origin foreigners, let alone Indian citizens, as seen in the discussion in the LinkedIn post I’ve linked above.
Let’s set aside the grave matter of breach of privacy and blatant misuse of taxpayer-funded government resources for election campaigning. How did the BJP end up running a marketing campaign that targeted such a large, irrelevant audience? Going rates for WhatsApp For Business are more than three times higher in countries such as the UAE, where several unintended recipients of the Viksit Bharat Sampark campaign reside.
Perhaps the BJP (or the Ministry, who can tell them apart these days?) simply plumbed the depths of a faulty database. Perhaps they simply don’t care about the pitfalls of carpet-bombing as a marketing strategy. As this report by The News Minute found, the party spent ₹30 crore in a month running ads on the Google network, even though Google took down more than half of its video ads for violating its rules of political advertising. Remember: BJP has made nearly ₹7,000 crore since 2018 from electoral bonds alone.
That’s all this week. If you enjoyed reading The Impression, please share it with your friends, family, and colleagues. And please write to me anytime at soumya@thecore.in with thoughts, feedback, criticism or anything you’d like to see discussed in this space. I'd love to hear from you.
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