Adoption of Music Streaming in India


Author: Nathan DMelloDate: 26 September 2020
Category: General

Turntables, Vinyls, Walkman, Discman, mp3 Player, iPod…. do any of these terms sound familiar to you? If yes, you are probably a witness to the evolution of music playback over the last 3 decades. Thanks to Apple for the invention of the iPod which opened the floodgates for various breakthroughs in this space. Considering the recent advancements in technology, an increase in the adoption of smartphones and internet penetration the introduction of Music Streaming Services on mobile and computing devices is hardly a surprise.

In India, the transition from feature phones to smartphones, sharp decline in the cost of data (said to be cheapest in the world), the fact that Indians spend 21.58 hours per week listening to music (3.69 hours more than the global average) have lead to significant growth of the Indian Music Streaming market. This growth has attracted global industry players like Apple Music, Spotify and YouTube Music to tap into the Indian market and use personalization and localization to drive growth alongside the homegrown players like Saavn and Gaana which cater to the local and Bollywood palette.

Let’s analyze the adoption of these services by users in India. There are basically 5 stages in the adoption lifecycle of a product or service which are:

  • Innovators — The first set of users that get access to the product or service. This set includes developers who build apps and integrations for the product/service or reviewers and tech bloggers who are in the business of publishing public reviews of products/services.
    In context of the Music Streaming Industry: Music Artists, Record Labels, Production Houses would all fall under this category as it is imperative to get as much International/Localized content on the platform. These apps will only succeed if the users find the music they are looking for.
  • Early Adopters — These are the potential evangelists for a product/service. They are the people who are one of the first consumers of the product or service and are usually brand advocates/loyalists, fanatics of the company. They are often exceptionally good at influencing others based on their credibility and help determine if the majority of the population will accept it. They are generally young, educated, high-risk takers and often have more financial lucidity.
    In context of the Music Streaming Industry: People who have used the same/similar service before (probably in another region), Technology Geeks who love to explore, people who are passionate about music might fall under this segment as they would probably be the most eager and excited to get their hands on the product.
  • Early Majority — This segment of consumers is the general population that adopts the product or service after they receive the confidence of the early adopters. Only after observing and receiving feedback from the Innovators and Early Adopters will they make a well-informed decision to adopt the product or the service. They tend to be less technologically educated, medium risk takers that are willing to take a chance on new products/services but only after witnessing others do so first.
    In context of the Music Streaming Industry: People from the general music listening population that own a smartphone, are probably frustrated with traditional means of listening to music (downloading and transferring from various sources), who are open to trying something new. They may or may not have received feedback from the earlier segments of consumers.
  • Late Majority — This segment of consumers are one of the last to adopt a product or service after a significant amount of time has passed as well as a good percentage of people have got their hands on it. They demonstrate very low risk-taking ability and do so only on a need basis.
    In context of the Music Streaming Industry: These are people who are skeptical about the service and/or its features, do not immediately see the value in paying for such apps, taken a long time to switch over to a smartphone or understand the concept behind the service. Skeptical about the risks of online subscriptions.
  • Laggards — Laggards are the absolute last group to adopt a product or service. They consist of people who are largely seniors or with low socioeconomic status. They use family, friends, and neighbors as information sources, dislike change and accept new things only when forced to do so.
    In context of the Music Streaming Industry: People generally in the 50–60+ age group who prefer traditional means of listening to music via radio, TV, CD’s, Cassettes and are generally averse to new technology. They are very unlikely to use the service unless circumstantially forced to do so.

Overall, only 11% of the country’s 1.34 billion population i.e 150 million users in India use music streaming services (according to a report by Deloitte). Out of these 150 million subscribers, less than 1% pay for a subscription and about 14% have it bundled along with other services such as a mobile contract, etc. The remaining user's stream music with free subscriptions. The services are currently most popular among college-going & working youth (70%), technology geeks and music lovers. It is also gaining increased popularity with users of devices such as iPhone which have Apple Music pre-installed as one of the stock applications provided with it. Considering this it can be concluded that the music streaming service industry is currently in a transition between the Early Adopter and Early Majority stage where it is faced with the major challenge of crossing the chasm.

Image for post
Agewise Users of Music Streaming Services in India

While there has been significant growth in this sector, there are multiple factors that are affecting the rate of adoption of such services in India.

>> Prevalence of Privacy: Although on the decline, piracy rates in India are still significantly high at 67% (In 2019). As a result, consumers are used to free access to music and are hesitant or see little or no reason to switch to such services.

>> Affordability & Willingness to pay: There are a number of factors that affect the consumer's willingness to pay for music streaming services in India:

(a) Subscription models in India are a fairly new phenomenon, digital payments have fairly recently been on the rise and many consumers are still skeptical and lack the confidence to make digital payments due to security concerns.

(b) Access to sources of privacy negates the need for the consumer to switch over / pay for such services.

Low-income levels and limited disposable income play a major role in impacting the affordability of such services in India.

>> Content Variety: India is a diverse country with many languages, genres, and music tastes. This makes personalization and localization among the top areas for growth for music streaming services. If people do not find what they are looking for they will churn and look elsewhere.

>> Data & Connectivity: While major areas in all tier 1 and select tier 2 cities are well connected with 4G technology major parts of India still lack fast internet access which is crucial for the effectiveness of such a service. Additionally, the cost of data has been on the decline in the last couple of years which should gradually help push the adoption of such services in India if there is a significant improvement in the service quality and internet infrastructure.

Let us now compare the various music streaming providers in India with respect to their service offering, growth and adoption:

Image for post
Comparison of the Music Streaming Services in India

A question comes to mind regarding how these companies manage to accelerate their growth despite the competition and factors working against them? What helps then stand out to consumers to boost adoption? Let's have a look at some growth hacking strategies followed by the music streaming companies:

  1. In 2016, Starbucks & Spotify became partners (in the U.S) with a goal of driving listenership to the streaming service and allow Starbucks customers to easily engage with music played at its 7500 locations. Customers were able to favorite and add music playing during a visit to the store (via location sharing) and were able to influence the future in-store playlists. Spotify users also earned “Starts” (Rewards Currency) for subscribing to Spotify Premium. Customers who purchased Spotify’s streaming packages were also eligible to earn more rewards points, which could have been redeemed for free beverages.
  2. A very commonly used means of engagement used by most of the companies are personalization. Through specially curated playlists that update weekly based on the user's listening habits allow users to tap into their favorite music or discover new music similar to their taste. This helps drive users back to the app every week to see what is new.
    Used by Spotify, Apple Music, Youtube Music
  3. Spotify made news with its new “Wrapped” feature which has been labeled as the “Growth hack of the Decade”. The service is known for its annual year-end wrap-ups and has topped it all off last month in December 2019 with a personalized “Your decade wrapped” curation. The high share-ability and intent of this feature are what it makes it stand out. Not only have they found a way to delight and retain existing customers but have had the social media of prospect users overflowing with curated playlists of family and friends and stands a good chance to be an effective acquisition channel and driver of brand/product awareness.
  • Product localization by introducing music in regional languages where the product has presence is key to engage more native language speakers and on-board them on the service either as free or paying subscribers. While major streaming services in India have already adopted major languages like Hindi, Telugu they still have a long way to go considering the huge diversity in India.

In conclusion, as music streaming adoption grows in India the streaming services face a huge challenge of crossing the chasm from the early adopter phase to the early majority phase. With the vast number of choices available out there its really comes down to how these services innovate and employ various growth hacks to increase their market share.