As a part of our #Outlook14 series, we asked heads of  online music companies – Saavn, Gaana.com, Universal Music India, OKListen and NH7 about their focus areas for 2014, and the challenges that the online music ecosystem needs to address.

MediaNama: Which according to you were the top developments and roadblocks with respect to the online music segment in 2013? Why?

Vinodh Bhat, Saavn

– Today’s consumers listening to music either on the web or through their mobiles seem more inclined to using music applications while traveling, shopping, hiring/ waiting for cabs- are all playing, etc.
– Android devices continue to have strong momentum in India.
– The biggest problem still faced by the industry is rampant piracy, and it is symbolic of a larger problem for consumers:  existing demand for music is not being met by the available legitimate means to consume it.
– A product that allows connectivity on the go, speed, choice, control, convenience, intuitive design, and an overall experience should be on par with the passion that people have for music in the first place.
– In addition, while 3G rollouts have provided near nationwide coverage, 3G data consumption overall has been underwhelming.  GBs and MBs are still foreign concepts to many Indian consumers to sign up for data.

Devraj Sanyal, Universal Music

– Other than iTunes there is no other comprehensive download store in offering for the India consumer.
– On the streaming front, comprehensive content licenses across web and application, internet bandwidth and telco billing mechanism have been the biggest roadblocks for the online music segment.
– The biggest development in online segment have been the availability of music based streaming services applications across all platforms which has resulted in increased consumption of music through such legitimate services.

Shreyas Srinivasan, NH7

– The smartphone trend in India is now the biggest positive for online music.
– Streaming apps are beginning to make an impact as data rates have come down and cheaper android phones have gained traction.
– The monetization opportunities around this has been limited to advertising as commerce/ micro transactions have failed to gain any sort of traction. So the opportunity with smart phones is the big development and the roadblock has been monetization.

Pawan Agarwal, Gaana.com

– Signs of eco-system shifting from mobile VAS to mobile Apps.
– Higher mobile internet penetration and declining mobile VAS leading to a bigger app economy.
–  The online music segment in India is still in it’s early stage, high data costs, low credit card penetration and lack of well – accepted alternative for mobile payments and lag in monetisation are the key roadblocks going forward.

Vijay Basrur, OKListen

– The launch of iTunes & increased penetration of streaming services has been good for the industry. Flyte shutting down has dampened the positive outlook for sure

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MediaNama: What has changed from 2012 to 2013? How?

Vinodh Bhat, Saavn

– As much as there is technical innovation required, there is also business model innovation required to serve a market as complex as India.
– As more time passes, we understand the consumer environment more and apply our own technologies to solve problems in that environment.
– We were also able make a strong case to mobile operators, OEMs, advertisers, and other partners to try new approaches and we have jointly come up with ways to help them achieve their business objectives.

Devraj Sanyal, Universal Music

– There is a greater awareness & availibility of music based applications and this has surely resulted in the form of increased consumption of music on mobile phones via the legitimate services.
– Also, the internet bandwidth is significantly better in 2013 and the cost of internet access has reduced quite significantly.

Shreyas Srinivasan, NH7

– Youtube in India is now both a thought and a usage leader in the music consumption segment. This was an undercurrent in 2012 and has broken into mainstream, this reflects all the startups which are spawning in this space.

Pawan Agarwal, Gaana.com

– High mobile internet and smartphone penetration, visible shift from mobile operators from mobile VAS to driving data ARPUs.
– All of these factors have contributed to higher awareness and acceptance from the consumers for a legitimate music service that offers the convenience to access and consume music anytime, anywhere.
– The efforts and the drive of the music industry towards piracy in blocking the illegitimate websites has been a great factor in improving the consumption.

Vijay Basrur, OKListen

– There is increased awareness about legitimate options to consume music. A fraction of these consumers are seeing value in paying for music downloads or streaming. At OKListen we saw an increased number of users ready to come out, pay for music and support independent musicians

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MediaNama: Which are the consumption patterns (online & mobile) that you observed in 2013?

Vinodh Bhat, Saavn

– The digital music industry has evolved from rudimentary handset personalization features such as ringtones and caller ringback tones to a truly immersive on-demand and curated experience designed for any gender, age or geography.
– We devised a tool that enables us to track the preferences of our consumers. Some of the interesting trends that emerged basis mapping our consumer preferences:

  • Nearly 50% of our streams occur during drive-time
  • Shreya Ghosal emerged as the most popular singer along with Yeh Jawaani Hai Deewani as the most popular album of 2013
  • The oldest song streamed on Saavn was 81 years old- Jao Jao Ae Mere Sadhu from Puran Bhagat
  • In total, our users have streamed 7,338 years of music- 340 of those years were sung by Shreya Ghoshal

Shreyas Srinivasan, NH7

– 16% of all tickets we sold came from mobile last year. It was sub 2% the year before, these tickets are large packet transactions (>3.5k), a lot of these transactions happened through our app NH7 inTown. Clearly consumers don’t care about form factor for commerce anymore.

Pawan Agarwal, Gaana.com

– The consumption patterns have seen a massive shift, from web to mobile.

Vijay Basrur, OKListen

– Increase in ARPU as our catalogue increased. We have over 250 Indian musicians onboard today
– Frequent purchases using our wallet feature
– Repeat visits to see what’s new. The independent music consumer likes to keep a tab on interesting music that is being released
– The biggest independent release of 2013, Raghu Dixit’s Jag Changa did record sales for us, along with being the # 1 album on iTunes India. All of this was done without any conventional media spend
– Indian independent musicians are getting more popular globally. About 10% of our sales come from out of India

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MediaNama: What kind of transition have consumers made from offline to online in 2013? Why? What are your observations?

Vinodh Bhat, Saavn

– Offline listening still dominates music consumption.

Devraj Sanyal, Universal Music

– Mobile phones, computers / laptops and tablets have become the primary access device for music consumption. Because of this there is a big shift in format of consumption from Cd’s to digital.

Shreyas Srinivasan, NH7

– This transition is gradual. Dont think anything major changed in 2013.
– Netbanking continues to make head way which has resulted in a boost in online commerce.
– 3G is finally fast enough for streaming music in Urban centres and that will continue to increase consumption.

Pawan Agarwal, Gaana.com

– Higher smartphone penetration with increased adoption of mobile internet is driving the adoption of content consumption through mobile apps.
– Consumers want anytime anywhere access to quality content.
– We’ve seen great response to content curation,online radios and personalisation from the consumer.

Vijay Basrur, OKListen

– Our consumers, who tend to purchase music, like the idea of owning their music. Consumption is also offline
– In the independent music scene, CD’s are still popular but digital is scoring a lot primarily due to convenience and affordable prices. Independent musicians are able to sell CD’s only at gigs. For those who cannot attend gigs, online is a great alternative

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MediaNama: What are the likely trends that you expect to see in 2014? Why?

Vinodh Bhat, Saavn

– Continued Android growth/penetration – this is driven by manufacturing efficiency and competition
– Higher Engagement – people will continue to spend more of their discretionary time on Web sites and in Mobile apps
– Data Consumption – consumption will increase as lower pricing hits the market and new use cases are conveyed to the market
– Advertisers and agencies start to appreciate the Web/Mobile apps as a branding medium when/where appropriate
– We anticipate the rise of Internet radio.

Devraj Sanyal, Universal Music

– Better internet speed and accessibility & reduced internet prices will further shift the skew towards digital consumption of content.
– There will be a plethora of data-oriented products and subcription services which will be launched by all Telco’s & online portals.
– Consumer will be more and more willing to pay for experience as against paying just for access to content.

Pawan Agarwal, Gaana.com

– Expect far higher music consumption happening on mobile, ideally the consumption on mobile should take over the consumption on web.
– Expect the total consumption to maintain the same growth as last year.
– There is enough traction and demand from the consumers for online music, expect to see some business model validation happening in the industry.
– Greater push for online music from pure play services, operators and mobile device OEMs.

Vijay Basrur, OKListen

– A lot more music being released in 2014. The live venues, festivals are helping a lot of bands get popular. There is a big focus on original music, which is usually validated by an album or EP release
– An increased awareness about paying for music. The more it is affordable & convenient, the less is the incentive to pirate the music.

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MediaNama: What are the challenges in the online music segment that would need to be addressed in 2014?

Vinodh Bhat, Saavn

– Burgeoning piracy is one of the major challenges the industry faces as a whole. At the same time, we believe that piracy is an indicator of demand and consumers are telling us that existing experiences are not simple enough and engineered to handle the many infrastructure challenges in India.

Devraj Sanyal, Universal Music

– Piracy continues to remain a big threat even in 2014. There will need to be a concerted effort against the fight for piracy from all stakeholders.
– The other challenge will be to provide easy and affordable access to consumers to encourage them to use legitimate content.

Shreyas Srinivasan, NH7

– Monetization is clearly the biggest challenge. There is a growing audience for consumption but models around monetizing it are still too nascent.

Pawan Agarwal, Gaana.com

– The main challenge continues to be piracy, it hurts every participant in the ecosystem, right from content producers, music labels to pure play streaming services.
– Plug and play mobile payment services should lead to higher conversions for paid subscribers.
– There certainly is a need of simpler copyright and licensing regime.  Anti-competitive exclusivity practices from some of the labels in the industry needs to be addressed on priority.

Vijay Basrur, OKListen

– The payments space needs to be more flexible. Once the payment space opens up, we think it will help the overall digital goods ecosystem including music. Today these is a lot of friction while purchasing digital goods
– Making music more affordable, accessible and convenient. Ofcourse this is more from a paid download perspective. Currently other than iTunes, there is no other destination to purchase music (excluding mobile operators)
– Creating awareness about the advantages of consuming legitimate music (quality, meta data, flexibility) rather than focusing on piracy

Note: Answers have been edited for for brevity