As a part of our #Outlook15 series, we asked heads of online music companies about their focus areas for 2015, and the challenges that the online music ecosystem needs to address in 2015. We got responses from Gaana, OK Listen, Believe Digital. Gaana is a music streaming service, OK Listen is an online music store focused on independent music, and Believe Digital is an aggregator. In case you’re a digital music company that wishes to share its answers to the questions below, we’d be happy to update.
What according to you were the top developments and roadblocks in 2014 for the online music industry? What made a difference to your business and how?
Pawan Agarwal, Gaana
– We’re seeing 2-3x the consumption we saw 1 year ago.
– We also saw all major labels offering content across web and mobile. This was a critical step towards players making a compelling, complete offering to consumers.
– We still need effective ways to let users pay for things easily. We see consumer interest in our paid offering, but there are multiple steps needed to get there, which limits consumption.
– Piracy is also a major problem, but we’re seeing consumers switch from pirated means of consumption to services like Gaana, which is great.
Vijay Basrur, OK Listen
-We’ve seen the demand for independent music rise in 2014, much more since our launch in 2012. It also helps that quite a few independent musicians are also singing in Bollywood movies. We are seeing a rise in the number of people willing to pay for content, which is a good change.
Vivek Raina, Believe Digital 
-As far as the industry is concerned, the major roadblock to really go to the next level would be the lack of a various and rich digital music offer in the country. iTunes and Youtube remain the only key market drivers but we think a wider offer would significantly help grow the entire market.
-As far as Believe is concerned, the partnerships we signed with Saregama, Aditya, Rajshri and more than 50 labels in the country have been milestones for our development in the region. Within 12 months, we’ve been increasing substantially our market share in the country and this has given us a very strong understanding of the local market.
What were the consumption patterns you noticed (online and mobile) for music in 2014? What changed from 2013?
Pawan Agarwal, Gaana
– We continued to see consumption growth, and are growing over 100% YOY in consumption. Bollywood film music still drives majority of consumption.
Vijay Basrur, OK Listen
-We are not on the mobile platform. But we’ve seen a good increase in the number of users who come to OKListen to purchase music.
– Our average transaction value has also doubled
Vivek Raina, Believe Digital
-We’ve definitely seen a lot of traction happening on streaming across the board even though, especially in India and in Asia, full track download remains the key revenue driver for labels (YouTube aside).
– In India,Believe does not distribute to Telecom digital music services but what we noticed that more and more labels started looking at options beyond traditional RBT and other telecom services to make up for the revenue drop. Local Indian digital music services and players like Apple and Youtube are now major focussed areas for most of the labels.
What are the challenges in 2014 that needs to be addressed in online music in 2015?
Pawan Agarwal, Gaana
-Figuring out scalable models that enable users to see value while paying for music is the major challenge for us. User acquisition is happening, and will keep happening for us. The challenge we are working on is how to convert them into loyalists and paying users.
Vijay Basrur, OK Listen
-Independent music faces an uphill task of discovery against the Bollywood onslaught. As Bollywood experiments with more & more independent musicians, we are confident that the landscape will get better in the coming years.
– A lot of collaborative independent music content is being produced on TV Channels. The growth of Pepsi MTV Indies is also something that should help in 2015.
Vivek Raina, Believe Digital
-One of the biggest challenge is definitely have more lead time from labels to be able to handle marketing and promotion properly on releases. This is key to really enrich the user experience and drive more audience on digital music stores.
– On top of that there’s still a big part of the music landscape missing from the stores and getting this content digitized and distributed will be one of our priority in 2015.
– The other challenge is in the way a lot of labels handle Youtube. Youtube is actually the biggest music service in India but is not treated as such with the proper strategy to increase engagement and user experience. We hope this is going to change in 2015.
What kind of trends are you observing for Indian music content in the overseas market?
Pawan Agarwal, Gaana
– It’s still largely Bollywood.
Vijay Basrur, OK Listen
-As Indian musicians travel abroad, the demand for their music is bound to increase. About 10% of our sales come from out of India
Vivek Raina, Believe Digital
– The trend we see on Indian content overseas is really similar to the overall trend we see on other international content. A strong traction on streaming service and a progressive decline of full track download sales.
– Overseas market are bringing in maximum revenues for most of the labels because of multiple services and a much larger digital economy. India is still nascent in that sense and has so far seen Telecom specific digital services besides YouTube .
There is still very little Indian music on sale online in India. Do you think Indians will buy music online, or is streaming the only way to go?
Pawan Agarwal, Gaana
– Streaming offers a far more convenient way to the consumer’s vs permanent downloads. It’s a rental model, you decide what you want to retain for repeat usage, while the rest can always be streamed.
– With India being a new release driven market, the rental model makes more sense, You can keep shuffling without needing additional storage.
– The economics works better for a consumer – at the cost of about 12 full album downloads, you get an option to download unlimited music for a year. Most importantly, streaming opens up a mode of discovery of music which isn’t there with downloads. The top 50 are easy to find, but finding that great playlist or radio is one of the consumer delights of streaming, and one that we focus heavily on at Gaana.
Vijay Basrur, OK Listen
-We believe that there is room for both models to exist. Just like you have iTunes (and many other download stores) along with Spotify (and other streaming sites)
Vivek Raina, Believe Digital
-Indians already are buying music online! Lets not forget that Indian pay for Mobile Value added services and we dont see a reason why they would not pay for a good product, good library and experience as long as cost has been thought through.
– Also, we have seen that markets like India sometimes skip a digital product economy , for example, before downloads could become substantial, Streaming is already getting bigger and we have given a taste to consumers about Streaming, Similarly, India saw a jump from Monotones/ Polytones to Full track downloads and skipped Truetones/Realtones.
– Streaming will surely become a key consumption model in the years to come and we’re really excited to see some key international players entering the market in 2015. But we do not believe that it will make download completely disappear.
– There’s a lot of different consumption practices and there’s still a lot of consumers that are clearly attached to the idea of purchase. And whilst mobile internet is developing, we haven’t yet reached a level where streaming can completely replace having a track physically stored on a device.
What trends are you expecting in 2015?
Pawan Agarwal, Gaana
– We expect consumption to grow faster than last year. We see regional consumption growing faster than Bollywood, as well
– We’ll see international players enter the Indian market
Vijay Basrur, OK Listen
-More investments might come in the streaming space with Rdio launching. Folks like Guvera & Wynk which launched in 2014 will also grow the streaming pie.
Tell us some things in the digital music business which you think will not happen in 2015.
Vijay Basrur, OK Listen
– A clear verdict of which is the right model to monetize music will still not be clear in 2015.
Vivek Raina, Believe Digital
– We will not see download disappear. We will not see a complete shift of Traditional Telecom VAS services to digital music stores. We also don’t see any substantial growth from any audio service.
Could you give us some anecdotes on developments that surprised you in 2014?
Vijay Basrur, OK Listen
– Our best selling artist in 2014, Bipul Chettri came as a complete surprise. Bipul has been pretty much an Internet sensation and is very popular in Nepal. Another band which created quite a sensation Imphal Talkies is from Manipur. Increasingly bands all over the country are using the Internet to promote their music.
Vivek Raina, Believe Digital
– Surprisingly, regional languages like Bhojpuri – which are negligible revenues when we see the sales on digital music services, has become one of the popular categories on video services like YouTube. They give surprisingly high views , while the Video look funny to many mainstream audience.
– An non-film album becomes Top selling album on i-Tunes India ( without any radio/PR/TV promotions) and the effect being just a link shared by the leading artist on her social media. Just to give us an idea about how important artist-Fan relationship is.
