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In our #Outlook16 series, we spoke to online music companies — Gaana, OK Listen, Believe Digital and Wynk — to find out how they viewed 2015 and what are their plans for 2016. Gaana is a music streaming service owned by Times Internet, Wynk too is a streaming service from Airtel, OK Listen is an online music store focused on independent music, and Believe Digital is an aggregator. Answers have been lightly edited.

What were the top developments for the sector in 2015? How has the sector changed between 2014 and 2015?

Karthik Sheth, Wynk

The big change towards the end of 2014 or towards the middle of 2014, and we believe we had a big role in catalysing that, which is when where Gaana, Saavn, Hungama all got their act together on their app side. They improved their apps, they got the content that was missing. To the average user, you have pretty much most of what you would look for is available. And then they also started marketing heavily as did we. That kind of started happening towards the end 2014 and you have seen the results through 2015. I think in 2015, there have been more smaller iterations and improvements rather than bigger ones — you see the UI of these apps, the ability to work on 2G networks, apps are getting smaller and smaller so they can work on lighter devices. I think this year has been story of lots of little little steps. End of 2014 when the big moves happened which is why we are sitting today at 50 times more consumption.   

Satyan Gajwani, Gaana (owned by Times Internet)

Streaming is becoming an increasingly mainstream habit, more receptiveness and familiarity with consumers.

Vivek Raina, Believe Digital

Interesting developments which have started in 2015 and are likely continue in 2016 are

– More independent music/artist exposure and creation of interesting music which have happened in 2015, be it via a major record label or artist themselves. More and more artists are trying to reach out to their fans directly.

– More and more labels/artists want to be up there on key services like YouTube and iTunes , not just for sales but to showcase their talent/catalog and have visibility on a global scale.

– This is going to be a regular statement for years to come but surely streaming is growing pretty fast in 2016 a well.

Vijay Basrur, OK Listen

We’ve seen far more acceptance of alternate content in this year compared to last year. Average transaction value has also increased for us.

What were the biggest challenges for the sector in 2015?

Karthik Sheth, Wynk

The challenge continues to be piracy. If you take songs.pk, it will be bigger than all the apps combined. But it is declining. If you see the traffic and the search trends, it is declining for the first time in many many years. So it is declining and declining pretty fast because you now have the ability to get the latest content, easy to find, in one place and if you are an Airtel data user, you will even pay for it. I think the tide is turning but the battle is still very very clearly piracy.  

Satyan Gajwani, Times Internet

Satyan Gajwani

Satyan Gajwani, Gaana (owned by Times Internet)

– Streaming is most valuable in a great connectivity environment. Connectivity has improved but needs to be much better.

– Piracy is still a problem, though as streaming services get better, the value proposition of piracy is getting worse.

Vivek Raina, Believe Digital

– Challenges of 2014 from our point of view have not been addressed much and still remain same, which is, having more lead time for album/single release from labels or artists to be able to handle marketing and promotion properly. There is still the urgency to release music ( Film OST) which is dependent on film release or just to be in the market with back to back releases from independent artists.

– Whilst we see a heavy marketing which is associated with a film soundtrack, we see a limited or no marketing strategy for most of the independent music. Challenge is to make artist to put some marketing strategy behind his/her release keeping in mind the target audience or rather consumer, which may not be only In India or only on YouTube. The day Indian artist understands this, we would see a different way that pays them on long term.

Vijay Basrur, OK Listen

Visibility of alternate content amidst Bollywood continues to be a challenge.

What are the trends that surprised you in 2015?

Karthik Sheth, Wynk

We found a lot of growth in regional and English. So Bollywood is still mainstream and very large but the growth rates of the other categories are actually faster. So therefore, we see on the app a lot more localization happening. So if you open TN [Tamil Nadu] or AP [Andhra Pradesh], the app looks completely different. Having said that, there is still a lot of Hindi consumption that is happening here.

Satyan Gajwani, Gaana (owned by Times Internet)

Telecom companies having an interest in building their own services. Hasn’t succeeded anywhere else in the world, but telecom operators are keen to buck the trend and offer services

Vivek Raina, Believe Digital

This may not be a surprise for people who have done this exercise but because we were able to release quite a few independent music from big Punjabi artist. We were surprised to see the sales and the way a single/album takes off. More interesting fact was to see India contributed only 20% of downloads.

Vijay Basrur, OK Listen

Artists like Bipul Chettri & Blackstratblues were able to get a fair amount of success with their album without spending any money on marketing.

What were your key learning in 2015?

Karthik Sheth, Wynk

On 2G, our experience is not good. If you open the app in 2G, it switches into a completely different mode which we call the Save Data Mode. It does two things: it optimizes the usage on the app so you can actually listen to an hour of music for under 17-18 MB. It really optimizes the music. It only loads just before so there is a habit of changing song after you have heard half of it. Usually what happens is you buffered the whole thing and you lose the data cost. So that we don’t do. If you make it more data efficient, data usage increases. You consume much more, you create a habit. Data efficiency was I think was the big one. Regional curation is also a big thing. I think now we have to figure how to create a UI. I think next year will be a lot about that: how do you curate and personalize at the same time.

Satyan Gajwani, Gaana (owned by Times Internet)

– We are seeing a faster growth in our regional catalogues.

– Product quality really matters. It’s easy to build a product, but without get focus and obsession over every metric, many large scale digital products have ‘leaky bucket’ issues and lose customers as fast as they acquire them.

Vivek Raina, Believe Digital

Vivek Raina

Vivek Raina, Believe Digital

2015 has been a good year for artists.  A great learning as to how a good artist can make a song popular and pull the sales. In this whole product cycle, the biggest learning is how social media is becoming a stronger tool  for music marketing.

Vijay Basrur, OK Listen

Consumers are getting used to streaming and are keen on having content on demand. The propensity to pay also seems to have gone up.

What are some of the broad trends that you expect to see in the sector in 2016?

Karthik Sheth, Wynk

I think there will be more competition coming in the form of international players. That will be one big trend. The other big trend will be on monetization because if the overall funding market is still slowing down, there will be pressure to monetize earlier. In reality, the biggest trend will be the shift from piracy to legitimate content.

Satyan Gajwani, Gaana (owned by Times Internet)

More regional, better products, entry of global players, and consolidation behind a couple leading players in the industry.

Vivek Raina, Believe Digital

In 2016, we expect to see independent/artist driven music growing. There is going to more and more traction towards online services (including local and international services).

Vijay Basrur, OK Listen

We believe that there still won’t be a clear winner in the download vs streaming war. Better licensing models might help streaming however the value download offers seems to higher than streaming as of now

Which categories and sub-categories are likely to be the key drivers of growth in 2016? Why?

Karthik Sheth, Wynk

I think we are still at a stage where the macro growth trends are bigger than the micro ones. So I don’t think it is consumption of any particular kind of music that is going to drive app usage. App usage is happening because platforms are penetrating, 3G and 4G networks are reaching, it’s becoming easier and easier to use these apps and consumers are trying and getting hooked and then making them a part of daily routine. That’s what driving growth. We will get to stage at some point where it will be more about Taylor Swift’s latest album which will drive growth. We are not there yet. I don’t think we will be there for another 3 or 4 years. 

Satyan Gajwani, Gaana (owned by Times Internet)

Bollywood contribution is still the largest but regional content and English has picked up significantly over the last year. Regional consumption growing faster than both, especially as we have improved language filters.

Vivek Raina, Believe Digital

Independent music ( Hindi and Indie Bands)  along with regional music (Across top languages- Punjabi, Malayalam, Telugu, Tamil, etc), these language are growing pretty fast across non-telecom digital services.

How has your relationship with record labels/content providers changed in 2015?

Karthik Sheth, Wynk

We had excellent relationship with all content labels because of Hello Tunes. Hello Tunes, is today, is the largest contributor of digital revenues. As a result, Wynk has only strengthened that relationship because it is now not just Hello Tunes, which is kind of flattish. That revenue pool is not growing fast but this one is growing very fast.

Satyan Gajwani, Gaana (owned by Times Internet)

– Streaming services are an increasingly important component of the businesses of music labels as our businesses grow.

– That being said, streaming still touches less than 15% of connected Indians, and the industry should work collaboratively with streaming services to build consumption, encourage innovation and adoption, and build a wide reaching, legal music business.

Vijay Basrur, OK Listen

While we continue to work with a few record labels, their efforts to ensure a wide reach of music could be better.

How big a problem is discoverability of content for online music platforms? How do you expect this to change in 2016?

Karthik Sheth, Wynk

For consumers, who know what they are looking for, it’s very easy because search engines work well. If you look at the latest enhancements to Google, they will help you send straight into middle of the app. So I think the discoverability of content that you are looking for is very very high. Discoverability of content you are not looking for is reasonably good once you have found one of these apps. I think all apps do a pretty good job of curation.

Satyan Gajwani, Gaana (owned by Times Internet)

One of our major improvements was language filters, which has helped a lot. Transliteration, differing spellings, and voice search are larger challenges which we are working on, and will improve in 2016.

Vijay Basrur, OK Listen

Vijay Basrur

Vivek Raina, Believe Digital

Online platforms are still way ahead and much better than traditional VAS services. There are still issues when it comes to back-catalogues delivered few years ago on services. People are using better SEO on services like YouTube. There are very stringent guidelines by iTunes while submitting a release, which are helping consumers to find their music.

Vijay Basrur, OK Listen

The problem is huge. Since there is so much content, discovery continues to be a challenge. We think the problem will become worse next year. This will ensure that there are investments into algorithms to improve discovery

What trends did you observe in customer preference for downloaded and streamed music in 2015? How do you expect this to change in 2016?

Karthik Sheth, Wynk

It’s still largely streaming because of the fact that downloads are paid for. There is a distinction in the consumer’s minds in terms of willingness to pay for content and willingness to pay for data. If a fully rational consumer would pay the subscription cost because they would recover that much cost by having to stream the same song that many fewer times. But the consumer is more willing to pay for data than for content. And as a result, where we have seen a lot of success is bundling content with data and we are continuously pushing that hard. I actually think that will help drive downloads.

Vivek Raina, Believe Digital

Download still plays a great role and we will find mixed preferences. There are people who still prefer ownership vs rental model but then there are markets like India, where streaming is already big in terms of number of streams happening month on month. This will continue for a long time as it’s about new generation who are more likely to go for streaming rather than downloads but there is a generation who has tasted downloads and will continue using it.

Vijay Basrur, OK Listen

We are a download only destination. While we have request for allowing to stream music, our download volumes have increased compared in 2014. Also since we distribute to iTunes, we are seeing a significant rise in downloads on iTunes India as well.

What were the biggest challenges related to monetization? How do you plan to tackle them in 2016?

Karthik Sheth, Wynk

Right now we are still at a stage where we are going from piracy to free. We will go from free to paid, we will have to find different business models that consumers will believe they should pay for. Today, that is bit of a challenge. I think music has been free in the minds of consumers so long, it will take little bit of time to change.  

Satyan Gajwani, Gaana (owned by Times Internet)

Consumption grows before monetization, but we’re seeing both ads and subscriptions pick up. On the ads side, the larger the scale of the product, the more compelling the offering is. And we’ve added a lot of targeting capabilities which are unique and powerful. On the subscription side, we’re getting better at moving users up the funnel, from casual engagers, to active users, and eventually, to paying users.

Vivek Raina, Believe Digital

While the industry is moving towards streaming services, it still has a long way to go in terms of creating a viable digital economy. Globally there is still a major portion of ad-supported streaming compared to paid subscription. Getting people to subscribe is a challenge and secondly, having enough ad inventory which can cover the cost of running services and have enough for the record industry and artists as royalty payout is a big task.

How big a problem is India’s poor internet speed for music platforms? What are you planning to do to make sure the content on your platforms can be accessed on low bandwidth?

Karthik Sheth, Wynk

A lot of it is not because of infrastructure but because of device capabilities. A lot of phones sold till recently were 2G smartphones. Even 3G smartphones, the second SIM would work only on 2G and even on 3G smartphone consumers buy 2G packs because it lasts longer. So the reality is consumers are on slow networks, I don’t think infrastructure is poor. If you look at LTE speeds, where spectrum is not a challenge, where infrastructure is available. Till date, 4G devices have been reasonably specced. You need to do both and that’s thing as an app developer you need to take care of, which is if your customers are on a 4G network, you have to provide a brilliant experience — high resolution images, HD quality and all of that. But the same app needs to work equally work for a fellow who is maybe on a 2G network because his phone is very light on memory and, therefore, you can’t load the app too much. I think this bit if fairly unique to India, which is why a lot of app developers are now beginning to develop their global apps out of India. 

Satyan Gajwani, Gaana (owned by Times Internet)

We’ve done a lot here, including making streaming work on 2G connections. Of course, the better the connectivity, the better the experience of streaming. But that’s what we get to look forward to as connectivity improves!

Vivek Raina, Believe Digital

Internet speed is still a problem for consumers as well as services. While we are talking about 3G / 4G services, the real seamless connectivity is still a problem. It’s becoming better every year and we do hope that this issue will be solved in coming years.

What kind of trends did you observing for Indian music content in the overseas market in 2015? How it compared with 2014 and what was are your expectations for 2016?

Karthik Sheth, Wynk

We are not available outside India but I know a lot of other apps are and they are seeing a lot of traction from expat markets, Middle East market but it is overwhelmingly India in terms of consumption. In revenue terms, some of the US, UK, Canada markets are interesting for some of the other players.

Satyan Gajwani, Gaana (owned by Times Internet)

We’re focused primarily in India, but organic growth continues outside of India.

Vivek Raina, Believe Digital

Overseas market is still the major revenue generator as far as international online services are concerned. Markets like US, UK, Canada, Australia are real digital economies and they will continue to drive things.  Apart from YouTube, Guevara, iTunes there are still many major services yet to go live in India, unless India has good number of services, overseas market will be a major component in terms sales and revenues. We do expect some more services to launch in India in 2016, which can gear up the competition in the market and users will have options. Then we can see traction in local market.

What are the challenges that need to be addressed in 2016? Please explain how these can be addressed.

Karthik Sheth, Wynk

Piracy will require the industry to come together and take some concerted actions. Wherever in the world, the industry has come together and not just the music industry but also telcos and has the legal framework to do something about it. We do have a legal framework but it could be more effective. So I think that could help accelerate this further. In general, the underlying trends are pretty favorable. We are already catching a tailwind. The tailwind is getting stronger. There are things that could make it even stronger but I don’t think, even if you don’t do any of this stuff, the pressure on piracy is clearly downward. So it is going to decline even if we just continue doing what we are doing.  

Satyan Gajwani, Gaana (owned by Times Internet)

Increasing protections of IP by law enforcement to protect artists and support legal consumption. And of course, better connectivity!

Vivek Raina, Believe Digital

Sector needs to go back and build key artists and get some good music out which can have a longer shell life. Some record labels are already started doing this in some form or the other. And its not limited to record labels.

Transparency is a global challenge right now and everyone in the value chain needs to work towards it. We are investing regularly to build tools for our partners as we believe that this is the first step to give a real picture of digital economy. Else, it’s all about large size excels, third party reports, which may not be helpful for everyone.   

Vijay Basrur, OK Listen

The key challenges are going to be the learning for download vs streaming, monetization for streaming players. The maturity of micro payments should be a good thing for the industry.

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