India Beyond Bollywood: How YouTube & Other Streaming Services Are Rewiring the Local Music Industry

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City of Hyderabad, India

If you’ve been following music-tech news this year, the recent influx of investment and M&A activity in the Indian music streaming market might have caught your eye.

First, in Feb. 2018, Chinese tech giant and Spotify stakeholder Tencent led a $115 million investment in Indian streaming service Gaana, which itself is owned by the Times Group, India’s largest media conglomerate. One month later, another Indian streaming service Saavn merged with national telco Reliance Jio’s own music offering JioMusic, in a deal valued at over $1 billion. The newly combined Saavn/JioMusic company is now the fastest-growing music service the country in terms of time spent on mobile -- outpacing bigger global competitors in the country like Amazon Prime Music, Apple Music and Google Play Music.

Thanks to the virtually free cost of data in India, not only is nationwide adoption of smartphones and local streaming services accelerating, but local indie artists and international acts alike are also finding new opportunities for monetization, brand partnerships and fan engagement in a landscape traditionally overpowered by Bollywood.

This shift was the motivation underlying the "India Beyond Bollywood" panel that took place at the Midem conference in Cannes on Jun. 6, which featured speakers Tej Brar (founder & managing director, Third Culture Entertainment), Priyanka Khimani (partner, Anand and Anand & Khimani), Mandar Thakur (COO, Times Music) and moderator Ed Peto (managing director, Outdustry).

"There’s another narrative developing in India now, and it takes the shape of over 470 million mobile data subscribers in the country -- and that number is still growing rapidly,” Peto said at the outset of the panel. “That creates a direct-to-consumer access that Bollywood never allowed for the creative class, to put it mildly."

Furthermore, not only is English a national language of India, but the country’s population is also disproportionately young, with almost 65 percent of the population below the age of 35 (and 50 percent below age 25).

“You have a bunch of young people with smartphones in their pockets and free data -- and they speak English," said Brar. "A lot of international artists are looking at us and saying, ‘Why are we flying over this country of over a billion people?’ I think anybody who is in the live music business is making a critical error by ignoring a market as big as India.”

The first half of the panel was dedicated to clarifying and demystifying exactly what role Bollywood has played in the domestic music business over the last decade.

“I think the first thing to realize is that Bollywood is not a genre of music,” said Thakur. Rather, as Peto put it, Bollywood refers to a wider ecosystem, centered around musical films, that “ultimately packages and sells [music] down the pipeline to the end touchpoint, which is the cinema screen.”

Similar to how sync deals for advertising and other visual contexts work in the U.S., film directors and producers are primarily responsible for the "A&R" around Bollywood music, employing music composers, playback singers and musicians on a work-for-hire basis. Some of the nation’s most famous composers and singers have built entire diversified careers off the back of Bollywood -- making up to 70 percent of their income from live shows, with a rising adjacent interest in brand endorsements.

Hence, while Bollywood is not a genre in and of itself, the term does “represent the current running musical taste of the masses” and is “the single largest marketing machine that has been there for music,” said Thakur. In fact, one reason why international onlookers might equate Bollywood to the Indian music industry as a whole is because local major labels often treat Bollywood soundtracks as marketing platforms for newly-signed acts, not merely as transactional channels for sync placements.

Even A-list acts will often forgo proper payment for studio time just to gain access to Bollywood's gargantuan marketing and distribution pipeline. “It’s quite funny to see how most of the time, some of the biggest playback singers we represent will still step into a recording studio without a fee,” said Khimani.

Yet, the adoption of music and video streaming as a primary entertainment format is gradually reshaping the local industry's power dynamics. Perhaps the most significant player is YouTube, for which India is now one of the fastest-growing markets when it comes to monthly active users. In May 2018, Google India revealed that a whopping 80 percent of the country's internet users across all age groups access the video service on a regular basis -- including 225 million monthly active users on mobile alone.

“YouTube is not just jumping off the back of Bollywood -- it’s replacing Bollywood as the primary music marketing machine,” said Thakur. “That’s how important the role of YouTube is, in a country that has been fed on Bollywood films. In a sense, because we’ve always consumed music through visuals, we’ve been a YouTube-ready generation for the last 100 years.”

Similarly to the U.S., local rights holders in India have trouble monetizing videos properly on advertisements alone: “I spend a lot of my time explaining to artists that nobody is making money off of YouTube," said Khimani. "In fact, some of the biggest music talent today in India don’t see any YouTube revenue at all.”

Brar, who manages a handful of Indian electronic artists and producers like Nucleya and BLOT! with international followings, revealed that YouTube and other streaming services combined currently account for around 25 percent of his artists' income. "That's not a bad mix, but you have to understand that that's an absolute exception," he said. "If you’re a typical indie band with just a couple thousand followers on Facebook, you’re not even going to make 5 percent of your money from digital.”

Yet, instead of complaining, enterprising artists and managers are jumping on the exposure and direct community access that YouTube enables on a global scale, so as to secure more lucrative deals from elsewhere.

“If you really want to make money off of YouTube, you’re not really depending on what you’re getting off of ad revenue,” said Brar. “You’re going out, finding a brand, doing branded content and closing it from another angle.”

An exemplary model for this approach outside of music is the burgeoning community of YouTube comedians in India, who count brand partnerships as one of their biggest revenue sources and are also encouraging additional content investment in the space from Amazon and other competitors in video. In fact, YouTube's global NextUp contest for emerging video creators will be making a stop in Delhi in Oct. 2018.

In the music space, certain streaming and media brands are already stepping up to support indie artists, such as Rolling Stone India's “Watch Out” emerging-artist campaign with local crowdfunding platform Wishberry. Saavn already makes up to 10 percent of its annual revenue from direct artist deals through its Artist Originals program. Interestingly, this integrated approach of streaming services investing in an artist's career across A&R, production, marketing and distribution is already thriving in India, but has caused heated debate on Western services like Spotify, which has yet to launch in the country.

“Five years ago, brands were still spending their money just on Bollywood stars and cricketers,” said Brar. “Now, even the larger brands are seeing value and investing a lot of money in independent music, and are willing to pay a premium for access to these fans. Whether they choose to enter that space through partnering with an artist or through sponsoring a festival or other live events, that’s their call. But ultimately, the independent artist is going to see the upside of that.”

As for live music, brands are also helping support local multi-genre festivals like the Bacardi NH7 Weekender, which drew over 70,000 total attendees in 2017. EDM in particular has exploded in popularity, enabling global festival franchises like Ultra Electric Daisy Carnival to expand into cities like New Delhi and Mumbai. Even though the top artists in the genre don't get any national radio play -- that precious real estate is still left to Bollywood music -- “almost all of the DJ Mag Top 100 DJs have come to India in the last five years,” said Brar.

Khimani shared an interesting case study around how even her Bollywood-centric clients have also capitalized on the rise of YouTube and the diversified tastes of younger audiences. Shankar-Ehsaan-Loy comprises three of the most celebrated film music composers in India (Shankar Mahadevan, Ehsaan Noorani and Loy Mendonsa), with a collective repertoire of over 50 Bollywood soundtracks. Yet, the latter two members also have a separate but complementary musical project beyond Bollywood called Instant Karma that delves in original content, and has gained even more prominent global popularity.

“Whatever Ehsaan and Loy are able to quote for a live gig as part of Instant Karma is at the very least 2x to 2.5x what they would be able to get as Shankar-Ehsaan-Loy,” said Khimani. “Coming back to revenue, under Instant Karma they’re still getting almost negligible income from digital revenue streams, but all the online activity serves as a trigger for them to reach out to a larger, different audience.”

(UPDATE: Khimani has issued a statement to Billboard correcting the above comments from the panel. Shankar-Ehsaan-Loy's quotes for live gigs are 2x to 2.5x what Ehsaan and Loy are able to get as part of ‘Instant Karma,' not the other way around.)

On the major-label level, Thakur shared that Times Music (which, like Gaana, is owned by the Times Group) currently makes 65 to 70 percent of its revenue from streaming services, inclusive of both audio and video. Physical formats account for anywhere from 2 to 10 percent of revenue depending on the sublabel within Times Music, while the remaining minority of revenue comes from general licensing and brand partnerships. Even just five years ago, ringback tones still accounted for up to 80 percent of Times Music's digital revenue, but streaming has since taken its place as the No. 1 digital income stream.

Importantly, Bollywood music is not growing as quickly on local streaming services as other genres and artists, in part because of the global impact of international trends. For instance, at the All About Music conference in Mumbai in Sep. 2017, Shridhar Subramanian, president of Sony Music for India and the Middle East, revealed that around 10 percent of YouTube streams for Ed Sheeran’s single “Shape of You” came solely from India, putting the country within the top five or six markets for the star in terms of video consumption.

While Brar's artists have achieved international popularity in part because of partnerships with global distributors like Believe Digital and The Orchard, the manager advised the audience that these distributors have yet to integrate with most of the local streaming services in India, with the exception of Saavn. “If you want to get your music onto Gaana, Wynk or many of these services -- which are usually coupled with a telecom provider’s data plan -- you’re going to have to approach them directly," said Brar.

While Spotify first opened a Mumbai office in late 2017 and hopes to launch imminently, major-label and streaming execs almost unanimously agree that it will be a significant, perhaps even insurmountable, challenge for the Swedish company to gain meaningful traction in a market already crowded and dominated by major telco and big-tech conglomerates.

“We already have multiple, very strong partners in all of those markets,” an unnamed major-label exec told Music Business Worldwide. “It is up to Spotify to convince us why we should help them compete. And right now, for obvious reasons, we don’t feel very convinced.”

The other elephant in the room is whether the Indian music market will ever see the same financial upside from paid subscription as Western markets have seen -- and whether such a comparison really even matters.

While subscriptions in India tripled in value last year, there are still fewer than two million paying subscribers in total across all the audio platforms in the country, with a paltry one-percent conversion rate. In a report from Jul. 2017, Peto wrote that India's recorded-music industry generated just $0.09 per capita in trade revenues in 2016; in comparison, the U.S and U.K. garnered $19.42 and $16.41 respectively over the same time period.

As with other music markets across East and South Asia, these numbers have led to the false assumption that the Indian music market is not worth international investment and buy-in.

“There is a myth that people in India just don’t pay. I think people are looking for more value,” said Thakur. “It’s like how Indians enjoy a larger buffet more than doing à la carte -- that’s just the culture. As an industry, we do believe that if people see value in what they’re getting, they will eventually pay. The quantum of what they will pay is a separate discussion.”

Thakur claimed that "the industry is working to move the entire ecosystem in a phased manner" across the three main tiers that currently define the Indian streaming landscape: free streaming via platforms like YouTube, telco bundles (as well as bundles with other services like Amazon Prime) and, last but not least, paid pureplay services like Apple Music and Google Play Music.

“But let’s not also forget that the world we're currently in started with free," said Thakur. "In a strange way, the pirate invented the streaming ecosystem. Let’s give them the credit where that is due.”