COVID-19 fast forwards streaming

Asia is home to various regions where music streaming is picking up, and notable among these is India. With the world’s second-largest population, standing at approximately 1.3 billion people, and an increasing middle class, there is a huge market to explore – and one that a former associate director at JioSaavn Ltd believes is still predominantly “untapped”. Indeed, one estimate puts the total number of unique subscribers in the country at 200 million. And the pandemic is pushing even more people towards consuming music this way. “While people are locked down, we’ve seen that huge surge in streaming platforms and that’s given a huge chunk of new users to a lot of platforms.”

As such a vast country, “India is a market where you cannot have an umbrella strategy”. There are numerous major metropolitan areas, but it is the other segment – such as semi-rural and tier 2 and tier 3 cities – “where the [mobile] data is growing, but music streaming has completely not reached” that companies “currently are looking to tap”. Language is another issue that streaming services need to pay attention to. “India has close to about 25 languages. Out of that, on the music landscape, there would be close to about 16-18 languages.” Again, this can vary between urban and rural populations, as well as by geography.

There are two main local players: “Gaana claims to be number one among all, with about 150 million users, then comes Saavn with about 100-120 million users.” By contrast, Spotify disclosed last year that it had reached 1 million unique listeners not long after initially launching in the country. The company first targeted the urban market and included localised offerings. According to our Interview, “you would not find any content in a regional language that is not present on Spotify at the moment.” 

Southeast Asia, with a population of 650 million, is another key region. “User penetration is, at last count, about 2.5%, and expected to hit about 3% in the next year or so”, noted a former managing director from Spotify Technology SA. Many companies have focused on the Philippines and Indonesia for their growing middle class and large populations, while Malaysia and Singapore are considered mature markets.

Again, paying attention to local differences is key. “People tend to consume music almost the same way around the world, but the key factor here was localisation. If you don’t have a local product, it’s very hard to win in those markets.” Another localised issue is people’s ability to pay. Huge swathes of the population across Southeast Asia do not have access to bank accounts; an estimate from Bain puts the figure over 70% for the unbanked and underbanked. While Paypal is now available across most of the region, there is still some way to go: “I think, as online payments or payment gateways become more normal, and more people adopt Wallet, that will really lend to more, better conversions for everyone.” 

One of the notable companies in this region is Joox, which is owned by Tencent. “Joox’s strategy in Southeast Asia has been different from the other streaming services. They have always been, and continue to be, very focused on advertising.” The company also offers live music events, “and they were incredibly successful with that”. Spotify also jumped on the concert bandwagon. One advantage when organising these, according to our expert from Spotify, is that “the power of data that all of these companies sit on is absolutely phenomenal”. Spotify used these data to tailor its line-up. As K-pop is huge in Indonesia, Spotify chose an up-and-coming artist from this genre, and also brought in local talent to emphasise their “dedication to the local music scene”. These events are an important way for streaming companies to bridge the gap between online and offline. “You will see, and continue to see, post-COVID, more of [these events] coming back.”

Data also mean the industry can chart listening trends in catalogues. A former president at Warner Music Group Corp explained that these can be divided into three categories: new releases, and the on-roster and off-roster catalogues. Out of these, according to our expert,  “off-roster… is the fastest growing” owing to older consumers using streaming services. This underscores the importance of having a larger catalogue, especially as younger consumers can be hooked on older music if, for example, it appears within a film, like Fleetwood Mac in Guardians of the Galaxy. However, as things stand, a minority of newer music makes up the majority of consumption.

Although new music is vital for labels, COVID-19 is disrupting how albums are traditionally released. Some artists, like Dua Lipa – who “took the COVID lockdown opportunity to be able to have global success” with Future Nostalgia – are using this to their advantage, but it could prove an obstacle to others. With the rise of streaming and demise of physical music sales, touring has become a driver of revenue – but in the face of global lockdowns and the threat of a second wave, the industry is slated to lose billions in lost ticket sales. Indeed, many artists are pushing their release dates back: “there is going to be a much busier release schedule in Q4 of this year and probably in H1 of next year”. In the meantime, the industry could look to other means to plug the gap, for example, by looking at YouTube monetisation or renegotiating terms with artists, according to our Interview.

The coronavirus pandemic is “certainly changing consumer habits, and nobody is quite sure where it’s going to go, but it’s not a disaster.” With cheaper data, growing mobile penetration and better banking access in many emerging markets, this could prove to be a boon for streaming services should they take the time to understand their customers.