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In tune: Music streaming apps tango with telcos

By Asmita Dey

Online music streaming app YouTube Music claims it attracted three million downloads within a week of its launch in India. That s good going. But the million-dollar question is whether listeners will stay tuned because they are now increasingly spoilt for choice: apart from JioSaavn, Gaana and Wynk, there are the global streamers YouTube Music, Apple Music, Spotify and Amazon Music.

India may be a big customer but not everyone wants to pay for their music, especially when plenty of it is already available on radio channels or even YouTube, which comes downloaded with an Android phone.

Of the estimated 150 million users, just about 1-1.5 million pay for their music today, according to experts who point out subscription revenues came in a shade below Rs 100 crore in 2018. But acquiring customers can be an expensive affair $1.5-$6.5 and content doesn t come cheap either.

EY (M&E) director Raghav Anand says without a minimum number of users and a minimum Arpu, it is difficult to defray the high CAC and content costs. The app economics, experts say, begin to look good once there are 20 million steady users paying around Rs 150 per month; while the money is made from 5 million users, 20 million are needed, given the churn can be high at around 60-70%.

The way JioSaavn works, the money is being made by telecom service provider from data usage. As of now, apps driven by telcos seem to have an edge given the costs for the others would be relatively high. Girish Menon, partner and head, M&E, KPMG, points out that apps that come with a telco may not, however, have deep insights into consumer preferences. On the other hand running a stand-alone app, even if it has deeper consumer insights can be challenging to scale up and requires significant investments in marketing and distribution, Menon observed.

Amazon Music, a pure subscription-based service that comes bundled with the Prime offering, has been launched not so much with the aim of making money but to attract customers to Amazon Prime. Amazon Prime is using music to drive the e-commerce business, analysts said.

Experts point out the foreign apps would need to invest serious money to acquire Bollywood music, the most popular genre. If YouTube the video app has been a success it is because there is plenty of Bollywood music available on the platform. Also, as Gaurav Jindal, Principal, at Boston Consulting Group, explains it s hard to be exclusive and points out that most of the streaming apps appear to have similar content. Consequently, music streaming could form just one component of a bigger package rather than a stand-alone business as is the case with Amazon Music.

Either way from a long-term perspective, partnerships and collaboration will be critical as platforms will require significant financial staying power and an ecosystem approach to create and maintain a strong market position, Menon said.

Today Sing by smule an app where users can record and upload music–is the top player in terms of revenue. EY s Anand believes music streaming with additional features is becoming popular. Youngsters are willing to pay for differentiated services, he said.

Sameer Batra, CEO, content & apps at Bharti Airtel said Wynk s deep understanding of consumers and personalisation of the music experience it delivers distinguishes it from other players. As regional music becomes popular Wynk s distribution reach through Airtel, makes it very well positioned to leverage the opportunity, Batra said.