‘AI’ might have been the word heard most during the conversations at the recent All About Music conference in India. However, several of the talks centred around the need for Indian consumers to start paying for music.

It was a call to action made during IFPI CEO Victoria Oakley’s keynote – who pointed out that India remained in 15th place in the worldwide rankings of recorded-music revenue during the first half of this year – and also twice by IMI chairman and Saregama managing director Vikram Mehra.

He raised the point in his opening address, and again in his fireside chat with YouTube’s director of music publishing for APAC and AMEA, David Sheils.

As such, the most pertinent panel of the first day of this year’s edition was ‘The Next Chapter of Music Streaming: Plays to Paychecks’ in which representatives from labels, DSPs and rights management organisations outlined – to moderator Roochay Shukla, the head of creative marketing for India and South Asia at Believe – what they feel it will take to accelerate music subscriptions in India.

Segmenting music listeners

Prashant Dogra, the CEO of Phonographic Digital Limited (PDL), a rights management organisation that works primarily with Indian regional-language and independent labels, feels the Indian music industry should determine some kind of “genre-based pricing”.

Dogra referenced the era of physical music when music fans would pay separately to buy the cassettes and CDs of each artist they wanted to listen to, and opined that streaming services could similarly segment their offerings. 

“I have worked on both sides, the DSP side and on the label and distribution side,” he said. “They need to sit together and find a monetisation model. The time of one size and one price fits all is probably over.”

Viral Jani, the chief revenue officer for India and South Asia at Universal Music, echoed Dogra in the belief that a multi-pronged approach is required while canvassing customers.

“The way to approach India is to break it down into a few clusters,” he said. “At the top of the pyramid is roughly 200 million affluent people. I think first we need to target that base to start the paid journey.”

Moving beyond ads

Both labels and DSPs agreed that growing advertising revenue won’t sustain the music streaming business in the absence of an exponential increase in subscriptions.

“Audio advertising will never pay for music cost, tech cost, cost of acquiring a customer. It will not pay for just one of these also, leave alone the combination of all three. So at its core, the model itself is broken,” said Sumit Aggarwal, chief strategy and growth officer at the Times Group’s Entertainment Network India Limited, the parent company of subscription-only Indian streaming service Gaana. 

Saregama’s  Mehra was equally emphatic about this in his fireside chat. “Hoping that advertising revenues are going to grow on free audio is living in fool’s paradise,” he said. “Advertising does not chase audio. Advertising chases video.” 

Universal’s Jani said that Indians aren’t as bothered by ads as listeners in other markets “When you talk about how to drive premium in India, one of the key factors spoken about is ad-free experiences. We have done a lot of research at Universal to understand user behaviour, and one of the things we have seen is that Indians love advertisements. So what are we talking about? When we start to sell premium to them, we should not talk about ad-free.”

Instead, said Jani, India should take a leaf out of China’s playbook and start putting more restrictions on the free tier. The outcome of such initiatives “are an eye-opener”, said PDL’s Dogra, citing that Malayalam and Gujarati are the two regional languages from which “revenues on one of the DSPs started growing because the restrictions on the free tier in the last one year have forced people to go on to the paid model.”

Mehra went on to say that “if three of the big platforms”—presumably Spotify, YouTube and JioSaavn—“start building serious friction on the free service, India is ready for a 100 million paid subscriber growth in 18 months flat”.

Harnessing UPI as a payment method

Both the DSPs on the panel were of the opinion that the rapid adoption of UPI [United Payments Interface, a real-time payments system developed in India] as a payment method will help boost subscriptions to music services.

“You always need catalysts and enablers for any industry to show hockey stick growth,” said Rishabh Gupta, the country head of Amazon Music India.

“How people would pay was an issue five years back. If you would have asked an 18-year-old, ‘Hey, do you want to pay for music?’ Even if he or she wanted to say yes, the question would be, okay, how? You could only pay by a credit card for a monthly subscription. And in India, till today, credit card penetration in India is still low. But now, over the last few years, UPI has taken the country by storm.” 

It is the dominant payment on both Amazon Prime Music and, added Aggarwal, on Gaana where “more than 95% of the transactions happen via UPI.”