Music entertains, inspires and thrills. It is one of the universal cultural aspects of all human societies.
Today, great things are happening in music. There are new artists and music trends as well as new ways to experience older music. There is increased penetration of digital music services, expansion of music services into new markets and new music-based products. Fans all over the world are connecting with music in new and engaging ways and, as a result, enjoying music more than ever.
The music entertainment industry, which now includes not only recorded music and music publishing businesses, but also other business sectors such as merchandising and music audiovisual content, is dynamic, growing and global.
The industry has grown significantly in recent years, primarily due to a growth in digital music entertainment consumption driven by technological innovation and consumer consumption trends and enabled by industry adoption. new technologies, formats and monetization models.
The following chart shows the global recorded music industry revenue from 2001 to 2020.
Global recorded music industry revenue from 2001 to 2020 | EY FICCI 2020 and IFPI 2020
The music industry is booming globally thanks to the increase in digital revenue. The transformation of the music industry has included the following trends:
• Reduction of initial investment and associated risks;
• Distribution and customer acquisition costs are now funded by large technology companies;
• Predictable recurring revenue streams;
• Fewer impacts than in the past;
• Limited seasonality, if any;
• Minimal risk of recession; and
• Promotion of the musical catalog.
Even with its strong growth in recent years, music streaming is still in the early stages of penetration and there remains substantial opportunity for further expansion driven by the growth in the number of paid subscribers to digital streaming services.
The continued migration of consumers online offers significant growth potential for ad-supported streaming. This trend is also driven by continued technological innovation across devices and formats, such as voice-activated speakers, connected cars, intersections with social media and games, evolution of audio-visual products, that deepens fan engagement and music consumption. These are also the early days of streaming music licensing expanding into new lifestyle categories such as digital health and fitness, which have tremendous growth potential.
Indian music industry stood at Rs 15.3 billion in 2020 and is expected to grow at a CAGR of 15% to cross Rs 23.2 billion by 2023. (EY FICCI Report, March 21 publication). The average user in India spends 21.5 hours listening to music every week, which is higher than the global average of 17.8 hours per week. Growth in India is driven by digital consumption, driven by the popularity of smartphones. The success of audio streaming services is fueled by ease of access, cheaper data and efficient distribution models.
While India-based OTT audio streaming services may have amassed over 150-200 million monthly active users, the total number of paid subscribers is estimated at 1%, providing huge room for growth. OTT audio streaming companies have 450 million paid subscribers worldwide. The side benefit of streaming services is the growing popularity of regional music i.e. Tamil, Bhojpuri, Punjabi, Gujarati, Telugu, Bengali etc.
The music streaming segment grew 40% year over year in FY21 according to Saregama’s annual report. Saregama said his music intellectual property (IP) was used 85 billion times in fiscal year 2021 alone. He licenses his intellectual property to streaming platforms like gaana.com, Spotify, Amazon Music, Hungama, Wynk, Saavn and other popular apps, including several video streaming platforms to use Saregama owned music. Moreover, in just five years, his YouTube views have grown from 0.5 million to 940 million. The company has also signed deals with social media platforms like Facebook and short-form video sharing apps like Instagram, Josh, Triller, etc.
Likewise, Tips signed two global deals in 2020-21 – a distribution deal with Warner Music and with Facebook. The two listed players in this space in India, Saregama and Tips, operate in the most lucrative part of the music industry value chain, namely music licensing.
(Gautam Baid is Founder, Stellar Wealth Partners and Small Case Manager. Opinions are personal)
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Posted: Saturday, March 26, 2022, 4:49 PM IST