Spotify launched in India last week, amid a controversy surrounding its licensing – and a legal injunction filed by Warner Music Group. That row continues, but how is the Indian launch going otherwise?

Spotify has confirmed to Music Ally that a week after launch, it now has more than one million users in India. That’s a combined total of free listeners and paying subscribers. Yes, of course we asked what the split is, but Spotify declined to say.

(For its global business, Spotify ended 2018 with 96 million subscribers out of 207 million active users – a conversion rate of 46.4%. However, we suspect in India it’s much more likely to follow the prevailing trends of a market where it’s estimated that there are around 150 million music-streamers, but barely 1% of them paying for subscriptions. If that holds true for Spotify, it may have around 10,000 subscribers in India. But that’s absolutely back-of-a-napkin speculation on our part.)

Reaching a million subscribers in a week is an impressive milestone, even within the context of the sheer scale of India as a music market. But Spotify will be well aware that this is just the start of a longer journey to build its business there – not to mention sorting out that licensing issue with WMG.

According to industry body the IFPI, India was the 19th largest market for recorded-music in 2017, generating $130.7m of revenues. $87.4m of those came from streaming – just over two thirds.

The 150 million music-streamers figure is more recent: it comes from a report published by Deloitte and Indian music-industry body IMI about the ‘Audio OTT economy in India’ – Audio OTT being ‘over-the-top’ services including Gaana, JioSaavn, Wynk Music, Apple Music and Amazon Music. And also now Spotify.

“Paid subscribers provide a stable source of revenue, but unfortunately in India less than 1 percent of the subscribers are paid users and nearly 14 percent subscribers are bundled users; the remaining 85 percent of users are on free subscription,” explained that report.

Those ‘bundled’ users – people getting a streaming service as part of a mobile tariff – may be crucial to India’s future as a growth market for music.

Research firm Midia Research recently outlined its views on that in a blog post by its boss Mark Mulligan. “To unlock the scale opportunity, streaming has to look beyond subscriptions, and also beyond ad supported,” he wrote. “The scale opportunity is telco bundles.”

Smartphone makers may play a role too, though. The Indian Express recently reported that Spotify’s app is preloaded on the Indian version of Samsung’s new Galaxy S10+ smartphone – or at least on the handsets sent to journalists there. Spotify is Samsung’s music-streaming partner, so it wasn’t a surprise.

According to analyst firm IDC, Samsung accounted for 22.4% of smartphone shipments in India in 2018, placing second behind Chinese firm Xiaomi. Note, though, that if smartphone preloads are going to be a route to scale in India, it’ll be cheaper handsets than the Galaxy S10+.

It’s no surprise, though, to see Spotify race to a million users in India. Sharp growth is the story of this market. Amazon recently said that its Prime Music service had doubled its Indian users in just five months, for example. Gaana has grown rapidly to 80 million monthly listeners, while digital-music firms Hungama and Saregama have also reported growth in 2018.

The expectation is that the intensifying competition among streaming services in India – as well as the continued impact of cheaper mobile-data tariffs and improving networks – will continue the growth. Nomura / Instinet analyst Mark Kelley, recently published some predictions, for example.

“Expect India streaming market to reach $976mn by 2025,” wrote Kelley. “ We estimate the premium opportunity will reach $656mn and the advertising opportunity will reach $320mn.” That would compare to $33.7m from subscriptions, $27.6m from ad-supported audio streams, and $26m from ad-supported video streams in 2017, so sharp growth (and a change in market dynamics) on the premium side.”

One twist in this tale: YouTube. The service had 225 million monthly active users in India in March 2018 (so has surely grown since), and is the most popular way for people to consume music digitally. Anecdotal evidence of this can be seen in film-music company T-Series’ battle with gaming star PewDiePie to be YouTube’s most-subscribed-to channel (T-Series currently has nearly 88 million subscribers).

But you can also see it in YouTube’s global music charts. At the time of writing, three of the top four musicians on YouTube (measured by global views) are from India: Neha Kakkar (225m weekly views), Alka Yagnik (205m) and Kumar Sanu (184m) – he’s level-pegging with Ariana Grande, since you ask.

In other words, one million users in a week is good going for Spotify, but the company will be well aware that the competition – from YouTube and from the local audio-streaming services – mean that the real battle lies ahead to establish itself as a major player in one of the world’s most exciting (in terms of potential, certainly) music markets.

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