Sunday, June 23, 2024

‘India’s streaming market is at the cusp of a digital boom with unprecedented opportunity.’

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MBW’s World Leaders is a regular series in which we turn the spotlight toward some of the most influential industry figures overseeing key international markets. In this feature, we speak to Kumar Taurani, Chairman and Managing Director of India’s Tips Industries Limited. World Leaders is supported by PPL.

India is one of the global music industry’s biggest growth stories.

According to stats published by Luminate in January, the market saw the biggest YoY increase in total annual on-demand music streams of any nation last year.

As MBW reported at the time, if annual streaming volume growth in the US slows in 2024, as many expect it will – but India manages to sustain its 2023 YoY streaming growth margin this year – India could become the world’s largest music streaming territory by volume in 2024.

It’s no surprise then, that Kumar Taurani, a veteran of India’s music business and Chairman and Managing Director of prominent India-based music company Tips Industries, tells us that, “India’s streaming market is at the cusp of a digital boom with unprecedented opportunity”.

The catalyst behind the impressive growth trajectory of India’s streaming business in recent years was the arrival of cheap mobile data in the market about six years ago.

The person responsible for that was billionaire and Reliance Industries owner Mukesh Ambani, who, via his telco company Reliance Jio, launched what Tips’ Kumar Taurani says was “nearly free internet” for millions of people via the rollout of a national 4G mobile network. The Wall Street Journal reported at the time that he spent $35 billion of Reliance’s money on the plan.

“The surge in content consumption, facilitated by more affordable data, has been a key driver in the rapid expansion of the streaming audience,” explains Kumar Taurani.

Kumar Taurani, and his brother Ramesh Taurani, started out in India’s music industry in 1975 by setting up a distribution network for vinyl records, claiming to have become the biggest distributor in Western India by 1977.

“We dealt with major companies like Gramophone Company of India Limited, now known as Saregama and Polydor now known as Universal Music,” explains Kumar Taurani.

By 1981, the brothers ventured beyond distribution and launched their own small-scale record label, focusing initially on non-film and regional music. In 1988 they ventured into Hindi film music.

“When we entered the film music market in 1988, we realized the need for our own cassette manufacturing due to the challenge of getting cassettes manufactured by others,” remembers Taurani.

Tips Cassettes & Records Co was subsequently born with the brothers establishing multiple large factories to meet the demand for their label’s music. They started producing about 10,000 cassettes per day, and by the early 1990s that output increased to around 200,000 cassettes daily.

“This expansion in the 1990s significantly boosted our capacity to meet the growing demand for cassettes at that time,” remembers Kumar Taurani.

The Indian music industry has evolved significantly since the company started, and Taurani notes that their journey “from analog vinyl and tape to digital files and online streaming has indeed been a challenging one”.

The physical market in India for Tips today “is nearly zero” says Taurani. “We’re not actively involved in the physical business anymore; it’s minuscule and limited mainly to vinyl for collectors. We receive a few inquiries for vinyl and we are in discussion about licensing our content.”

He adds: “It has shown us the importance of adapting fast and being proactive to be prepared for any unknown digital source of monetization. The next opportunity (or challenge) will be AI-led music.”

Today, the listed company’s business is thriving digitally. Content available on the company’s official YouTube channel, for example, which has nearly 64 million subscribers, has racked up billions of combined views.

According to Taurani, Tips Music is among the “top three priority Indian origin music labels”. It produces content in multiple languages including Hindi, Punjabi, Telugu, Tamil, Marathi, Gujarati, Bhojpuri and other languages, straddling all genres of popular Indian music.

“We’ve witnessed a significant transformation from being perceived as a boutique label to now ranking among leaders,” says Taurani.

He adds: “This remarkable growth, particularly in the last two years where our top line nearly doubled from Rupees 90 crores to 187 crores  ($10.84 million to $22.53 million), underscores our deep understanding of market dynamics and the impact of our music catalog.”

Taurani credits the strength of [Tips’] repertoire as being central to the company’s positioning in the market.

“We started building [Tips’ repertoire in] 1988,” he says. “[It] has been central to our success, especially with our substantial share in the 90s music era, holding about [a] 65% [share of music] of that decade.”

Here, Kumar Taurani tells us more about Tips’ positioning in the market and his predictions about the growth of India’s music business.

How is Tips Music positioned in the music industry in India today?

Our strategic acquisitions in the past of several significant labels have diversified our catalog across Hindi and regional languages, and also fortified our market presence.

This expansion, coupled with our proactive transition to digital platforms, including an early presence on YouTube and collaborations with streaming services, has been instrumental in adapting to the industry’s shift towards digital consumption.

Our journey from a boutique label to ranking in the top three Indian priority origin labels, is a testament to our adaptability, and commitment to evolving with the industry’s trends.

In what markets globally are you currently seeing the most growth for your content?

We are seeing substantial growth in markets like the USA, Canada, UK, Gulf countries, Australia, New Zealand and Germany due to the increased popularity of Indian Music and Musicians.

Platforms like YouTube and Spotify have been instrumental in this international expansion.

Tips also owns a large catalogue of film soundtrack copyrights. What is the ratio of your non-film to film music content and how big a priority is the movie soundtrack side of your business?

Film music is a central aspect of India’s cultural and entertainment landscape, and we have embraced this reality in our strategic approach. Our film music catalog is rich and diverse, capturing the essence of Indian cinema, from the 1990s till 2024.

Our focus on film music does not overshadow our commitment to non-film music. In our expansive library of approximately 31,000 songs including a huge percentage of non-film music.

Citing Luminate stats, we recently reported that India could become the world’s biggest music streaming market by volume in 2024 – overtaking the USA. What are your thoughts about these stats?

With music streaming services accessible to a broader audience, the way music is consumed in the country has drastically changed.

The market’s evolution is also evident in the changing consumer behavior towards paid subscriptions. Traditionally, there has been a preference for free content in India, but OTT platforms are now successfully nudging users towards paid models. They are implementing strategies to incentivize paid subscriptions, such as offering ad-free listening, the ability to download music, and access to songs offline, among other features.

“The market’s evolution is also evident in the changing consumer behavior towards paid subscriptions.”

This approach sells the musical experience, subtly encouraging people to opt in for subscriptions. This shift is crucial for the sustainability and profitability of the music industry, promising enhanced revenue streams for artists, rights holders, and the industry as a whole.

The Indian streaming market is not just growing in size but also maturing in its business model. Streaming platforms like YouTube Music, Spotify, Saavn etc. are all poised to grow in this market.

What are your predictions for the future of the music business in India in 2024 and beyond?

Looking towards the future, our predictions for 2024 and beyond are rooted in a strong belief in the continued growth and expansion of the Indian music industry. With projections indicating a 15-20% annual growth rate, we are anticipating an industry boom that could potentially elevate the market size to approximately USD $1.5 billion-plus, within the next four to five years.

Apart from the digital growth story, we anticipate a significant increase in public performance revenues, especially if the government mandates music licensing for bars, restaurants, and pubs. Currently, approximately 90% of such establishments do not adhere to music licensing regulations, treating music as a free commodity within their premises. Government intervention to curb this practice would greatly benefit the entire music fraternity. In the context of public performance revenues in India, which currently stand at nearly USD $30-35 million, a comparison with PPL – UK, which achieved USD $200 million in 2022, highlights the untapped potential.

“The future growth of the industry will likely hinge on our ability to innovate, adapt to emerging technologies, and tap into new market segments.”

Considering the market size and the number of establishments in India, there is a substantial opportunity to achieve 20-25 times the current earnings from public performances in India.

This significant growth will not only enhance the industry’s financial footprint but also its cultural impact and global reach. To achieve this ambitious target, it’s imperative for major label companies, including ourselves, to plan strategically and collaborate. The future growth of the industry will likely hinge on our ability to innovate, adapt to emerging technologies, and tap into new market segments. Embracing digital transformation, exploring new genres, and investing in emerging artists and regional content will be crucial strategies in driving this growth.

Furthermore, with the increasing integration of music into various digital platforms and media, there’s an opportunity to create new revenue streams and business models. This may involve partnerships with OTT platforms, expansion into international markets, and leveraging data analytics to understand and cater to evolving consumer preferences.

What hurdles are getting in the way of streaming subscriber growth in India? How could streaming be improved for artists and rightsholders in your view?

“Music is free” – is the largest hurdle in the mindset of Indian consumers and entities. This is the core issue. Be it the consumers themselves or the entities like bars, pubs and restaurants who don’t pay and play music.

OTT companies are now creating strategies to convert free users into paying subscribers. Spotify is doing a great job in the market on such limiting-free strategies. They are slowly and steadily converting free users to paid ones. YouTube music has a large paid base and is consistently growing the paid base. It shows that Indians are willing to pay.

“[streaming] companies are now creating strategies to convert free users into paying subscribers. Spotify is doing a great job in the market on such limiting-free strategies.”

India also uses bundles, where Amazon and Wynk via their OTT service bundle or telecom usage bundle, give a great experience to their users. This needs to further grow.  Regulating free-streaming further, in a slow manner and pushing users to a paid model, will pave the path for paid user base growth. 

There have to be initiatives by the entire music industry where artists and composers participate in a campaign to talk about how music is not free. The artists need to proactively come forward and lead this along, with support from the societies, labels etc equally.  

Where are the biggest opportunities for international artists and their representatives in India?

In the metro towns of India, there’s a significant market for international music, and it’s doing quite well. While our primary focus at Tips Industries has been on domestic film and non-film music, we acknowledge that there’s a niche but growing interest in international genres among urban audiences. 

What creative or business trends are you seeing in the market that we should know about?

On the creative side, Indie Music, Fusion Music, Regional and Mainstream Collaborations and Virtual Concerts are seeing a greater market than predicted. We gave examples of how international music is gaining traction in India. There are remixes made by DJs using Afrobeats. Creativity has no boundaries and it will keep evolving.

On the business front, the landscape is always evolving. We’ve seen a tremendous shift towards digital consumption of music, with streaming services becoming the norm. This digital revolution is reshaping how music is distributed, consumed, and monetized. There’s also a noticeable trend towards collaboration among artists, labels, and platforms to tap into the vast potential of the Indian market. We’re seeing more efforts to consolidate and expand the industry, aiming to not just compete but also grow the pie for everyone involved.

Can you tell us about the current legal landscape regarding music licensing and copyright in India?

The legal landscape in India for music licensing and copyright is quite robust. We’ve had our share of battles in the courts, especially concerning internet streaming rights, and we’ve emerged victorious.

“The legal landscape in India for music licensing and copyright is quite robust.”

These successes reflect the strength of our copyright laws and the judiciary’s understanding of the nuances of music rights. It’s reassuring to see that our legal framework supports the protection of intellectual property, which is crucial for the growth and sustainability of the music industry.

We’ve made significant strides in ensuring that artists, composers, and labels are fairly compensated for their work, setting a positive precedent for the future.

If there was one thing you could change about the music business, what would it be and why?

If there’s one thing, we would like to change about the music business, it’s the perception and practice around paying for music. We strongly believe that artists and all stakeholders in the music value chain deserve fair compensation for their work.

Music, like any other form of art, should be valued and respected, and this includes financial respect. We need to cultivate a culture where paying for music is the norm, not the exception.

“If there’s one thing, we would like to change about the music business, it’s the perception and practice around paying for music. We strongly believe that artists and all stakeholders in the music value chain deserve fair compensation for their work.”

This would ensure the sustainability of the industry and encourage the creation of quality music. It’s about educating the audience and working towards a model where the entire ecosystem can thrive.

[I] wish there could be more mandatory legal music licensing laws enforced for entities like pubs, bars and restaurants in India. It could change every Indian music industry’s fortunes and also the government benefits from the taxes that will be collected along.

World Leaders is supported by PPL, a leading international neighbouring rights collector, with best-in-class operations that help performers and recording rightsholders around the world maximise their royalties. Founded in 1934, PPL collects money from across Africa, Asia, Australia, Europe, and North and South America. It has collected over £500 million internationally for its members since 2006.Music Business Worldwide

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