Indian Music Labels Are Jostling For An Uncertain Pie

Last year, India’s music business made Rs 2,400 crore in revenue, up 10% year-on-year (YoY), according to consulting firm EY’s estimates (pdf). Almost all of it came from music streaming. However, the industry’s growth has slowed as music streaming suffers a crisis and subscription revenues have hit a wall. 

Yet, there is hope. EY estimates that the music business will grow at a 15% compound annual growth rate to Rs 3,700 crore in the next two years as more people stream music and pay for it. 

Already, India’s music industry is governed by several highly skewed factors. Of all the music people listen to in India, two-thirds is film music. Consequently, music publishing revenues are only a third of the total industry’s business. Almost 70% of all music consumption comes from Hindi and Bhojpuri tracks. Nearly three-fourths of all Indians pirate music, much higher than the global average of 29%, EY estimates showed. 

Besides, there is a vast gulf between India’s biggest music label and all its competitors. 

Impact On Biggest Labels 

Leading music label T-Series has long dominated the industry. In 2019, it overtook Swedish YouTuber PewDiePie to become the most subscribed YouTube channel worldwide, prompting PewDiePie to release a now-deleted diss track. Today, it has over 200 million subscribers on YouTube and an extensive library in Hindi and Bhojpuri along with significant inroads in other languages (read this edition of The Impression to know more about major labels’ investments in local language music)

Earlier this month, T-Series reported its revenues for FY23, broken down by business segments for the first time. In FY23, T-Series made Rs 1,672 crore in revenues from its music business, up nearly 32% YoY. Music accounted for more than 60% of the company’s total revenue from operations for the year, slightly higher than the previous financial year. 

T-Series’ numbers make it India’s largest music label by revenue. It was hardly a surprise though for the company that has over 200 million subscribers on YouTube and an extensive library of film and non-film music in Hindi and Bhojpuri, the bulk of India’s music consumption by value, along with tracks in other languages. 

Sony Music India is a distant second among top music labels, with over Rs 745 crore in revenue in FY23, up 25% y-o-y. Not only is Sony Music’s size less than half of T-Series, but Sony is also growing slower than the market leader. Saregama, another market leader, saw 22% growth in revenue from music, its biggest business vertical. But, in FY22, its music revenue was still below what it earned in FY19.  

In a stagnating market, bridging the gulf between the market leaders and those lagging would come with its share of challenges. But there is still hope.

Bridging The Gap

One way to bridge the gap is to buy up opportunities. Take, for instance, the storied (but smaller) rival Universal Music. In FY23, it more than doubled its revenue YoY to Rs 555 crore. That was partly because, in September 2022, it acquired a majority stake in entrepreneur Tarsame Mittal’s group of music labels called TM Ventures which represents a long list of top film and non-film artists including singers Arijit Singh and Sunidhi Chauhan, composer-singers Amit Trivedi and Vishal Bharadwaj, and breakout indie acts such as Osho Jain and Techpanda x Kenzani. 

Last February, Warner Music India bought a controlling stake in Tamil language label Divo while in October it acquired talent management firm E-Positive Entertainment. Saregama, too, acquired 1,500 songs from the Telugu music label Mango Music in 2022. A year earlier, the French independent music label Believe acquired the legacy music label Venus and rebranded it as Ishtar. 

Another bright spot is the rise in performance rights. Live concerts are booming in India, resulting in a 20% bump in revenue from performance rights for music labels, as per EY estimates. 

Cost Involved

Nothing matters more than finding ways to boost money made in music streaming. About 15 million fewer people streamed music monthly in 2023 than the year before, EY found, and just 4% of the user base paid to stream music. Yet, this relatively tiny universe of paying music subscribers is now 7 million strong, up 55% YoY. There may be more scope for growth: music labels and streaming companies are slowly pushing more Indian users to pay for music. 

“Many of the platforms being under financial pressure have decided to move from free to paid…All the labels have joined hands and are, in fact, helping the platforms in their journey,” Saregama India’s managing director Vikram Mehra told investors in an earnings call last month (pdf). “We have removed our conditions on minimum guarantees for platforms that have moved behind a paywall.” Without minimum guarantees though, labels are facing a short-term contraction in music licensing revenues, Mehra said. 

There are other pressures too. Chinese internet company Bytedance-owned Resso, among the platforms that went subscription-only last year, closed operations in India in January this year. 

But Mehra is hopeful that change is just around the corner. 

“All that we need to see now over the next 12 to 18 months is this base of users finally going behind a paywall and generating revenue for the platforms as well as labels,” Mehra told investors in the call quoted above. “It has happened internationally. It's bound to happen in India. It's happening [in] the video streaming space in India. It will eventually start happening in the space of audio streaming too, give it 12 to 18 months.” 

It’s a much-needed  dose of optimism. Only then can music labels fight not just for a bigger piece of the music business, take on a gigantic leader, and fix the imbalance in the way Indians enjoy music.