(Originally published on Seedwalker)
2012 ended with two events that were particularly noteworthy in the music industry. First, Psy’s Gangnam Style became the most viewed video on YouTube; noteworthy because the K-popstar turned copyright infringement into a money spinner, making a mint off ads runs on Gangnam YouTube videos – posted by him and others – and from TV commercials for top brands. Then, Christmas week saw the most digital music downloads ever in the history of downloadable music. Ever. So while overall spending on music is expected to shrink by 4% in 2013, according to Forrester, at least listeners will continue to download and stream music online more than ever before. And the quality of music we have access to will continue to get better. That said, the economics of the music business are complex and controversial and I’m not even going to attempt to crack that nut in this post. But I would like to spend some time on another shift in the online music industry – one that benefits all parties.
Now that the first wave of post-Napster music services has a foothold in the market, listeners in the western world (mostly English-speaking, although there is the occasional exception) have several choices – we can download MP3s on iTunes or Amazon, or stream or rent music on Spotify, Pandora, Rhapsody, Rdio, Deezer or a handful of other subscription or ad-supported services. But what gives if you are a music lover in an emerging market with low internet penetration and high copyright infringement? Services like Saavn are solving for just this. Saavn is an ad-supported streaming service for on-demand Indian and regional South Asian music. I had the opportunity to speak with Saavn co-founders Vin Bhat and Rishi Malhotra recently (Paramdeep Singh and Anurag Gupta are other co-founders), who shared some of the nuances of the market they’re in.
First, 75% of Saavn’s base is in India (10% is in the US), so music listening habits in the chief market are key. Copyright infringement and piracy are rampant in India; up to 90% of listeners get bootlegged music downloaded to their phones from the corner store or download music illegally from dozens of known websites. The remaining predominantly access music via their TVs. Thus Saavn caters to a pretty diverse base of listeners from all over the map, conditioned to varying listening habits. Next, only about 10% of the 1.2 billion people in India have internet, of whom roughly half access the internet via their wireless devices. Of the 900 million mobile phone users in India, only about 11% have a data plan. To further complicate matters, most Indian songs are played in Bollywood movies and the singers’ names are often unknown. Then there are language-related barriers – most songs can be hard to phonetically spell in English, making it a challenge to search for songs online.
Fortunately for Indian music lovers, the seasoned Saavn team has solved for many of these challenges, including a proprietary search feature built for native content. Launched in 2010, the Saavn.com team consists of 55 employees based out of New York, Mountain View, New Delhi and Mumbai. The service streams 99% of the known catalog of Indian music, licensed from over 200 content providers. It is in the enviable position of having little competition in the Indian music market and has acquired global rights for music, something that is a challenge for western counterparts. The service has 10 million active users (against Spotify’s ~20 million), and the average Saavn user spends 4-5 hours on the website, staying for 45 minutes per session. Future plans for the team include embedding the Saavn app with handset OEMs, bundling music with wireless data plans and expanding into video.
What interests me about Saavn and similar services in emerging markets is that they point the way to the future of mobile and internet adoption. We often tend to forget the unique challenges that entrepreneurs face in such markets, and the innovative workarounds they’ve developed. And why not, given the upside? According to comScore, online penetration rose by 7% in 2012 – much of it due to above average growth in countries like India and Russia that have a low denominator to begin with. Mobile stats are equally exciting for BRIC countries, with India poised to become one of the fastest growing markets for mobile in general and smartphones in particular. Services like Saavn will help accelerate the adoption of smartphones by tipping users into data plans that are becoming increasingly affordable in emerging markets like India.
Of course, my favorite part is that, in the end, everyone benefits – consumers gain readily accessible content online that won’t break the bank, content producers gain access to a new market and distributors get to use a cheaper distribution channel.
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