The Indian music industry has experienced a dramatic change over the past few years. Technological advances driven by streaming have ushered in a period of growth. Covid-19 has created several challenges; however, the industry is holding up relatively well with the rise of several new avenues to consume music. With the budget release a few days away, Blaise Fernandes, President and CEO of Indian Music Industry, shares his thoughts and highlights some of the broad trends and expectations in the coming year.

1. How do you see the major trends you witnessed during Covid-19 in the music industry segment taking shape in 2021?
The recorded music industry has traversed from a physical to a predominantly digital business model even before Covid-19, 80 per cent of revenues for the recorded music industry in India come from the digital sector. However, the Covid-19 pandemic impacted the recorded music industry in India in the following areas:

  • While streaming counts have increased by 23 per cent during FY- 2020, the same is not translating into revenue growth for music labels as the Indian market has a low subscription base and is dependent on ad spends. As long as the Indian market is an ad supported ecosystem, growth will be stunted. 
  • Work from home has reduced travel time, but the fact that stream counts have increased by 40 per cent indicates music is therapeutic. Especially in trying times, a value never factored when one looks at the recorded music industry. 
  • The public performance revenues negatively impacted by 95 per cent in 2020 and given the status quo in terms of restrictions in outdoor activities and justifiably so as social distancing is the need of the hour to fight the pandemic, we expect public performance revenues to be impacted by 90 per cent in 2021. This is a wipe out for record labels.  
  • As ad spends were impacted, the business's sync segment was hit by 80 per cent in 2020, for 2021, we expect a 75 per cent de-growth in sync revenues. Another wipe-out for the music business.

1. Lack of revenue realisation from new listening habits and increased time spent on music consumption

  • According to the Digital Music Study, 2019, 62 per cent of surveyed music listeners consume music while travelling. Despite, Covid-19 restrictions on commuting, the listening time on audio OTT apps had increased by 42 per cent. This is the medicinal or therapeutic value and characteristics of music.
  • The time spent on commute has shifted to the adoption of new listening activities. Per a KPMG survey, there was a twofold increase in consumers who consumed music while doing household chores and increased 1.2 times while working/studying. During leisure and fitness activities, music consumption increased by 53.2 per cent and 24.5 per cent, respectively, due to Covid-19.
  • We reckon that these new listening habits adopted during Covid-19 will become routine during 2021. This is a positive trend for the recorded music industry. However, the revenue realised from the increased time spent on audio OTT apps have not been commensurate since music streaming in India is mainly ad-supported. Paid audio streaming subscriptions remain in single-digit percentage. We estimate that there will be a revenue increase of 8 per cent attributable to digital consumption of music in 2020. The faster we move to a subscription ecosystem the profitable it will be for all stakeholders.

2. Increased investments in independent and local artists and repertoire

The external market conditions are perfect for increased investments both from domestic and international players given the smart phone penetration base of 450 million going up to 900 million shortly, cheap data. Also, keep in mind a potential export base of 100 million users across the globe who consume content from India. The recorded music industry is working closely with the government to ensure that the copyright holders unlock the value their investments in copyright. Unlocking the value of copyright will be the trigger for fresh investments and for I-POP, which has the potential to be like K-POP, which is estimated to be a $ 50 billion enterprise by 2025.

2. How do you see music startups, more specifically tech-related music startups changing and driving the growth of the music industry in India?
The nexus between music and technology is critical in India and globally, especially when there are more than 300 million unique music listeners on streaming platforms. Tech-related music companies help make sense of and navigate through the Indian music market. Record labels can gain insights on music consumption and listening habits and identify rising genres and artists and invest in them accordingly. This will enable the recorded music industry to operate and allocate resources efficiently. 
3. While the demand for music on online platforms has remained the same, live music has completely moved to digital/virtual platforms. Do you expect this to be the new normal, especially with the government’s focus to improve online infrastructure/internet connectivity?
The shared excitement and energy at a live concert or the ambience that live music adds to a bar/restaurant will not be supplanted by live streaming. Live-streamed performances are more convenient to organise and attend. However, the in-person experience of being at a live music event is greater than the virtual experience of a live-streamed performance. 

With the country under the process of vaccinating the citizens against Covid-19, we can expect the live music scene to reach the pre-Covid status by the end of 2022 with relaxed precautionary measures. Simultaneously, backed by improving internet infrastructure and connectivity, live music streaming will remain a viable option for artists and their fans. Artists can reach a large fan base while fans can interact with artists directly on the digital platform. There will be a hybrid model as we advance with in-person attendance at concerts and the same concert can be accessed by consumers all over the world.
4. Production of Indian language music videos independent of the movie industry has seen a jump in the last ten years. Would you attribute it to improved skills of domestic technicians and better infrastructure for media, in general?
India is still primarily a film-centric music market, aka, as Original Soundtracks (OST). We see green shoots in independent music. We have the potential to take I-POP to K-POP levels; however, there is a dire need to create effective statutory licensing and compulsory licensing laws. Investments in I-POP are curtailed as labels prefer the safer and more stable route, namely OST or film soundtracks. The time is right for I-POP given the demographic dividends, cheap data, smartphone penetration, each regional language in India can have their own independent labels, there could be a 'jugalbandi' of languages in India, these need investments and for that to happen, the archaic laws must go. No doubt the quality of music videos being produced are world class, and this is thanks to the domestic talent behind the camera. I-POP also has a huge potential to create many jobs.

5. Going ahead, what are the three most important outcomes that you look forward to from budget 2021 that impact the media sector?

We request that funds be appropriated in Budget 2021 such that it results in the following benefits:

IP protection and awareness via –

Building a robust IPR regime through the launch of IP crime units across each state in India similar to Maharashtra Cyber Digital Crime Unit (MCDCU) and Telangana Intellectual Property Crime Unit (TIPCU) dedicated to taking action against online copyright piracy. INR 1,500 crore is lost annually to the recorded music industry due to a high (67 per cent) music piracy rate in India. This will protect copyrighted content of not just the recorded music industry but the entire M&E sector. In addition, providing funds that would encourage National Law Schools to offer technology law courses and engineering colleges to offer courses on data and privacy would further equip such crime units and provide employment opportunities.

Training Programs should be offered at various staff training institutes both at the centre and state level-

Through Public awareness programs, the public needs to be made aware of the potential financial threat of accessing pirated sites and the negative impact on the copyright content creators via digital civics. In fact, as per RAND reports, entertainment piracy operations have close links to terror organisations and crime syndicates. Cell for IPR Promotion and Management (CIPAM), an initiative of the Ministry of Commerce, has made a good start to spreading digital civics. However, with monetary and professional assistance from the government, such efforts can be improved and increased. 
Music Export Scheme – 

Several schemes are listed on the Ministry of Culture website, which helps promote music in India like the Scheme for the Award of Fellowships to Outstanding Persons in the field of culture. Unfortunately, most of these schemes do not delineate music from the other arts and would only focus on promoting music, not on music exports. Further, these grants are direct government to performer grants, without any role of the industry, which is best placed to administer the grants. Therefore, introducing a music export scheme will facilitate the Indian recording companies in entering global music markets. Such a scheme will help to showcase India’s cultural diversity and talent to a global audience. It will also lead to the promotion of India’s soft power. India's rich diversity and the introduction of a music export scheme would generate considerable revenues similar to the Korean music industry and the Latin recorded music industry, which through music exports generated $ 512.58 Mn in 2017 and $ 554 Mn in 2019 respectively.

* The views and opinions expressed above are solely of the interviewee. The content does not reflect Invest India's position or opinion and Invest India bears no responsibility for the same.

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