Why Spotify is hitting high notes in India

The platform earns its revenue either from subscriptions or from advertising. Spotify works closely with labels, which hold the copyrights of the music that is streamed. Often labels also discover new artistes on Spotify. Spotify claims it paid $7 billion in royalties to rights holders in 2021, which was more than double the amount paid in 2017. All time Spotify payouts to music rights holders are approaching $40 billion.

Spotify India was in the news recently for removing Zee Music Company’s songs, after negotiations for a renewal of their licensing agreement fell through. A Spotify spokesperson said, “Spotify and Zee Music have been unable to reach a licensing agreement. Throughout these negotiations, Spotify has tried to find creative ways to strike a deal with Zee Music, and will continue our good faith negotiations in hopes of finding a mutually agreeable solution soon.”

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India’s growth story

India is not Spotify’s highest revenue generator for video or audio streaming, compared to the US or European countries. According to business management consultants Redseer, the OTT audio space has had about 140 million monthly active users for the last two years.

“From a pure user growth point of view, it is one of the fastest growing markets—making it one of our top five strategic markets globally. We have tripled our audience in India over the last 24 months. If we continue doing things right, revenue will definitely follow,” says Gyllenhammar.

The Indian diaspora across the world is massive, which means the global appeal for Indian music across markets is also huge. Spotify is hoping to bank on this. Says Gyllenhammar, “We have seen this with Latin music and with KPop. We are now seeing this with Punjabi music, which is growing from here as an export opportunity, which is probably one of the reasons why Spotify has been so successful in India.”

Given how value conscious Indians are, the pricing model had to be tweaked. “We had to innovate and experiment with our plans for the Indian market, like we haven’t done anywhere before,” explains Amarjit Singh Batra, general manager, SAMEA (South Asia, Middle East, Africa) and managing director, Spotify India. New subscription plans such as daily plans, weekly plans, family plans and many more were introduced for India. Whereas in most Western markets, Gyllenhammar explains, “There are recurring monthly subscriptions that you sign up for with a credit card, and $10 a month gets deducted. But this might not work in India. We don’t have a similar annual plan in any other market, but here.”

Globally, 45 percent are paid users, whereas in India this would be much lower. Most streaming platforms in India are advertising-driven. However, Spotify hopes to continue focussing on growing its subscribers. “Last year, our paid subscriber growth doubled—which was faster than free-user growth. So we are growing, but we still have a long way to go to get to that 45 percent global figure,” explains Gyllenhammar. The company did not share India-specific numbers.

In the early days of its India launch, Spotify saw growth mostly in the metros. However, over the last four years, its user-base has expanded to tier 2 and 3 cities as well. “We have been expanding our presence across Indian languages. Spotify’s philosophy is that it is for everyone, so for us every user of each language is given equal importance. We understand that for every user, their language is their pride, and we are focussing on just that,” says Batra.

Spotify India is available in 12 languages, including Hindi, Punjabi, Telugu, Tamil, Malayalam, Kannada, Marathi and Bhojpuri. “We are curating music in multiple languages and working with independent artistes and the film industries from each of these regions,” adds Batra. The goal is to have a presence in every language in the market.

The audio streaming platform is also curating playlists for each language, such as ‘Punjabi 101’, ‘All Out 10s Malayalam’ and many more. The app is also available in 12 Indian languages, in addition to the 100 languages available globally.

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Artiste-centric approach

India already has quite a few players in the audio streaming market. According to Mukesh Kumar, senior engagement manager at Redseer, “We estimate 10 to 11 million subscribers to OTT audio streaming in India, currently. In 2022, JioSaavn had the highest market share of monthly active users; Spotify leads in number of streams and has been consistently growing user engagement too.”  

What makes Spotify unique is its creator-centric approach. Batra reckons, “In India, the focus has primarily been on film, and not artiste-centric music. Our mission with Spotify India is to drive consumption and popularity of artiste-driven music,” Rahul Balyan, head of music, Spotify India, says, “We are enablers of their [artiste’s] success. We always support them in growing not just on Spotify, but also on other streaming platforms and on social media. We don’t sign any exclusives with artistes.”

The platform runs programmes such as ‘Fresh Finds’ and ‘Spotify RADAR’ to help users discover new and talented artistes. Some of these programmes allow new artistes to pitch their unreleased music, and Spotify’s in-house editors pick songs that are a part of the Fresh Finds playlist, which has 30 songs. “These programmes help shine the spotlight on the work of fresh artistes, and eventually help them get bigger projects. For instance, artistes like OAFF and Kamakshi Khanna, were discovered via Spotify and are now working on film music,” adds Balyan.

There was a time when young artistes didn’t really know what they were worth and who was listening to them. “Spotify is changing that. Our ‘Spotify for Artists’ app has allowed artistes to understand what is working for them and what isn’t,” says Balyan. The platform is bullish on hip-hop, among other genres and hopes to continue doing events like Rap 91 Live, to engage with the community and provide a platform for local artistes to perform. “Additionally, we will continue to penetrate deeper into regional languages.”

Also read: How should music streaming services pay artists?

Betting big on podcasts

Innovation has been at Spotify’s core since it was founded in 2006. It is now expanding its audio offerings by focussing on podcasts. “Podcasts are bringing all that's good about radio into the digital world, into a complete on-demand experience, letting users choose what they want to hear,” reckons Gyllenhammar. With radio there was a radio jockey culture which took off. Now, adds Batra, “Spotify allows anyone and everyone on the platform to be a radio jockey, since you can create your own podcast about anything you feel passionate about. There’s an equal opportunity for everyone.”

Earlier, there used to be radio shows, adds, Dhruvank Vaidya, head of podcasts, Spotify India. “We’ve adopted those formats and created fiction podcasts. For instance, Virus 2026 is a 10-episode series featuring Ali Faizal and Richa Chadha; and another fictional series, Bhaskar Bose, and with Puranjit Dasgupta as voice actors.” Additionally, Spotify is also working with a bunch of creators such as Ranveer Allahbadia and Leeza Mangaldas on their own podcasts too. Now, one in four music listeners is a podcast listener on Spotify, claims the company.

Even on Anchor, a podcast creation tools, there are podcasts being created across 12 to 13 languages. “We realised this is a segment that has seen a lot of interest. To encourage this further, we launched a mentorship programme, where we take creators through scripting, editing, sound design, marketing and finally publishing,” adds Vaidya. This programme is across Tamil, Telugu, Malayalam, Bengali and Hindi. Through this, Spotify saw a lot of first-time creators across professions such as doctors and bankers, talking about a diversity of topics and mostly from tier 2 cities.

“Podcasting has been picking up pretty well in India, as more and more India-focussed content is generated, and Gen Z and millennials adopt listening habits. Another trend we are picking up is the audio series market, which is one of the fastest growing segments,” adds Kumar.

Even from a marketing point of view, podcast advertising can be personalised, unlike radio, since there’s a lasting connect with the creator or podcaster, claims Vaidya. India hasn’t moved into advertising for podcasts, yet. “We have to create this market for India, with tools such as Anchor--Spotify’s erstwhile podcast creation and analytics tool-- nudging creators to start looking at podcasts as a medium to reach their audiences. Podcast creators can now use Spotify for Podcasters to create and analyse the performance of their content,” says Batra.

Also read: Spotify bets on audiobooks

With education at the core of Spotify’s strategy, they are not only educating users, but also creators and artistes. “We have masterclasses and events for creators and artistes on how they can succeed on the platform, use analytics and grow themselves,” he adds. Vaidya feels people are using podcasts to learn something new. “We are hoping to build on knowledge and learning as a genre. There is a wide base of content across topics, from digital marketing and leadership to NEET and CAT prep,” says Vaidya. Knowledge and learning works, because podcasting is a space that allows one to deep-dive, unlike short-form content on social media platforms. He adds, “People are not reading as much, but they are still willing to listen and that is the space we want to capture. You can learn while you are going for a walk, at the gym or driving.” In the last three years, Spotify has onboarded close to 200,000 creators on Anchor.

Audiobooks have only recently been launched in North America, but the audio streaming platform is bullish on its growth. “It took us a long time to be where we are with music, it was faster with podcasts, and hopefully we will grow even faster with audiobooks,” adds Gyllenhammar. Though the platform is very much rooted in the audio space, it might consider jumping into adjacent spaces over time.