In-depth: Will music streaming apps eat into radio's listenership?

The OTT market has exploded in India on the back of cheap data and affordable smart phones. But one segment within OTT that has shown exponential growth is the online music streaming apps. Users are now streaming most of their music live on apps such as Gaana, JioSaavn or Wynk, even in the hinterlands of the country.

But this growth has rung alarm bells for the country’s radio industry that has recently invested around Rs 300 crore in buying new frequencies under the phase three auctions. The radio industry has started worrying about what kind of an impact these apps would have on their listenership in the long run. The mobile users have already moved to listening to music on apps instead of FM channels.

“As an FM broadcaster, it will be negligent to blow off the steam being generated by serious online streaming services like Saavn, Gaana and Spotify. They have an obvious advantage of on-demand playlists, which cannot be overlooked. A lot of people are drawn to it because of the variety that it provides,” said Sunil Kumaran, Country Head, THWINK, Reliance Broadcast Network, which operates Big FM.

Prashan Agarwal CEO of Gaana.com, which claims to be the number one app in the segment with around 80 million users, says that migration of listeners from radio to apps is already underway.

“The pie of listeners remains the same. Some might choose radio or some might choose app. So, in that sense, we see lot of listeners moving to music streaming apps and it will continue to grow in future,” he added.

“Today there are about 80% to 90% consumers who get some form of music on their phones. There is healthy consumer basis across the board which has encouraged music streaming. The consumption is growing exponentially as consumers are getting more comfortable and more habituated to using music on phones in India,” Siddhartha Roy, COO of Hungama Digital Media said.

But what is drawing users to music apps from radio is the convenience they get in terms of personalising their music. Also, availability of a strong data connection and high quality less-add music is adding to that convenience of playing songs on mobile phones.

“I think the kind of convenience users get on music streaming app is very seamless, so we definitely see a lot of our consumers using our services during commute, whether it is metro or train or car. So the consumption has increased,” said Gaana’s Agarwal.

Currently, only 150 million users are using music apps in a country which comprise nearly one-and-half billion people. There are around 10% people who use music apps. Agarwal believes that in the next two years, around 400 million users will start music online as most people are shifting to smartphones and their first choice is to have a music streaming and video streaming app.

But though the trend of using streaming apps for listening to music is growing, there’s still no data to support it.

Jehil Thakkar, Head, Media and Entertainment, partner, Deloitte, said that music streaming is still in its infancy and there is no data to suggest it is cannibalising radio listenership. “Even if we take inferences from other markets where streaming is far more penetrated, there is no evidence that streaming is impacting radio listenership,” he said.

“They may be drawing a bit of younger generation to themselves but overall there is no indication of people moving from radio to online streaming services,” said Kumaran of Big FM.

Regional music content boosting the growth of streaming apps

Apart from habituality, the access to regional playlists has further boosted the demand for the online music streaming. The users don’t have to be in Kolkata to have access to Bengali songs. Whereas, radio doesn’t offer such privileges as it gets territorial.

“At Hungama, we have seen regional growing rapidly. Today 48% of our consumers are consuming regional music largely on the back of Telugu, Tamil, Kannada, Malayalam, Bengali and Punjabi. Tier II Tier III cities are seeing a sizeable consumers being added to Hungama services,” Roy said.

Agarwal said Gaana has witnessed growth following the availability of regional library and voice command integration. “If we look across languages than Gaana has grown by more than 100% YOY, it is mainly due to heavy exposure to different music through our recommendation engine. From the product standpoint, a lot of our innovation had been on offering the app in 12 different languages and voice service. 22% of consumption is backed on these languages. The voice services further boosted the growth as millennials and Tier II and Tier III costumers prefer the medium.”

Who wins the advertising and profitability game?

For music streaming apps, SOD (subscription on demand) remains the primary parameter of growth as compared to ad-supported content on demand.

On the advertising front, music streaming services are still a small component of media planning. “Music streaming is important for advertisers but right now it is a peripheral media presence in the plan. Music streaming is actually a very small component today for an overall media plan but as it grows in numbers, the advertisers will come. As the measurability increases, you will see it becoming important,” Thakkar commented.

On the contrary, the engaging content and interactive model of radio attracts advertisers’ interest as compared to music streaming services. Kumaran said, “Advertisers prefer radio because not only does it have tremendous reach but it piques a listener’s interest through engaging content and promotions. Trust and credibility are very important not only for advertisers but also for listeners. For many listeners even today, radio is the most trusted source of information. The flexibility of our radio medium allows it to leverage topicality, has RJs as influencers that play a strong role and the ability to weave the brand communication into the programming fabric offers values which no other medium is capable of.”

The music streaming services have also been attracting interests from brands across FMCG, consumer electronic, automobile, consumable durable and e-commerce.

“We have seen exponential growth on that front. Right now the core challenge is that there is so much of traffic that we don’t have enough advertising dollars casing that traffic. This means that the current short-term yields will always be under pressure as you will continue to grow faster than you will be able to add more advertisers to your supply,” Roy commented.

The online music stream service also faces challenge as the consumer is getting used to the free service and is not entirely moving to the pay model. “One is aware on what is happening on Telcos where this service is being bundled for free and so our largest challenge is for us to have consumers to pay. The market needs to have the ability to move consumer to pay buckets,” he added.

All experts believe that currently radio has an edge when it comes to advertisers but music apps will also see their revenues grow as they have advertisers who want to do branded content along with having a subscription model for users who can pay.

“If you just look at advertising, radio will still be preferred but music apps have more revenue generation options,” said an expert.

Can both music apps and radio co-exist and grow?

Roy of Hungama Digital Media believes that both music streaming app and radio can co-exist. “Consumers listen to Radio City or Radio Mirchi because they like their style of presentation and packaging, whereas with music apps, they get personalisation. There are various reasons and style in which the content is cut and consumers go back because they want to experience that content. Music stays the same but what differs is the way it is packaged and presented and consumers choose the presentation that they like,” he stated.

Agreeing with Roy, Big FM’s Kumaran commentated that there is whole lot of non-music content on radio that drives listener engagement. “Radio has survived the tape, CD and IPOD. Music apps operate in a different space which is quite different from the live and local space that radio operates in. Radio is an interactive medium. There are traffic and weather reports, local stories, contests where listeners can participate in. All this builds a strong bond between the listeners and the RJs,” he added.

Vineet Singh Hukmani

Vineet Singh Hukmani, MD and CEO, Radio One, said the biggest advantage for radio is that it is live, local, mobile and free, and no medium so far checks all these four boxes.

Currently, Gaana claims to have around 80 million active users whereas Saavn and JioMusic (prior to the integration) had a combined user base of over 25 million monthly active users.

Radio is also employing the help of digital platforms to boost their reach to masses. Kumaran said radio and digital is like bread and butter and it is all about forming a perfect partnership between radio and digital content. “At Big FM, we have adapted well to digital platforms to extend our brand, protect our listener base and reach new audiences,” he said.

“The content on radio is superlative and can easily use the internet to reach more people. Digital/online just allow added access. Digital by itself means nothing per say unless the content is great. All the international/Indian digital content ‘visual’ offerings are seeing rising content costs and subscriptions are not growing unless price is dropped. It will be very difficult for them to sustain. I see existing media companies using digital only as a means to increase their reach and we are already doing that with www.1cast.in. Other radio stations will soon follow suit,” Hukmani said. 

“The listener will continue to listen to radio for companionship, local information and for the curation of music that radio provides. Radio has managed to keep its identity through it all and with internet radio and music streaming, there is no reason for the trend to buckle. I still believe that radio as a broadcast medium will continue to be the king; albeit with some modifications,” Kumaran said.

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