Spotify’s bet on podcasts in India
Understanding Spotify India's marketing initiatives and why is it betting on a nascent market like India for podcasts
|Prasant Naidu||Nov 27, 2019|| 2|
The article looks at the following :
Spotify’s India launch
Marketing initiatives in India
Original podcasts for India
Global and Indian podcast market
Competiton from Gaana and JioSaavn
And the way forward
In October 2019, Spotify, the digital music service announced it has turned profitable for the third time in its history. For the third quarter, the company beat its expectations and posted an operating profit of about $60 million. A faster new subscriber rate is one of the reasons for it to turn profitable - 248 million monthly active users were added of which 113 million are Premium or paying users.
The letter addressed to the shareholders mentioned to betting heavy on podcasts, and marching to new territories like India. Podcasts are witnessing growing adoption among its subscribers even though it is a small percentage.
14% of its monthly active users currently listen to podcasts. However, the segment accounts for less than 10% of its total ad revenue of $189 million in Q3. The majority of podcast listening is dominated by the United States, but European countries are also witnessing faster growth.
Spotify launch and marketing initiatives in India
Spotify’s bet on the podcast market is for real even for newer territories such as India. Earlier this year the streaming giant opened up officially in India. Amid the legal battle with Warner Music Group, Spotify launched premium subscriptions in India with a 30-day free offer and post that Rs.119 every month. Similar to its competitors in India, the company also offered a free ad-supported model and an easy pricing model.
Amarjit Singh Batra was hired for leading the job in India. At the launch, the company claimed that the Indian app will deliver a “localised experience” to every user. Spotify Lite is the company’s offer for India(also available in 36 markets across Asia, Latin America, Middle East, and Africa on Google Play) that is enabling music for users with limited connectivity and on low-end Android phones.
According to the International Data Corporation's latest report, the Indian smartphone market has shipped 46.6 million units in the third quarter of 2019. However, the market is still dominated by the low-end smartphone segment (under Rs.15000) which accounts 80% share of the total market. Serving this dominant base reaped benefits to Spotify. Within months of its launch, the app gained over 2 million active users in a month.
These numbers are backed by the marketing spends of the company. One of them has been the “Sunte Ja” campaign that brings the dashing Anil Kapoor who refuses to get old and young talent Ishaan Khattar as father and son.
Speaking to AFAQS, Amarjit shared that the ads display Spotify as a progressive brand, yet reflect the deep-rooted culture of the country. Leo Burnett was assigned to create the campaign and here is one of my favourite launched during Diwali time.
Additionally, Spotify has also not shied away from doing meaningful associations. It tied with Snap to engage with Indian users during Diwali. Snap Inc added a new AR(augmented reality) based landmarker lens for Gateway of India on Snapchat.
The Spotify lens added some unique AR experiences with special 3D effects, which users can access by pointing the phone’s camera on the monument. It also created playlists listed as ‘Diwali Shuffle’, ‘Diwali Drive’ and ‘Diwali Bash’, which users can add to the AR experience before sharing it with their friends and family on Snapchat. (Read: Snapchat’s revamped strategy for a “poor” country India)
Speaking to YS, Amarjeet specifically shared that the “Sunte Ja” campaign has worked for the brand in garnering national appeal.
I have my doubts when the Spotify Head says the campaign had a national appeal. The brand had inadequate regional connect other than creating the same video with voiceovers in Telugu and Marathi. Anil Kapoor’s presence might have worked only in Hindi speaking regions but that won’t qualify as a national appeal or impact.
He also stressed on the fact that the brand is focussing on original podcast content.
“We’ve seen a 50 percent podcast audience growth Q-on-Q. The potential growth of podcasts as a new form of audio storytelling is garnering steady popularity in India.”
Spotify’s best on podcasts and launch in India
Globally the podcast industry is booming; according to the Interactive Advertising Bureau (IAB) and PwC industry generated an estimated $479.1 million in revenue in 2018 and is expected to produce more than $1 billion by 2021.
Spotify is betting heavy on the podcast market and is committed to building a podcast network. Earlier this year, the company acquired Gimlet Media(podcast network) and Anchor(provides tools to build, publish, and monetize) to boost its share in the podcast market. “In just shy of two years, we have become the second-biggest podcasting platform,” said Spotify CEO Daniel Ek. “Our podcast users spend almost twice the time on the platform, and spend even more time listening to music.”
Spotify is now planning more acquisitions for podcasts and the company is willing to spend around $500 million.
Recently Spotify announced that it is launching three original podcasts for India - 22 Yarns with Gaurav Kapoor focussing on cricket, Love Aaj Kal relationship advice by Aastha Atray and Ankit Vengurlekar and a fiction thriller by Bhaskar Bose.
The company will also offer a better discovery of podcasts, data, and monetisation to podcast creators.
Podcast market in India
Amarjit thinks that audio streaming and podcasts will become more mainstream next year and might even leapfrog the growth of videos. As an MD of a company that is spreading wings in a competitive and diverse market like India, such enthusiasm is expected. However, let’s look at the market with an open perspective.
Indians love music and 80% of the surveyed respondents deemed themselves as “music fanatics” revealed the IFPI-IMI Digital Music Report 2019. (Read: Indian wants music but for FREE)
“Higher than the global average which is 54%. The category is owned by the 14-16 age group users. On an average internet user in India is listening 19 hours of music each week – over two and a half hours of music daily.”
The report was conducted across 9 geographical locations in India. The study comprised 3000 internet users aged between 16-64. Globally, 34000 internet users were surveyed. This is how Indians are consuming music.
Audio streaming has gained significant user engagement year-on-year growth in India. The average time spent on audio and video streaming per week was 4.5 hours and 5.3 hours respectively. Services such as Gaana, JioSaavn, and Spotify were among the top audio streaming service for music listeners.
Spotify is the most used streaming platform for listeners aged 16-24 as they are more brand conscious and have the highest engagement with international music. YouTube remains to be the platform for oldies.
However, the audio streaming market in India has a problem - Indians love music but for free. “51% of respondents preferred to use YouTube as anything they wanted to listen to was available and it is free.”
In fact, Indians are ready to watch ads than pay for content. According to the 2019 Asia OTT Research Report, about 25% of the OTT population wants to pay nothing and watch ads while consuming content. (Read: Is the subscription model paying for OTT and music streaming apps in India)
Podcasts have been there in India for a while but video took away the limelight. Indians generally want things for free and without much of an effort. One of the reasons why consumption of video is high in India and so has been the TikTok’s growth story.
According to the PWC report, published earlier in 2019 briefed new media models like OTT, video on demand, Esports, and podcasts are slated to be the biggest gainers in the Indian entertainment market. The report further informed the podcast market has grown in India. With monthly listeners(defined as people who listened to at least one podcast in the last month), totaling crore last year.
“India is now the world's third-largest podcast listening market after China and the US, PWC estimated that the Indian listenership could go beyond 17 crores by 2023.”
Competition from Gaana, JioSaavn and other startups
Launched in 2010 by Times Internet, Gaana.com the largest commercial music streaming service with 100 million monthly users is one of the biggest competitors for Spotify. Gaana expects to double the number of monthly active users in the next two years representing a 50% share in the overall market. CEO Prashan Agarwal expects the next 100 million will come from Tier-III towns.
Gaana is now diversifying and investing in non-music content from motivational speakers, meditation, comedy, and storytelling. Meanwhile, it has partnered with Google to launch an instant app for listeners who want to experience the app without actually downloading it. This feature is targeted towards the next 100 million users coming online.
Gaana entered the podcast market in 2016 by forming a partnership with Radio Mirchi 98.3FM to offer two of the latter’s famous radio shows, Mirchi Murga and Hansi ke Phuwarey, on its online platform. At the same time it also launched its first original audio series or podcasts hosted by film actor Ashish Vidyarthi. The company has aggregated content from podcast platforms like IVM and Audioboom.
Another player that has been an early investor in the podcast market is JioSaavn. In 2016 when it was still independent and known as Saavn, the music streaming service had launched nine original audio shows in its platform. At that point, the company mentioned that it plans to charge higher ad rates for these shows and eventually put some of them behind paywalls.
In 2018, Saavn was merged with Reliance Industries owned JioMusic for a $1 billion. According to CEO Rishi Malhotra, the merger has been seismic. JioMusic is the subsidiary of India's second-biggest telco operator Jio that has played a key role in bringing 4G mobile coverage to India. Besides, it has changed the way the Indians consume the Internet by offering data at cheap rates.
Speaking to MBW Rishi expressed that he is happy with JioSaavn producing and distributing some of the popular audio podcasts such as NoFilterNeha, Thank You For Sharing, Take 2 with Anupama and Rajee, etc.
In addition to Gaana and Saavn, the Google Podcasts app said India is also among the top five countries since its launch in 2018. There are other players like All India Radio powered by the PM’s Mann Ki Baat, Indus Vox Media that has been in the scene from 2015, Aawaz.com, etc. who are developing the podcast market in India.
Regional is the way forward for podcasts
Like every other medium that is trying to grow in India, the way forward for podcasts is going regional. Google Podcasts is already investing in podcasts beyond Hindi and English. Speaking with ET, Dipti Mehra, Google’s global communications and public affairs manager informed via the Google’s Creator Program it is removing barriers to create content in languages such as Tamil, Bengali, etc. (Read: How regional is defining India’s digital future)
However, the podcast market is still nascent. Hence Spotify podcasts are available for free since India is still a free market for the company compared to the global market where paid subscribers are significant in number.
“We do expect having more free users in India compared to other markets. In India, less than 1 percent users pay for music streaming and our average is higher than that. We look at it as a long-term journey. We are working on strategies to build this into a paid market. One thing is to help move people from piracy to streaming and the second is to move them from free to paid. That will only happen when people listen to music and podcasts as a habit on the streaming platform. As we came in, we realised that such a habit has to be created and developed in the culture and therefore, it will take time for Spotify to build a paid subscriber market in India,” said Amarjeet to Business Today.
Spotify understands the challenges and the competition the Indian market provides. However, to create new habits one has to satisfy the craving brain. The “Habit Loop” as described in the book “The Power of Habit” talks about the Cue, Routine and Reward. What will be the reward for Indian users to build this habit and keep consuming content on Spotify?
We will have an answer by 2025, if not sooner.