Music industry finds groove in digital beats: How well can it leverage it?

The boom in audio streaming, short video apps and social media gives a much-needed boost to the sector. How well can it leverage it?

MC Stan aka Altaf Shaikh, a Pune-based hip-hop rapper, had hit a million streams a month. That is when, in September 2020, he signed up with Believe India to launch his album Tadipar. Believe promoted and distributed the staccato beats of the story of Shaikh’s life. MC Stan is now at five million streams — meaning his songs are played that many times — a month. He also has over a million You­Tube subscribers. For a new rapper, these are pretty good numbers, say analysts.
 
Shaikh is among the 600 artistes and labels such as Desi Music Factory (Hindi), White Hill (Punjabi) or Aditya Music (Telugu) that Believe works with. The India arm of the Paris-based Believe is an unlikely music company — it does not create music or own a label. It just markets and distributes it. In the process, over seven years in India, Believe has discovered artistes like Sangeetha Rajeev, MC Stan and Sachin-Jigar. “Our service is not IP creation, our service is for IP creation,” says Vivek Raina, managing director, Believe India.
 
Believe is, along with Spotify, YouTube, Apple’s iTunes, Amazon Prime Music and Gaana, among the dozens of reasons the Rs 1,530-crore Indian music market is coming to life again. It is a different type of music firm that, along with an array of streaming options, short video apps and social media put together, is creating a whole new ecosystem where monetising intellectual property, or IP, has become easier.
 
More than 130 million of the 662 million Indians online tuned into one of the 15 major streaming music apps in August 2020, according to Comscore. The world’s largest YouTube channel, T-Series, is an Indian music company. Over two-thirds of the total industry’s revenues came from streaming in 2019, up from one-fifth a decade ago. Short video apps like Josh or Moj license millions of songs, creating a new revenue stream. “Digitisation destroyed the music industry and digitisation is now helping revive it,” says Vikram Mehra, managing director, Saregama.

 
Melodies and mayhem
 
When MP3, a technology to compress music, took off in the late nineties, the resulting file sharing and CD ripping almost destroyed it. From $23.4 billion in 2001 the global music industry revenues fell to a low of $14.7 billion in 2011. They finally started rising again in 2016 and are now just over $20 billion. iTunes (2001) YouTube (2005) and from 2006 onwards, the regular launch of music streaming apps changed the industry in three ways.
 
One, they reduced piracy from 80 per cent to 60 per cent or less in India. What changed the game, reckons Mehra, is the shift from “browser to app-based consumption”. When people browsed on the internet for a song, they invariably ended up listening to it or downloading it from a torrent (pirate) site with dodgy servers that could slip through cyberpolicing. The ease of listening to a song legitimately has taken much away from the need for piracy. Google and Apple, the largest (global) players, are also good gatekeepers taking down pirated content when informed. All music labels have to do is track the song. That is easy given that now “every song is fingerprinted” points out Mehra.
 
Two, apps brought transparency and, therefore, monetisability. “International companies put metadata, tags, names of composers et al (for Indian music labels),” says Neeraj Jaitly, director, Art and Artistes. This unlocked the value in the libraries, making revenue share very real. Therefore, if a song is played on the ad-driven, free part of a streaming service, then the label gets a per-play rate. This ranges from 4 paise to 10 paise. If the song is played as part of the paid-for service, then the label gets a revenue share. For either mode of payment to work at scale, a song has to be trackable. That explains the millions spent on digitising libraries for recalcitrant music companies. The rewards have been phenomenal.
 
From April 2019 to March 2020, songs from R D Burman, Kishore Kumar, Sahir Ludhianvi, M S Subbulakshmi, Gulzar, M S Viswanathan and others played over 6 billion times online. And every time they played, Saregama (which owns the IP) got paid by YouTube, Spotify, Gaana, Moj et al. In the year ending March 2020, over Rs 238 crore or about 46 per cent of the revenues for India’s oldest music company came from licensing its library of 130,000 songs across eight languages. That is up almost two times from March 2016 and continues to grow 40 per cent year-on-year.
 
This ability to get more from existing and new music has meant a bounty not just for labels but for individual artistes as well. Rakesh Nigam is the CEO for the Indian Performing Rights Society, or IPRS, that licenses and collects royalties on behalf of lyricists and composers. He points out that from Rs 45 crore in 2017-18, the money IPRS distributed reached Rs 170 crore in the year ending March 2020.
 
Three, apps have aided the discovery and promotion of new talent a la MC Stan. For instance, YouTube acts as the world’s auditorium. “We bring upcoming and unknown Indian artistes, put them under a curated playlist. The content goes everywhere; Bekhayali (singer, Sachet Tandon) hit viral charts of the world. Armaan Malik was the first Indian artiste on Times Square,” said Amarjit Singh Batra, managing director, Spotify India to Business Standard last year.
 
Much of this shaping up of the ecosystem couldn’t have come at a better time. Across the world music funds like Hipgnosis, Royalty Exchange or Shamrock Capital are buying music catalogues at 10-15 times their current value. In the last two years, there have been about 12-15 deals with major musicians such as David Crosby, Bob Dylan and Neil Young selling their catalogues to music funds. In India, Believe bought out the catalogue and music arm of Venus Worldwide for a reported Rs 380 crore, in 2019.
 
As the Indian music industry scales up to its true potential, maybe 10 years on, MC Stan will be selling his songs to Hipgnosis.