Forget The U.S., India’s Music Streaming Race Is The Big Growth Story

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A key part of Rdio’s new $3.99 plan for cost conscious consumers taking a baby step towards music streaming services is the important caveat that this new service is cheaper outside of the U.S.. In India, it will retail for 60 rupees (around 94 cents) per month.

Suddenly the package, which is limited to 25 track downloads (popular in India due to limited data packages and varying internet quality) and a radio service on mobile, starts to make more sense. This is an emerging market play, not necessarily something that will take off in the U.S. and other Western markets.

That’s important because, unless you’ve been sitting under a rock, you’ll be aware that India is The Big New Opportunity for technology firms.

Huge Internet Growth Potential

Just 90 million people — less than 10 percent of the country’s billion-plus population — enjoyed internet access in 2010, but that figure is tipped to rocket to 500 million by 2020, spurred by the sale of smartphones. India shipped 64.3 million smartphones in Q4 2014 and, while the market declined for the first time due to left over inventory, smartphone adoption is poised to grow like no other country worldwide. (China’s smartphone shipments fell for the first time in six years last quarter.)

That rush to mobile has predominantly benefitted homegrown companies thus far — India’s Flipkart and Snapdeal feature prominently in Forbes’ annual unicorn list for billion dollar valued tech companies — but the country is increasingly a focus for global tech firms. (Amazon, for example, invested $2 billion in India last year.)

E-commerce has been a benefactor of India’s digitization, but music streaming is another area that is heating up. The reasons are different to the U.S., however.

1. India leapfrogged the desktop, mobile is the primary method of internet access for tens, if not hundreds, of millions in the country.

2. The smartphone is the single entertainment hub for many Indians.

Music and movies are natural areas of interest for people. That’s why the addition of the humble FM radio to feature phones was a major move, and why many go to great lengths to download music to even the most basic phones.

Piracy And Freemium

Those who do download music will typically do so using pirate sites or illegal methods — often without realizing. And that really is the biggest rival to Rdio — which entered India in January after acquiring local player Dhinghana — and domestic competitors Saavn and Gaana.

But it isn’t just mainstream consumers who download content illegally, even tech savvy Indians do too:

One of the key goals for legitimate streaming services is to make their products easier to use than piracy, and cheap enough for the price-conscious public in India.

That’s easier said than done and freemium offerings have been the preferred option to date. Talking to music streaming executives in India, there is some doubt as to whether Rdio’s approach will work when the freemium approach has turned millions of users of ad-supported, free services into paying customers without an immediate price barrier to deter them.

Likewise, for those who do wish to pay, competitors offer many more features for just a little more money. Saavn’s packages for desktop and mobile start from 120 INR ($1.80) or $0.08 per day, while Gaana is priced from 99 INR ($1.50).

For now, Rdio and Australia-headquartered Guvera are the only international streaming services present in India. Things could get even more interesting as and when Spotify and Deezer decide to enter India. That seems bound to happen sooner rather than later — it’s hard to resist the potential of a billion-plus population once the market, although they are likely waiting until the market has matured sufficiently.

Update: “We absolutely want to make Spotify available in India as we do across the rest of Asia, but there’s nothing to report as of now,” a Spotify spokesperson told TechCrunch.

Meanwhile, a Deezer representative said: “We have no immediate plans to enter India but, that said, India is a very interesting music market and we definitely have our eye on it.”

Featured Image: Jiri Flogel/Shutterstock