Deep dive into the Indian audio streaming industry – Part 2

The Indian audio streaming market grew exponentially in the last couple of years, fuelled by the increased smart phone penetration, cheap data plans, and the proliferation of audio streaming platforms, home-grown as well as international.

In this two-part in-depth series, Adgully delves into the world of the Indian audio streaming market. Part 1 of the report explored the growing potential of this medium, the contribution of regional  to the growth of Indian audio streaming, paid subscription vis-a-vis free service, and more. Part 2 of the report will cover the challenges faced by the Indian audio streaming industry, cost of content, in-stream audio ads & other growth areas, the podcast factor, and more.

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The Challenges

The industry is not devoid of challenges. Touching upon the challenges faced by the Indian audio streaming industry, Shubh Bansal, VP-Growth, Pocket FM, says that with digital intrusion, audio has evolved into a content consumption medium that requires immense personalisation. “The challenge is delivering that personalised listening experience with relevant content. Besides personalisation, we strongly recommend prioritising building an effective creator community, nurturing them to encourage and sustain quality content and innovate the audio category for the future.”

With regard to the challenges faced by the audio streaming industry in India, Ideabrew studios Co-founder-CEO Aditya Kuber said: “One of the biggest challenges is creator growth. From a non-music ecosystem growth aspect, the creator ecosystem is growing and meaningful revenues are just starting to come in. Once this grows, more creators and therefore more options for listeners will further fuel growth. Also, the freemium model will take a while to go fully paid. It needs to be a mix of strong content-led incentives to listeners and exclusive content in audio.” 

“Getting paid subscribers on board is challenging, even while considering podcasts as a standalone service - the proclivity to subscribe is not very high. At the moment, monetization of podcasts is limited to the use of programmatic ads and brand integration on a CPM-based model,” says Shailja Saraswati, Chief Content Officer, Omnicom Media Group – India.

Vishal Chinchankar, CEO, Madison Digital and Madison Media Alpha, feels that cost of content is not going southwards; this is clearly impacting the bottom-line. “From a revenue POV, if we look at the Indian digital adex, a large investment is attracted by video players and brand narrative in the form of 20 or 30-second videos will remain large part of media plans, when it comes to brand building. I believe that there is nothing bigger than cricket in India, which eats up a decent share, which leaves a small share for audio ads. Here’s where audio OTT players are facing the revenue challenges.”

The challenges faced by the categories within audio streaming industry varies, noted Sidharth Singh, Co-founder, CupShup, adding, “While the music streaming players are battling the stagnation in user growth, podcasts are yet to see a wide adoption by users. The numbers of Gaana and hence speculation of acquisition by Airtel gives away the story. Long-form content platforms like Kuku FM, Mirchi Plus, etc. will continue to enjoy good loyalty but will it find itself difficult to acquire its users from platforms like Instagram or Mojito where the attention-deficit youth is thronging.”

According to Shahir Muneer, Founder-Director, Divo, while the audio game is on, one of the primary challenges in the Indian market is encouraging consumers to pay for premium audio content. “While the listenership is on high rise, the paid subscriber base is not growing at the same rate. Another challenge that is hampering the industry to a large is piracy which affects music sales. Combating piracy is another step which needs to be addressed for the music streaming market to grow,” he adds.

Vishal Chinchankar feels that content will always remain the main driver not just to attract new users but also advertising revenues. Today, he adds, audio OTT players have clearly built high brand engagements on the back of hyper personalisation which is driving brand messaging to right audience cohorts. “Personalised playlists are driving brand association. For example, health & wellness brands associating with “workout playlist”, etc. These innovations are quite successful in building the brand mind measures, apart from newer ad formats created by Audio OTT players.”

For premium services, says Shailja Saraswati, a subscription-based content plan would be the key differentiator, although it is vital to note that focusing only on music is not the ideal course of action.

According to her, the scope of the plan should be adjusted to include other content like podcasts, which adds some much-needed diversity into the mix and incentivizes customers to pay for subscription-based services.

“Besides content, innovation should also reflect in the features and personalisation options. This surely enhances the overall product experience for the customers. As a consumer, many of us have already been exposed to the basic benefits of a premium service, which includes downloading content and accessing music offline. Some other ways to attract the attention of consumers are to provide the best possible user experience and offer content exclusivity. Advertising will continue to be a dominant force in India, largely due to a large demographic of youth like the student community and us being a fairly young country. The overall paid subscribers are estimated to remain at 2% only, thus offering a huge scope for growth through brand integration on content and brand ads on streaming platforms,” says Shailja Saraswati.

Aditya Kuber feels that in-stream audio advertising is an untapped marketing opportunity in India.

“Most definitely! Just for podcasts, we can offer a reach of over 40 million a month. Plus, there’s data and targeting available that’s comparable to any digital advertising medium.”

According to Aditya, podcasts is a 90-million-strong monthly audience in India. “This cuts across languages, genres, influencers and formats. For brands, it’s a way to engage audiences for a long time - a typical podcast session exceeds 20 minutes. Like with other digital mediums, influencers can be leveraged here, too. Creators like Ankur Warikoo, Anupama Chopra, Ayaz Memon and others have already created significant communities within audio,” he adds.

According to Shahir Muneer, the subscription growth has been underperforming and has not got the growth story that video OTTs have got. He adds that this will be a challenge for the next decade and will be a major obstacle to growth. “Bundling and offers on subscriptions seem to be dependent on advertisers which means you are primarily dependent on ad networks like Google to fill ad inventory, where CPMs are extremely competitive. Direct ad sales will need innovative solutions than just selling ad inventory.”

It is known world over that Indian consumer is most spoiled lot, quips Sidharth Singh. At the same time, he notes that it also holds immense potential. “So, yes, while there wouldn’t be a rapid increase in people buying subscription to music apps, the market is fertile and receptive to new ideas and innovations. Audio streamers are already taking the route of intelligent branded content placement and relevant sponsorship opportunities to sustain. Also, they are banking on the consumer experience to do the magic for them in the long run. Imagine hearing a romantic or horror story on Mirchi Plus only to be disrupted by an ad. Times Group might be banking on this spoiled customer experience for you to go for subscription,” he adds.

In-stream audio ads, other growth areas

In-stream audio advertising is an untapped marketing opportunity in India.

Shubh Bansal believes that the audio advertising space has been quite well-explored by the brands. “However, we believe the future of brand engagement in audio advertising needs to be driven through compelling storytelling, a personalised brand connection and a non-disruptive experience. Otherwise, listeners will always have the choice to move to other platforms, as it's been happening in the conventional audio landscape,” Bansal adds.

Shahir Muneer feels that in-stream audio advertising is still an untapped market in India and is considered a niche platform by marketers.

Apart from music, the streaming platforms are looking for other growth areas in audio streaming such as podcasts, termed as the modern radio.

Sidharth Singh agrees that in-stream audio advertising is an untapped marketing opportunity in India. “We will see a sudden jump in marketing opportunities in times to come due to above explained reasons,” he adds.

Though podcast is still at a very nascent stage today as the numbers are fewer, it should see growth in coming years, says Vishal Chinchankar.

The future of audio OTT lies in storytelling, and we are already leading that growth, says Shubh Bansal. “We take pride in our 50+ million listeners community, 15 million monthly active listeners, with a daily average time spent of 100+ minutes daily. Our storytelling has resulted in 3-bn streaming minutes monthly across eight Indian languages, including English.”

Podcasts and non-music audio definitely are growing since the pandemic/ post-pandemic time, says Shahir Muneer.

“We are seeing great opportunities from leading platforms like Spotify launching exclusives with us in Tamil, the first such regional initiative by any streaming platform, and they have been ranking in top 10 in India even beating global and Hindi podcasts. Recently, we also saw Kuku FM announce they have crossed 1 million active paid subscribers, which is a noticeable feat considering music streaming collectively only has 3 million subscribers and even some video OTTs are struggling to get 1 million paid active subscribers. There definitely seems to be a growth story in place for non-music and podcast content, streaming platforms are looking at this as a major growth area, but their investments are primarily skewed to music currently, but there will be a focussed increase on non-music and podcast content as well,” says Muneer.

While in-stream audio advertising has been around, it has not been able to scale up the way it should ideally have, despite the fact that music streaming today is doing better, says Shailja Saraswati. According to her, 25% of podcast revenues today are coming in from ads, though this should ideally see a further increase. It is only a matter of becoming more aware and recognizing the true potential and effectiveness of podcast advertising.

Aside from FM radio, points out Shailja Saraswati, podcasts are gradually gaining prominence in India as an audio streaming medium. According to her, podcasts are perceived to be a more personal, authentic medium and a large number of the listeners are young, under 25-somethings seeking inspiration and role models to follow.

“The same individuals also make up the largely digital-first audience that always stays tuned to their favourite audio streaming apps, where they discover podcasts. More interestingly, this is a medium where listeners are open to consuming long-form content, allowing creators to tell the full story. It goes beyond entertainment and creates a safe space for learning, education, self-care and experiencing catharsis. There is no doubt that podcasts as a medium will expand and grow, making the way for the emergence of originals, book pods and other regional content. The global podcast revenue is 2 billion dollars and is projected to reach $4 billion by 2023. The market in India is smaller, with an 80 million reach and is expected to grow gradually but considerably,” she says.