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Research: Spotify’s Entry to the Indian Music Streaming Market

Spotify

Data Point

The Sweden-based music streaming company, Spotify, launched its services in India on 26th February 2019 ("Spotify Launches in India — Spotify", 2019). The entry to the Indian music streaming market is in line with the company’s global growth strategy that aims to expand to new markets. The launch in India reflects the recent aggressive expansion of the company across MENA and Southeast Asia, raising the total number of the firm’s markets to seventy-nine. According to Daniel E.K., the founder and chief executive officer (CEO) of the company, the entry of the company in the Indian market matches the company’s objective of connecting artists and fans from different regions across the globe. 

Spotify’s music streaming service in India offers consumers with listening experience of local and international music and provides consumers with the freedom to play music from a diverse variety of devices and app integrations. Barely five days since its launch in India, Spotify realized more than one million active users. Reports from Deloitte indicate that there are at least 150 million audio digital subscribers in India. With a general population of 1.34 billion people, the shift to a foreign market suggests that the market possesses significant potential for Spotify as a music streaming service provider. Prior to the move, Spotify only had 24.8 million monthly active users in markets outside Europe, North America and Latin America ("Spotify Launches in India — Spotify", 2019). These statistics reflect the efficacy of the firm’s strategic choices.

Indeed, the addition of over a million users within five days indicates the rich opportunity presented by the move to infiltrate the Indian market. Spotify is currently engaged with a tussle with Warner Music over a disagreement on a deal in their global operations. Although the legal fight has not affected the operations of the music platform, particularly concerning its business activities in India, the outcome of the legal row is highly anticipated by marketers’ keen on ensuring the growth of Spotify in the new market ("Spotify Launches in India — Spotify", 2019).

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The Insights

The launch of Spotify in India has significant ramifications on the marketing and advertising world. Spotify’s introduction to the Indian market enabled brands such as Anheuser-Busch InBev and OnePlus to initiate groundbreaking marketing campaigns in the country through several business deals that are already in place ("Spotify Launches in India — Spotify", 2019). The firm’s service offerings create a unique opportunity for the company to advertise itself to its users, millions of whom are socially active on various platforms. Moreover, recent findings show that the organization’s users utilize approximately 2.5 hours per day streaming and listening to music on a wide array of electronic gadgets. Over the last decade, India has witnessed a significant mobile internet revolution which has, in turn, increased the number of connected Indians. Consequently, online streaming has emerged as a popular means of enjoying music. Importantly, music is an ingrained part of the Indian lifestyle and culture and is integrated into various aspects of the community’s life.
 
The music streaming market in India has about 150 million users, and the figure is projected to rise to more than 400 million users in the next four years. Moreover, firms that advertise their products and services through Spotify’s proprietary mobile application enjoy superior and inimitable multimedia ad experiences as a result of the application’s ability to support for video, audio, and visual display formats. Such diversity allows the advertising brands to reach out to their target audience more effectively. The sharing of playlists among music fans enables advertisers to gain useful insights into the trending patterns in the market to keep up with the needs of the consumers. Spotify’s late entry into the Indian music streaming industry comes at a time where the music streaming market in the country is crowded. The sector comprises of local and international music streaming players. Global firms such as Google Play, Amazon, and Apple Music have a substantial impact on the market. Local firms include JioSaavan and Gaana. The latter dominates the industry, with nearly half of all the music streaming market and about 80 million active users. From an internal perspective, India presents such a strategic market for Spotify that it should ensure a foothold ("Spotify Launches in India — Spotify", 2019). In spite of growth in its current markets, the firm needs to realize growth, and India provides potential grounds for achieving this objective. Protectionist policies adopted by China deny the company impetus to venture into the Chinese market where there exists a massive population of mobile-connected individuals. Additionally, competitions from the market-dominant Tencent discourages Spotify to venture into the Chinese market.

Spotify India’s comprises of exclusive features that offer important indicators to marketers on the trends in the marketing industry. Firstly, the streaming service has multi-language music recommendations such that users can switch to their preferred language. To this end, Spotify’s Indian users can select local dialects, such as Hindi, Tamil, Telugu, and Punjabi ("Spotify Launches in India — Spotify", 2019). This capability allows the company to cater to the rich music culture that characterizes the nation’s populace. Spotify relies on a team of experienced local and international music experts and cultural tastemakers to enable the product meets the diverse needs of Indian music consumers.  Increasingly, firms are adopting a marketing strategy that entails a strong focus on providing connectivity to the global culture while concurrently providing room for local adaptation. The dynamic nature of the marketing industry requires that marketers influence developers to meet the needs of their target market. This trend has been a key strength of Spotify India as one of its core competencies. The firm has established itself in the music streaming industry by leveraging on the understanding the consumer needs of its potential market. Indeed, marketers should strive to understand the target market as they embark on increasing their territory by entering new markets.

The Actions

The marketing strategy by Spotify to move into the Indian music streaming market has several teachings from which marketers can learn. These lessons provide useful insight to marketers on several fronts. Firstly, Spotify’s entry to the Indian market impacts marketers understanding of the ramifications of late entry into the market. Having operated for over a week, the company’s remarkable growth in the number of users points to the advantage of understanding the target consumers. Spotify has invested heavily in gaining insight into consumption patterns of music. This strategy enables the company to meet its clientele's needs, albeit in culturally diverse populations. Secondly, Spotify’s setting of the price below a major international competitor, Apple, illustrates the firm’s attention to current market dynamics. Currently, Apple Music’s subscription is set at $ 1.69 while Spotify costs $1.67 ("Spotify Launches in India — Spotify", 2019).  It’s critical to note that although the latter has gained over one million users within the first week of entry to the Indian market, the number of subscribers who have subscribed to the premium services are significantly less. The apparent disparity between music streaming and value shows that the industry is still growing, which is why advertising has become a primary source of income for music streaming firms in India.

The current row between Spotify India and Warner Music has spilled over from a local deal between the two firms to an international scandal, which illustrates the impact of international business in local contexts. Following the legal struggle, music published by Warner is currently unavailable on Spotify India. Multinational firms are engaged in a range of agreements with other multinational firms, which affect the global operations of the involved companies. It is imperative that marketers factor in existing deals with other organizations when planning for market entry.

Spotify’s entry into the Indian market occurs at a period where the company is planning on tapping into the podcast market. As observed, India possesses a valuable potential market for Internet-based mobile platforms. This phenomenon indicates that entry into the foreign market has been sparred by the drive to establish itself in light of the company’s growing focus on the podcast market. In the recent past, Spotify acquired Gimlet Media and Anchor, both of which are leading podcast publishing platforms. This decision is in line with Spotify’s objective of becoming a major global competitor in audio media. Increased visibility in the marketing industry through audio platforms aims at catapulting the firm ahead of its competitors, such as Tidal, and generating higher earnings from advertisements. Indeed, Spotify provides an alternative digital advertising platform in addition to the market-dominant firms, Google and Facebook. Since podcasts enable the publishing of long content, the firm can keep listeners engaged for more extended periods. In turn, advertisers using the platform are likely to look towards partnering with the music and podcast content platform. This leads to increased income for Spotify.

By Alex Buffet

Reference
Spotify Launches in India — Spotify. (2019). Retrieved from

https://newsroom.spotify.com/2019-02-26/spotify-launches-in-india