Spotify’s six-point strategy for cracking India

That India is an extremely significant market for Spotify is evident in not only how much it fought to get there but also how often its performance in the country is mentioned during earnings calls.

India, CEO Daniel Ek said in February, was one of the regions where the company witnessed “faster growth” in Q4 2020, and was “a notable source of upside vs. our forecast driven by successful marketing campaigns”. Last month, in an interview with Music Ally, Ek pointed to “Bollywood and new types of Indian music” as genres he believes will blow up.

What Ek and Spotify haven’t yet mentioned is just how many users they have in a territory where decade-old domestic DSPs such as Gaana and JioSaavn claim over 150 million monthly active users.  Industry experts estimate that Spotify has between 15 to 20 million MAUs in India, which may not seem like much but is fairly impressive when you consider that the Swedish service has only been around for two years.

Plus, in the week ending 18 March, it hit an important but unreported milestone. For the first time since it launched at the end of February 2019, the top 200 tracks on Spotify India’s weekly chart represented over 100m streams. In contrast, the UK’s 200 most played tunes during the same week tallied 120m streams and, of course, much higher ARPUs.

Encouragingly however, Spotify’s conversion rate in India is above the industry average of a low single-digit percentage. “I can confidently say that it’s better than that,” Gustav Gyllenhammar, the vice president of markets and subscriber growth at Spotify’s HQ, told Music Ally.

According to Gyllenhammar, the platform’s high listener engagement – widely regarded to be about four times that of homegrown competitors – gives it the edge in converting users into subscribers. “The biggest correlation between conversion over time has been that the more one consumes music and at multiple use case locations, the more their willingness to pay goes up,” he said.

While consumption on various devices, such as desktops, tablets, smart speakers and gaming consoles, isn’t something Spotify is seeing substantially yet in India “where 90%” are streaming music “on one single mobile phone”, the company feels that it’s early days.

Though internet penetration has grown exponentially over the last five years – it’s currently at about 50% – “the overall market is [still] growing,” said Spotify India managing director Amarjit Singh Batra. Music Ally spoke to Gyllenhammar, Batra, Padmanabhan ‘Paddy’ NS, the head of artist and label partnerships, and Sneha Singh, the music culture and editorial head, about how they’ve navigated the nation so far.

Build “brand love”
Like the local DSPs, Spotify’s focus in India right now is customer acquisition. Gyllenhammar said that because the country is at the “lower end” of “the willingness to pay generally for digital services”, the “primary focus for our first leg of the journey is to build brand love and awareness and usage, both on the creator and on the consumer side”.

The region that compares the closest to India in its characteristics, Spotify has observed, is Latin America. “When we first put our flag in Latin America back in 2014-2015, there was very, very low willingness to pay and high piracy,” said  Gyllenhammar. “Today, it has some of the most successful markets for Spotify, even on the premium side. It goes to show that if you get users to really love the brand, monetisation can come at a later stage.”

As to which specific countries Spotify looks at for a roadmap on how to chart their course, he cited Brazil as well as Indonesia, where the service launched in 2014 and 2016 respectively.

“But obviously, there’s a difference between markets that have populations of 200 million to 300 million and a more homogenous language and cultural identity versus India, which is much more multicultural, six, seven times as large and by its sheer size and opportunity and diversity, [like] a continent.”

He added that as long as the conversion rate increases at a higher percentage year-on-year, Spotify is on “the right path”. “We’re seeing strong growth in premium, even though it’s the minority.”

Go wide and deep
Ever since the entrance of the Jio mobile service changed the game by lowering data costs and bringing large swathes of Indians online five years ago, it’s become clear that for a music streaming platform to succeed in the nation, they need to cater to customers in a variety of local languages.

“Growth in this country only comes from the heartland,” said Mandar Thakur, the COO of the record label Times Music. “It would be a fallacy to think that subscriptions would essentially be urban market driven. The middle to bottom of the pyramid is really where your scale comes from, price points notwithstanding.”

Spotify learned this lesson quickly. “Although a lot of our initial focus was on the main metro areas, we’ve seen very, very rapidly, the need to also be present in tier two as well as rural areas,” said Gyllenhammar. “This is one of the reasons why we’ve made investments into all the regional languages and are being more local than what we were from the outset.”

Added Batra, “Things [we’ve looked at are]: What languages are doing well? How do you kind of cater to this language? Why is this language not as big, though the population is so huge in this particular region?”

In India, unlike in the rest of the world, when a user signs up on a streaming service, they’re asked to choose the languages they want to listen to before they’re prompted to pick their genre preferences. Notably, until March 2021, Gaana was the only app that could be used in ten different Indian languages.

In March, Spotify became available in 12, Hindi, Bengali, Bhojpuri, Gujarati, Kannada, Malayalam, Marathi, Odia, Punjabi, Tamil, Telugu and Urdu. Throughout the past two years, it has also steadily increased the quantity of locally curated playlists – there are now more than 600 compared with the 100 at launch – and podcasts.

Tackle it region by region
In 2020, Spotify ran marketing campaigns targeted at fans who listen to music in the three most streamed languages after Hindi and English, namely Punjabi, Telugu and Tamil. These initiatives included a television commercial starring south Indian film star Nagarjuna in Telugu and Tamil, the sponsorship of a season of the Telugu version of reality TV show Bigg Boss (the Indian equivalent of Big Brother), and two digital ad campaigns in Punjabi.

The first, rolled out in March 2020, featured such crossover Punjabi pop chart toppers as Neha Kakkar, Badshah and Diljit Dosanjh, the last of whom also premiered his album G.O.A.T. with a listening session on Spotify’s Twitter page in July. The second, which ran in December, centred on its Punjabi 101 playlist, for which Spotify roped in genre stars like Harrdy Sandhu and Sidhu Moosewala. This week, it launched a Punjabi pop microsite.

Consequently, listenership has grown across all three languages, especially for Punjabi and Telugu, playlists of which were among the fastest growing last year.

“In the Telugu market, in the first year, we were doing well but we were not really the destination,” said Batra. “Today, Hyderabad is among our top five cities in terms of MAUs.”

Jay Mehta, managing director, Warner Music Group India, feels the fact that the top tracks on Spotify’s charts are in a mix of languages, is an indicator of its pan-India growth. Mehta singled out the success of Punjabi hip-hop hit “Brown Munde” by A. P. Dhillon, Gminxr, Gurinder Gill and Shinda Kahlon, to highlight this.“It’s done massive numbers, what [barely any] other Hindi or international song has ever done on Spotify.”

Get the price right
Customers in India are particularly price conscious, and Spotify quickly realised that too, said Gyllenhammar. It’s why the free tier there is “better and more expansive” than anywhere else (there are no restrictions on the number of tunes free users can stream) and why, in addition to Indonesia, it’s the only place where Spotify offers “premium mini” subscription plans.

You can upgrade for as little as Rs7 a day and Rs25 a week [$0.094 and $0.34 respectively) which is in line with the deals peddled by domestic rival Gaana, on which one can avail of either 20 downloads or ad-free listening for just Rs9 and Rs19 per month.

“What we thought was a global advantage for many consumers [when] saying we have 50 million songs, you can download all of them [didn’t work],” Gyllenhammar said. “An Indian consumer directly says, I only need 25 songs, why should I pay for 50 million?”  In India, Spotify has as many as 15 premium payment plans, the most in any market around the world. In comparison, JioSaavn offers six.

Workshop with labels and artists
Among the challenges the teams at Spotify experienced at the start was familiarising labels and artists to its way of working, and getting them to understand that algorithm-based recommendations have a greater impact on listenership than editorial playlists.

This is why perhaps, even though Bollywood and “non-film” releases from major labels are given prominent placements in its flagship playlists such as New Music Hindi, Spotify’s charts comprise a wide-ranging mix of Punjabi pop, international tunes and other Indian regional language compositions.

“There was no algorithmic approach to music,” said Padmanabhan ‘Paddy’ NS, the head of artist and label partnerships at Spotify India. Educating labels and artists about the importance of submitting music at least two weeks in advance was one of the first tasks at hand. “I used to get calls at 10 in the morning saying, ‘We’re releasing a track in half an hour’,” said Paddy.

“[We explained to them that] if you [give it to us] early, the tastemaking audience grows because of the algorithm. That if there’s a new track by Arijit Singh, [everybody] who listens to him will get it automatically on day one. That doesn’t happen with Bollywood releases most of the time because they’re submitted last minute. But big companies like T-Series and Zee Music Company who never used to do that have started adapting to that.”

Don’t ignore the independent scene
A segment where Spotify seems to be leading is Indian independent music, which it has been showcasing, arguably more than the likes of Gaana or JioSaavn, through a range of playlists and its Radar programme, which spotlights upcoming indie acts.

Batra says there’s a logical reason why Spotify has focused on “non-film” and independent music from the beginning: the average number of tunes in a film soundtrack has been decreasing consistently over the last decade.

“From 10 songs, it came down to four,” he said. “In the last year, a further shift happened where films [are released] on video OTT platforms, and the songs are maybe one or two [and appear] in the background or the end [credits].” DSPs such as Spotify thrive on the amount of content uploaded and Bollywood isn’t generating enough of it.

On the other hand, more independent music is being produced and consumed than ever before. Editorial head Sneha Singh, who helmed programming at Saavn before joining Spotify in 2018, says that things have changed considerably in the country’s indie scene since the time she worked in radio in the mid-2000s.

“We were restricted when it came to playlisting,” said Singh. “There weren’t so many artists. Even if they were around, they were majorly doing live shows because they didn’t have the kind of support [they needed] to take out albums. [On Spotify] we have over 50 [indie music] playlists including [those like] Dinner and Chill and Rain on Indie. Back in the day, I couldn’t have come up with a one-hour schedule of rain-themed indie songs. I would have had to layer it with Bollywood. We’re seeing the best phase [for indie and] it’s only going to get better.” Musically