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News |  21 May 2013 17:21 |  By RnMTeam

Paid subscription models receive a push in India

MUMBAI: Digital music services in India have been growing by leaps and bounds, leading to a high level of consumer engagement and in turn content development as well. The segment is witnessing a lot of action with many streaming services launching various subscription models indicating that a paid ecosystem is here to stay.

2012-2013 witnessed the rise of paid subscription models in the country with most leading services including Saavn, Gaana, Hungama and iTunes contribute to the development of a paid ecosystem. Although other leading services like Dhingana and YouTube have not ventured into the territory yet, reports suggest that they could launch a paid subscription model in the near future.

The advent of the digital music market was marked by a ‘free culture’ which acted as a deterrent to the music industry in its growth. Scrambling to sustain their businesses, most music services developed paid subscription models offering users the option to pay for content. Although the model is still gaining ground with consumers, it encourages consumption of legitimate content and revenue generation.

Speaking with Radioandmusic.com, Hungama Digital Media Consumer Business & Allied Services COO Siddhartha Roy said, “The biggest danger to the entertainment industry are the free streaming sites as they do not enjoy advertising yields to their full potential. The principle driver for the industry is going to be a robust, fair and technologically right music download and streaming service, which will include a marginal fee. With the increased usage of smartphones and tablets, there is a great demand for streaming and download to own services for both music and videos. And consumers are willing to pay for quality services.”

While Hungama does not have a paid app, the music downloads and video streaming is charged beyond 30 seconds. It also features an upgrade to stream full length music videos for Rs 110.

Amidst the new developments came in Saavn with their premium music service Saavn Pro, offering music at a compelling price point to users across all its major markets. Another new entrant in the space was Gaana with the launch of its paid subscription model Gaana+. The service offers simple features along with a well designed interface providing for a rich experience.

Times Internet CEO Satyan Gajwani stated, “In mature markets like USA, the paid model is one of the biggest revenue generators for music businesses. The Indian market is quite far from maturity and we have already seen a positive response to this. We will have to promote our subscription model more strongly amongst our audience, show them the benefits, let them experience it more and be our advocates.”

However, many new players still believe that India as a market is yet to develop the perfect path to rake in digital moolah and have thus delayed the launch of their models in the country. Amongst these players is YouTube which has delayed the launch of its paid subscription model in the market. The company has stated that the model has not been ruled out and will launch in India sometime in the future.

Another service to tread on similar lines is Dhingana, which inspite of boasting of a wide range of innovative content, is yet to feature its paid model in India. However, as reported by Radioandmusic.com earlier, there are inklings that the service might launch a paid subscription model in the market soon.

But on the other hand, it is being witnessed that consumers are slowly getting attuned to the paid ecosystem through the app and song downloads amongst other interesting features being provided by the services.

In a bid to attract consumers today, digital music service providers are witnessing cutthroat competition in providing the most unique features to the audiences at a compelling price point. This in turn has been going down well with the audiences who seem to be enjoying the wide range of content being offered to them on their mobile devices, tablets, PCs and more.

Roy expressed, “Consumers are happy to pay for a service, provided it is convenient and of great quality. The main driver for the industry is a robust and technologically right music download and streaming service that will be driven by the telcos and ISPs, device manufacturers and services from companies such as ours.”

Taking the view forward, Hungama launched its music app two months ago which attained a massive response.  It is differentiated in the sense of presentation and experience with its wide range of curated and unique content on one interface. They went a step ahead by including the video streaming feature as the next step for audiences. The app also featured curated playlists through a Mood Discovery feature that finds and plays music to match the user's mood.

The biggest game changer for them, which also helped push the paid model was the Gamification and Loyalty program. It’s the only music app to reward the consumer for every action on the app. With this feature, users can earn points every time they watch videos, play and share music, invite friends or create playlists.

Although the app has free music streaming, it also provides for a paid download to own option to help create engagement and consumer delight. Catering to a global audience, the app already has over a million downloads. Thus while consumer focus remains the key, they are also building a sustainable business for themselves in the long run.

“Consumers can own a piece of content by way of in-app purchases in the Android app. For this, we have tied up with all the telecom operators where payment happens through operator billing on the Android platform. We also have subscriptions for premium upgrades. We will continue to build on the product and offering the Hungama edge to our consumers,” he elaborated.

Another leading player in the space, Gaana also unveiled their paid model last month which has been well received by the audiences. The Gaana+ service currently comes with a 15 day free trial after which there is a monthly subscription fee of $2.99. The service is currently integrated with Gaana.com's updated iOS app and makes use of in-app purchase for subscriptions. The company intends to extend the feature to the Android app in a couple of weeks with subscriptions via Google Play. It also plans to tie-up with telecom operators to offer integrated billing.

Gajwani said, “A lot of requests for song downloads are happening per subscribed user so it can be concluded that the paid app has been well received. There is access to the largest music collection with over one million songs, including Bollywood, Hollywood, Tamil, Telugu and regional music with a multi bit-rate option allowing them to choose the most ideal speed for their internet connection.”

“We can meet the demands of the users and make them available at a modest price; we will be able to attract users into subscribing. By purchasing this subscription, user is able to make songs their favourite and their playlists available to them in offline mode. Hence, while listening to offline songs they don't have to pay for data cost every time that song is played, which saves cost,” he added.

The app features an interactive user interface and various personalization elements like favouriting, play listing and more which are carried to the cloud so that user gets them on any platform using the same account. The users can download songs once and listen to them many times without paying for the data cost every time even without being connected to the internet. It also encompasses a social listening experience radio mode so users can listen to their own auto-generated radio station.

“We have a wide range of music that covers nearly every consumed genre in India. With respect to the Gaana app, it has been more widely received by users in the metros and other tier 1 cities. However, our J2ME and Blackberry apps have helped us to reach out to the lower tier cities quite significantly. With better mobile and internet penetration and faster speeds, we expect to make a much stronger mark in these territories,” he added.

Unlike Hungama, the app caters to demographics within India and the user base comprises of all available who fall under the content licensing agreements by the service.

Other services which launched similar models in the market included Saavn with Saavn Pro on iOS and with a single price point of USD 3.99 per month driven by the fact that the content is priced much lower than most other services.

However, the trend witnessed amongst the launch of these models was that each one of them consisted of an ad free version of the app to offer an unhindered experience to users. Advertisements on music streaming sites are generally considered as a hindrance by users which disrupt their experience.

Thus, services have now gone down the new route of developing ad free paid models of their applications. Emerging as a trend now, it cuts down on one major revenue generating stream for the services. However, with the paid model gaining tract, developers are focusing on alternate revenue streams.

“Ads are generally treated by users as a nuisance and something that interferes with their experience. For a reasonable fee, if someone is ready to eliminate these ads, they would be more than happy to pay. It works on the same logic as the ad free services of digital cable TV services that has found ready acceptance,” Gajwani mentioned.

But according to Roy, while these ad free models are generating traffic and growth, it might create a dent in the ecosystem in the future.

“The free streaming sites do not enjoy advertising yields to their full potential and may not be setting the right precedent in the ecosystem. We have brought years of consumer and partner insights when we created the hungama.com offering, and our learning is evident in the music service and app we have created,” he stated.

Gajwani affirmed that the trend is infact here to stay and there will always be a certain section of people wanting to opt for an ad free model. But inspite of that, the subscription and ad free models will continue to co-exist without affecting each other.

He said, “The best part of the current market is that advertising and subscription models can co-exist. We have found that a hybrid of ad banners, sponsorship and paid app based model is most suited to our product. Advertising is and will remain a big source of revenue as the number of people wanting free service will be far greater than subscribing.”

However, the future being witnessed by players is that while content will always be the king, all the music services offer nearly the same collection. So, subscription is going to stay for long. As the data speeds are increasing at a great pace, the costs will come down for using high speed data connections. This in turn will largely be the focus of most services in the future to come.

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