Why the Indian music industry is unable to hold a tune

He was referring to his company’s decision to shut its audio streaming service, which ran out of steam after battling tough market conditions for over a decade.

People simply do not want to pay for music, the executive, who didn’t want to be identified, indicated. “The paid subscription model hasn’t taken off in India, and it doesn’t make sense to continue to rely on what is an uncertain advertising tier,” he explained.

Other industry executives agree with that assessment.

Things have rarely been this bad for the music business in India, across regions and languages. Film producers, independent artistes and music labels are grappling with the shutdown of multiple streaming platforms, including Airtel’s Wynk, ByteDance’s Resso and Hungama Music, which failed to crack the paid subscription model.

Others, such as Spotify, have halved per-stream payouts.

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In the business of digital music, such payouts are handed out by streaming platforms to both artistes and labels. The cogs of the business, however, start rolling with music labels acquiring the rights to movie soundtracks from film producers. This acquisition includes digital rights. In turn, labels sell the music to streaming platforms, who can either stream it free with an ad-supported model or charge a subscription fee from the consumer. In the case of non-film music, labels usually produce a song themselves and sell it to the streamer.

But despite a rich musical heritage and wide consumption across the country, the Indian music segment declined by 2% to ₹5,300 crore in 2024, according to the annual Ficci EY media and entertainment report. Digital revenue, the biggest chunk of the segment, fell from 68% of total revenue in 2023 to 62.4% last year.

Further, per-stream rates earned in 2024 by some labels reduced, and the push to convert free to paid subscribers impacted growth in music monetization, the report said.

The radio business, meanwhile, remains on the decline, while music channels on TV saw viewers move away long ago. Although YouTube offers some stable, if low income, the platform, primarily seen as one for video, is gradually veering towards long-form content with better internet and connected TV penetration. Film music rarely draws listeners, as movies themselves tank at the box office. As for the independent music scene, it is far too cluttered for payouts to seem substantial.

Subscription failure

While there isn’t one clear tool to combat the crisis, music industry experts say that to start with, users in India have to be educated to start paying for music. That is easier said than done. Industry experts are unanimous in stating that the decline of audio streaming services in India stems from weak subscription models.

According to the Ficci EY report, the Indian music industry recorded 192 million free streamers in 2024, as compared to 12 million paid streamers, proving that platforms have been forced to depend heavily on advertising revenue.

A spokesperson from JioSaavn, an Indian music streaming company, said platforms that were solely relying on valuations, with sub-par products and limited scale, versus focusing on growing customer engagement, are the ones that have folded up.

“Players who have continuously invested in improving the customer experience and understanding the psyche of Indian customers are able to move their customers to paid subscription,” the spokesperson told Mint. “On the same side, music labels also understand that the long-term gains lie in subscription revenue, and are being supportive of the players who are able to show promising results in getting users to opt for paid subscription.”

The business model doesn’t permit providing free music, and this fact is well understood by both the music labels and digital service providers. “They are both moving towards the equilibrium, which would ensure an optimum mix of free and paid users to ensure that none of the players in the music value chain is disadvantaged,” the JioSaavn spokesperson added.

“It will take some time for subscriptions to compensate for the loss or slowdown of revenue market growth, which was primarily driven by ad-supported services or telco bundling,” said Vivek Raina, managing director–India, at Believe, a global digital music company.

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Raina believes the industry’s biggest challenge remains the imbalance between the content acquisition (when labels acquire music rights of a film) and production cost (producing original music), which music companies must bear, versus the lower revenue growth the market has been experiencing for a couple of years.

Streaming services Spotify and Amazon Music did not respond to Mint’s queries.

Unviable ad models

The ad-dependent model has proven financially unsustainable, restricting streaming companies’ revenue potential. At the same time, per-stream payouts have fallen as low as ₹0.01, making it even harder for platforms to fairly compensate labels and creators.

This reduction is primarily due to the high share of ad-supported users, who generate substantially lower revenue than paid subscribers. As overall streaming volumes continue to rise, limited revenue gets distributed across a larger number of plays, reducing the value of each stream.

Additionally, platforms often have very low rates for payouts, and a significant portion of revenue is retained by labels before reaching artistes. As a result, despite increased consumption, actual earnings for music creators and producers are shrinking, making it increasingly difficult to sustain long-term investment in content creation and growth.

“The current licensing economics of providing free music in the ad supported tier and the reality of advertising monetization doesn’t stack-up,” the JioSaavn spokesperson said. “The fixed cost for music, which is independent of ad revenue, in the long run is unviable. In order to make the model viable, we need to collectively grow the base of paying subscribers to have viable unit economics.”

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Subscriptions aside, there is also an urgent need to combat the detrimental effects of artificial intelligence (AI), with AI-generated versions of songs eating into streams of originals, say industry insiders.

Last September, Michael Smith, a musician in North Carolina, was accused of using AI tools and thousands of bots to fraudulently stream songs billions of times in order to claim millions of dollars in royalties. Prosecutors had called it the first criminal case of its kind they had handled. India needs similar intervention on such cases, say music industry insiders.

“AI adds another layer of challenge to the discoverability of music because anyone sitting at home can create a profile, ingest a song and gain income for doing nothing. There is a need for immediate action on the AI front,” Priyanka Khimani, a legal expert in entertainment and music rights, said.

By ‘ingest’, she means to say that anyone can use AI to create a decent sounding song or one that sounds like a specific artiste. They can then create a duplicate artiste profile on streaming platforms such as Spotify or YouTube and get paid per stream.

More clutter, less discovery

To be sure, the challenges of discovery and reducing payouts are aggravated by the amount of music that gets created and released on a daily basis in India. Music industry experts point out that in recent times, the quality of music produced by Indian artistes has improved tremendously because of access to better quality and more affordable production tools.

Artistes can today make music at a professional level and distribute it widely and easily on platforms such as YouTube, Spotify, JioSaavn, and so on. This opportunity was discovered widely during the covid-19 pandemic and resulted in a massive surge in independently produced music content, lowering entry barriers but aggravating the challenges of discovery.

The cluttered market makes it harder for artistes to stand out without substantial promotion, resulting in fewer streams, lower payouts and royalties.

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“The number of songs, including those by independent labels, that are dropped every single day is huge, so the question is how they can get sampled,” said Mahendra Soni, co-founder of Bengali production house Shree Venkatesh Films (SVF), which also owns a music label. “Also, digital trends are a reality today, and most people are clicking on music that the algorithm throws at them via Reels or YouTube Shorts, which also means they move on too fast and streams are low. That is a pain point.”

Soni, however, added that the growth opportunity, especially in regional languages, is immense as people are now open to listening to newer languages. Many industry experts point out that over the past few years, several Bollywood labels have begun exploring regional markets, in turn, inflating prices there.

India’s film and non-film music sectors share almost identical structural barriers, but non-film music creators face even greater limitations. While film music enjoys substantial promotional and distribution budgets, the non-film and independent artiste ecosystem relies heavily on digital avenues, organic growth, and virality, according to Gaurav Dagaonkar, co-founder and CEO of Hoopr, a music licensing platform.

“The indie music scene is creatively vibrant and expanding, drawing increasing interest from platforms and labels seeking fresh talent. However, success in this space now hinges on more than just musical ability; factors like visual appeal, social media engagement, performance skills, and streaming metrics play a major role,” Dagaonkar added. “Simultaneously, indie artistes grapple with limited access to robust licensing tools and earn minimal revenue from streaming, making long-term sustainability a significant concern.”

That said, the bigger companies say they are doing their bit. “For YouTube, India remains an incredibly important market, and music is central to the platform’s experience. We are continuously working to ensure our artistes and partners can effectively monetize their content on YouTube,” a YouTube spokesperson said.

The platform has paid over ₹21,000 crore to creators, artistes, and media companies in the last three years in India, the person added.

The way forward

To be sure, many believe the current crisis also throws up a window of opportunity. One way forward could involve a focus on growing paid audio and alternative monetization streams. Some see hope on this count—if the entire industry rows in the same direction.

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“Over the last decade, most services have focused on user acquisition on the free tier and not enough on converting these users to paid subscribers. There is now an impetus for the industry to pivot from a volume-centric, ad-supported model to a value-driven subscription business model,” a Sony Music India spokesperson said. “This requires a unified industry effort from all stakeholders, including working on improving consumer engagement, better differentiation between free and premium offerings and explaining the value proposition to consumers,” the spokesperson added.

In any business, consumers pay for what is consumed, and the ecosystem can’t always run on venture capital money, said Mandar Thakur, CEO of Times Music. “In a way, this is a short-term crisis because this is the perfect opportunity to build on the paid ecosystem side,” he noted.

Believe’s Raina also sees things improving. “The subscription model hasn’t fully taken off yet (in India), but it’s evolving in the right direction,” he said.