MUMBAI: The Indian music industry, which is expected to grow at the range of Rs 1,100 crores to 1,300 crores by 2020, has managed to grow at a steady pace over the period of the last five years from 2010 to 2015. These figures were reported in a paper titled ‘Vision 2020 Document on Media & Entertainment Sector’.

The CAGR for the music industry was 5 per cent between 2010 and 2015, which was around Rs 900 crores. However, by 2020, the industry will grow at a CAGR of 5 per cent to 8 per cent. The music industry has witnessed growth at the same pace seen in the last five years, and will continue at the same rate, given the fact that music consumption has been aided by a mix of advertising and subscription, and a build-up of ancillary revenue streams.

Many in the music industry are aware that physical music revenue has declined drastically; the disclosure of the same in the report is no surprise. The report has added to the decline by stating that “physical music revenue will continue to decline and become insignificant over time.” However, digital streaming services like Hungama, Gaana and Saavn, were credited to having “animated the market” with the emergence of digital music aggregators.

Digital music services have managed to focus on data analytics, better user experience and targeted advertising, that have helped alter the dynamics of the music industry and is now at the very heart of it. As per the report, “As many as 97.4 million people in urban India listen to music online, which is close to the 63 per cent of the total urban Internet users in the country. Mobile is the predominant platform accounting for 75 per cent of traffic, and about 36 million use an app to stream music on their mobile.”

Globally, digital streaming has managed to make some revenue through a “combination of advertising and subscription model.” The report did not stress much on the live music business in India, which has been growing, however, added that “globally, music companies have generated new revenue streams like live events and merchandising. The importance of live events is further emphasised by the fact that they present an important advertisement medium for music companies.” Live events and merchandising, have also been a source of revenue in Indian music industry as well.

It is a challenge for the industry to monetise its services in a market where consumers like to enjoy music-for-free. Especially in India, monetisation is a big issue for both local and global music players entering the Indian market. The report also stated that a move towards the paid model in India will, therefore, require a behavioral shift. Further it added that unlike music offerings from mobile operators, independent services face some key challenges, such as establishing a billing relationship with customers.

Digital piracy, which is a menace, should be tackled with a collaborated effort by government agencies and industry players, as it causes significant revenue losses for the industry, concluded the report.