In a tete-a-tete with me, Swapnil Shinde, co-founder, Dhingana.com, an Indian music streaming platform across mobile and web, provides insights about the music streaming market in India, the consumer base for streaming, and the opportunities that he sees in this market. He explains how the music streaming industry works and tells how the streaming model can help stop music piracy in the country.
IBNLive: Where does the future of music lie - in downloads or in streaming services?
Swapnil Shinde: We believe that the future of music lies primarily in streaming. If you look at the US market, 70 per cent of the total music consumption today is happening via Internet streaming. And given the fact that - as of today, there are around 100 million unique users accessing Internet in India via mobile and web - it can be estimated that in the next 5 years, the number is going to blow above half-a-billion (500 million), and 75 per cent of those will be coming from mobile.
So, our approach is that we don't want the content to be locked. The streaming is going to be free for the users. It will be a paid model if we allow users to download. So, from a user's perspective, consuming music for free, which is monetised with advertisements, makes a lot of sense.
IBNLive: When people can download and own the content for free, why would they opt for streaming?
Swapnil Shinde: From a music consumption experience perspective, streaming is always going to be a better experience. When you start downloading stuff, whether it's via a pirated or a legal channel, you have to manage the music that you download. For instance, you download some music on your phone and then you get it on various devices including, CDs/DVDs, pen drives, laptop or other devices. But streaming allows you a very ease of use experience. Today, if you like something, you can just start listening to it whether you are driving or working on your laptop. The experience is seamless across devices.
As we move ahead with the 3G coming in and networks improving over time, we believe that the ease of use with the Internet streaming is far more valuable and easily approachable for the users. Also, the users can create their playlists, listen to their favourite songs and share the music that users are listening to in real time with their friends on Facebook. Users can also see what music their friends are listening to. With Internet streaming, the user experience is extremely simplified.
For instance, some of the biggest music labels in India release say 5 to 10 music albums a month. So if you want to start listening to new releases, you have to find that album, download songs and you will ave to repeat it for all the albums you are interested in.
But in case of streaming, the whole experience is quite easy to use nd access. In case of streaming, music becomes available for streaming within 5 minutes of its launch on all our platforms.
The ease of use and the whole experience is simplified. If you look at the trend, everything happens in real time. The ease of use is only for you as a user.
Besides the ease of use, the social music discovery and personalised recommendation angles add a lot of value to your use case. When you want to download, you know what you want to download, but we, through our experience, can allow you to discover more music based on what other people in the community are listening to.
IBNLive: Music streaming comes in two flavours, free and paid. What advantage does the paid model give to the users?
Swapnil Shinde: The free model is where users are allowed to stream the music for free. But in the paid model there is an added advantage on top of the services that we offer.
For example, if you want to sync your playlist offline i.e. if you want to listen to your music and have the same experience even without Internet connection, you will be able to do so in the paid model.
Another paid model advantage could be letting users download songs and we can ask them to pay for that.
Also if users want to have ad-free experience, it is also possible in the paid model. These are certain experiments that we will be running in the future.
IBNLive: Which distribution model has more potential - paid or free (ad supported)?
Swapnil Shinde: Our main revenue model is going to be from advertisement model. We are not going to lock the content. The content will be free for unlimited consumption.
If you look at Pandora, the US-based streaming music service, it has both free as well as premium subscription model. The 90 per cent of their revenue today comes from advertisements. In fact, they are planning to convert some of their paid users to free users, because in doing that they believe that they can monetize their usage more in one year as compared to the amount they pay per month.
IBNLive: Is there any plan to come up with paid model?
Swapnil Shinde: We might experiment with certain premium paid offerings in the future, but it is not solidified as yet. We may come up with a paid model later this year - may be Q3 or Q4. However, that is only going to be experimental. Advertising is still going to be our main revenue model.
IBNLive: Given the patchy internet connection that we have in India and low penetration of 3G, what promise do streaming music services hold in such a market?
Swapnil Shinde: When we designed our applications for mobile, we made sure that the player or the streaming client that we have developed supports adaptive bit rate streaming. So, depending upon the quality of the network that the person is using - whether it is Wi-Fi or EDGE or 3G - the application will adaptively change the bit rate of the song so that the experience of streaming has least amount of buffering.
For instance, you are using Wi-Fi network and listening to music on your iPhone, we will stream you at say 128 kbps. You move out and sit in your car, your Wi-Fi drops and you connect to say 3G. We will detect that and start streaming your songs at say 64 kbps. As you move along, the 3G is patchy and you fall back to EDGE, we will detect that the network has degraded and we will start streaming your songs at say 32kbps.
So, this adaptive streaming is something that we have worked very hard on and we are building it into all our applications.
We can stream at 64kbps even on the EDGE but the song will buffer at least five times in a 3 minute interval. Our streaming logic is that we will buffer at least 3 seconds of song before we start playing it back. But if we stream at 32kbps on EDGE, so have seen that the buffering happens only once when the song starts.
IBNLive: Can streaming apps kill music piracy?
Swapnil Shinde: Today the known reason that why people go for piracy is that they want music for free. But in streaming, we not only provide you music for free in different genres, but on top of that we are offering you world class experience forward by social music discovery, personalised recommendations available across all platforms - whether Nokia, Android or anything else. With this, the trend of downloading is going to change over time.
Also, as people understand that there are alternatives where they can get a lot more for free, then more and more people will like to choose that option.
To help people understand the value of music streaming, which in a way is a step towards fighting against music piracy, Dhingana plans to come up with campaigns early 2013 telling people that they can use music streaming services like Dhingana across different platforms where they can have seamless experience powered by social music discovery, and can get a lot more value.
IBNLive: Music streaming is an expensive business. How viable is it for new entrants and how deep pockets they should have?
Swapnil Shinde: The business is expensive or not, it depends on how you approach it. I will answer it in two aspects.
Typically, 98 per cent people use a third party CDN (content delivery network) to stream their music. That is, you offload your streaming to someone else. You create the basic product and streaming comes from the network of the third party.
But what we have done is that we have designed our own proprietary delivery network, which we use to stream content that allows us to reduce our bandwidth streaming cost by 10 times as compared to using a third party solution like Amazon or Akamai, for example. So, that has helped us a lot in saving cost and this is one of our operating avantages. For example, if Akamai is charging you 25 cents for streaming 1GB of content, we might be able to do it in 3 cents.
Secondly, for licensing, you need to have deep pockets to close licensing deals with a lot of music labels. The more labels you have, the more money - depending on your deal - you might have to flow in. But for a new entrant, he can decide that how many labels he needs to concentrate on in the beginning, and figure out a way that how he can establish. For example, you can only opt for Bollywood or Ghazals or oldies in the beginning, depending on your budget.
IBNLive: What are the different models which define your relationship with music labels?
Swapnil Shinde: There are two or three models to work with music labels. One is like the fixed guarantee where we pay a label fixed cost for their catalogue per year.
The second is where we pay them a minimum guarantee and then a variable cost per stream i.e. every time their content is streamed we pay them a certain royalty.
The third is basically we pay them only variable cost based on their content consumption.
IBNLive: Are most Indian music companies open to publishing their content online or is there still some reluctance?
Swapnil Shinde: No, they are open to licences. So, today if you see the US music industry, in US there are alternative sources of revenue for music labels like iTunes store or Amazon's store and then there are streaming sources. But in India, the alternative sources are kind of absent today. CDs is the one way that helps them earn revenues. So when we approach the music labels, they look at us as an incremental source of revenue. So, they are willing to work with us and explore this particular opportunity.
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