Spotify's biggest competitor is YouTube
Also, brands are lining up for some Koffee.
If you are here, then you are probably curious about the burgeoning entertainment landscape in India and other major markets globally.
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Hello and welcome back to Overshoot!
Hope you have had a wonderful start to 2024.
We were out of the newsletter sphere for a bit longer than expected. Some projects, which have been on the back burner for a really long time, needed our attention.
But we are back now and with a lot more new insights on the entertainment landscape. All of it will unfold in our upcoming newsletter editions.
For now, let’s dive into today’s edition!
Streaming
Spotify is competing with YouTube and not its music streaming peers
A couple of weeks ago, while commuting, I tried playing Taylor Swift’s New Romantics from my Spotify ‘Liked Songs’ playlist. But I could only hear about a 10 second snippet of the song.
When I tried investigating further, I realised the Swedish music streaming platform had put a bunch of free features behind paywall.
It was Spotify’s way of pushing users to opt for a premium subscription or update the app where free users have a limit on the number of song they can change, cap on repeating songs, and no rewind, among other things.
It was utterly exasperating as it felt like being coerced into becoming a premium member. But I was also not alone. I spoke to folks at my co-working space about these updates and at least five of my desk mates had encountered similar changes.
“It was so sudden. I don’t mind becoming a paid user but the app is only accepting monthly payment and the process is so annoying,” one of my desk mates told me.
Since its founding 15 years ago, Spotify has majorly been a loss making entity. Like most other listed streaming platforms, it is currently under the pump to show some signs of profitability as wall street investors are no longer impressed by just user growth. Hence, converting free subscribers to paid ones has become a bit more urgent.
But can’t Spotify make money through audio advertisements? That’s what other streaming platforms are anyway trying to achieve. Show ads to the free subscriber.
Spotify could earn from advertising revenue but the number would be miniscule, especially in India.
Advertising on streaming platforms is at a very niche stage in the country. More so for audio streaming platforms, claims a former Jio Saavn product executive.
“When it comes to audio streaming, the number of users on these platforms are very limited,” says the Jio Saavn executive. As of April 2023, Spotify had 55 million monthly active users (MAUs) from India. That’s a drop in the vast ocean of digital media.
But advertising on YouTube means getting access to hundreds of millions of people as the video-sharing platform had 462 million users as of October 2023.
When brands think of spending on advertising in India, they usually prefer putting funds behind performance marketing, social media campaigns, and ads on national television channels to build a mass appeal.
“The percentage going to audio ads is very low. It would easily be less than 5 percent,” says the executive mentioned earlier.
Brands also hope for some kind of follow-on action when advertising online. Be it performance marketing, working with creators or digital marketing, a brand would always hope for users to click on the links in their ads.
Nudging listeners to click on such links, without disrupting their in-app experience, is another major challenge in audio advertising. For video format ads on YouTube or Instagram, a button can be placed for interested viewers to go onto a brand’s website.
Voice commands are used to nudge listeners into clicking a some kind of tab. Spotify usually incorporates this in their ads. But anecdotally speaking I have hardly ever seen anyone (myself included) actually clicking on these ads. People end up listening to the commercial like they would on a radio station.
Have you ever clicked on an audio ad? Tell us.
Due to limited visibility, only a few companies would want to spend on audio advertising. I have seen Bumble, Tinder, a few financial service companies and music labels, among a few others, advertising on Spotify.
The platform’s model is also to aggregate music, which means the same music can be available on competitor platforms including YouTube Music, Jio Saavn, Airtel Wynk and Hungama.
If it is only about the music, which can be accessed ad-free and at a lower cost on another platform, then what is stopping listeners from jumping on to another platform? Indian consumers are notorious for not forming deep brand loyalties and moving on to a different brand if the value proposition is better.
YouTube is the obvious candidate for a Spotify alternative.
From the biggest music firms in the world to emerging musicians, everyone uploads their music on YouTube.
T-Series might consider not renew their music aggregation terms with Spotify. But India’s top music label would never take content off their YouTube channel that has 275 million subscribers, the biggest in the world.
The monthly subscription rates between Spotify are also not too different. Spotify starts charging ₹7 (US$ 0.085) per day going up to ₹179 (US$ 2 approx) per month, while YouTube charges starts at ₹139 (US$ 1.68) per month going up to ₹1,290 (US$ 16 approx) for a year. In their subscription price, users also get access to ad-free music and tons of ad-free videos on YouTube.
One could not deny Spotify’s impact in India’s independent music sphere. The app has changed the growth trajectory for many up-and-coming artists through Radar India playlist that brought many indie artists, including Kamakshi Khanna, Anuv Jain and Osho Jain (not related), into the limelight.
In Africa, the platform is also giving a global reach to Nigerian Music Industry’s Afrobeat songs and artists.
But disrupting the free user’s experience and pushing them towards a paywall might not always be the best strategy, especially when the music streamed on the platform is not exclusive to Spotify.
Another Spotify competitor Resso,which is owned by Tiktok-parent Bytedance, was silently becoming the top music streaming platform in India. But after becoming completely subscription based, it is reportedly wrapping up business in India soon. Spotify’s limited popularity in the most populated country could take it a long way if only the firm plays its cards right.
Amazon is firing again
This time hundreds of employees are being laid off in the studio and Prime Video department, reports Reuters. The streaming platform spent millions of dollars during the pandemic years developing high-budget shows and acquiring the MGM Studio. This includes $465 million spent on the first season of The Lord of the Rings: The Rings of Power.
Brands line up for a Koffee sip
Guilty pleasure watch Koffee with Karan has given a few partner brands 2x growth. MyGlamm, a cosmetic brand, claims its public awareness doubled after it became the title sponsor for the celebrity talk show, according to this report. This has gotten brands lining up to sponsor Disney+ Hotstar’s biggest audience attracter show.
Also,
YouTube’s public policy head was been summoned by NCPCR for not being able to curb child sexual abuse content. More here.
You don’t want to miss out
Tackling Instagram Reels and YouTube Shots
Since I started working independently, I have obviously been exploring creator monetization with a lot of interest. But I am still not very clear how Instagram’s Reels, now that it is the only sizable short-video platform since Tiktok’s ban, pays its creator.
The company started a Creator revenue program last year. But it also shut it down a few months ago, according to a few creators I spoke with. This video here though has helped me in making a bit more sense about monetization. I hope it does so for you as well.
Sexual assault case on Disney
Victim claims the entertainment conglomerate turned a blind eye to the VP of distribution assault on female employees to protect a revenue stream.
And,
Anne Hathaway and Jessica Chastain’s Mothers’ Instinct trailer dropped last week.
Does the film look interesting? Tell us in the comments below.
Thank you for hanging with us.
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