Why is Spotify’s impending arrival in India a big deal?

Spotify’s much awaited entry in to India has been challenged by several unique hurdles. However, their recent partnership with record label, T-series highlights that they are definitely on the right track. Currently Spotify’s services are accessible in India only through back-door methods like switching VPN IDs or changing one’s GPS location, but it looks like the green and black logo will find a place in our smartphones real soon.Whether Spotify will enjoy a success story similar to what Netflix has achieved in the country is yet to be seen. But it is not going to be a cake walk for them. Let’s take a close look at a few reasons as to why it is going to be a difficult journey for Spotify in the Indian market.

The first and the most obvious: India is a Bollywood centric market.

The Indian market is unique and unlike any other in the world in terms of its complexity owing to its large variety of languages, local dialects and preferences which is directly catered to by Bollywood music. It is from these movies that songs become popular and turn into hits. Therefore, cataloguing this huge variety of music, that is unique to India, is going to be a challenge. Additionally, another aspect that could be a hindrance to them is the fact that a majority of Indians who listen to Bollywood music, search for songs based on actors who were in the movie. This search logic is currently not embedded in Spotify’s system and it will be interesting to see how they work this out.

Secondly, Music labels.

India has a number of local music labels, but the concentration of market power rests with a few old-school labels like T-series and Saregama. Brokering and negotiating a deal with these bigger labels is a cumbersome process and usually have a long gestation period. This is exactly why the deal between Spotify and T-series is considered to be a huge breakthrough. Also, if recent reports are accurate, Spotify has quite a few exciting deals with big names like Zee Music, Times Music etc. to be finalised in the coming weeks.

Price Sensitive Market.

Services provided by Netflix and Spotify have made a huge dent on piracy in many parts of the world, with more and more people preferring to pay and avail these services rather than download pirated copies. However, in a market like India where people prefer free downloading to buying, Spotify could end up being perceived as a pricy choice. This is because India is a low-end market, where almost one-third of the world’s poorest live. It is true that there is a large and growing middle class, but a major chunk of them are quite price sensitive andwill still prefer to take the free, ad-supported model even if they can afford to pay.

Spotify has an ad-free premium subscription model which is priced at $9.99 (INR 705 approx.) a month in the USA. This price bar is unlikely to attract premium subscribers to their platform, especially when local music applications offer similar services at one-fifth of that price. If Spotify can come up with a pricing strategy that can match Apple Music’s INR 120-per month plan in India, the company will definitely find takers for its services and add to its expanding 30 million premium user base.

Spotify has shown intent in lowering their prices in certain developing markets in the past. Hence, India ideally shouldn’t be an exception.

The Inevitable: Vast number of domestic players

Every global business has to ward off local competitors when setting up shop in a country. In Spotify’s case, they need to fight off competition not only from domestic music streaming leaders like Saavn, Gaana etc but also from global music players like Apple music, Amazon music, Google play music and even YouTube, which is currently the most widely used music platform in the country.

However, each of these domestic players have very different strategies in terms of content offered as well as prices charged. For example, Gaana has a disparate music catalogue with equal focus on both local as well as global music. Saavn on the other hand is yet to fulfill the 360 music requirements of users and charges a higher price to get the Pro version as compared to Gaana.

Given the complexity and lack of homogeneity of the market, both in terms of customer preferences and competitor strategies, Spotify will have to extensively study the domain to find the right balance between the variety of music databases and the price charged to the end customer.

Lastly, Payment mediums.

Spotify has always been quite stringent when it comes to accepting payments. They only accept card-based payments in the US, and direct carrier billing in other markets. Since credit card users in the Indian market are quite less in number, Spotify would have to explore other alternatives that are more popular like pre-paid cards and partnerships with local phone operators. The latter is slightly challenging considering two of the country’s top operators already own a music service — Jio with Saavn and Airtel with Wynk.

Recently however with India’s focus on UPI and wallet-based payments, a third popular mode of payment has emerged with a few major home-grown players in the market. It will be interesting to see if Spotify embraces India’s newly popular payment modes.

However, despite these seemingly difficult obstacles, let me tell you why Spotify’s impending arrival is a big deal and could set off a new culture of consuming music.

Earlier the most appealing or useful aspect of a music streaming app was how huge its music database was. But today with almost all major players providing access to databases with a minimum content size of 30 million, it has become more of a basic requirement than an attractive feature.

The focus now is on the music search and recommendation algorithm. This is a crucial aspect for music lovers everywhere including India, and this just might be Spotify’s ticket to a glorious entry into the country if they play their cards right. The reason for this is the fact that Spotify’s Discover Weekly is the best recommendation engine available today. It’s ability to recommend relevant music to the user when he or she is driving, working out in the gym, or even sleeping off on the couch, is unparalleled. Spotify’s playlists like Release Radar and New Music Friday provides subscribers with the opportunity to discover and latch on to new music from artists they would have never stumbled across on their own. They even have a featured series called Secret Genius, that allows fans of pop music to listen to the songwriters who wrote some of their favourite hits.

If you still feel only content size matters, you can definitely ignore this and continue listening to music on your Apple Music App. Regardless, there is no doubt that Spotify has something different to bring to the market which will be appreciated if they roll their services out carefully. It is going to be very exciting to observe their journey in India. Like I mentioned before — Spotify’s arrival in India is a big deal!

Originally published at https://www.linkedin.com.