Spotify‘s (NYSE: SPOT) The mission of a million creators is to make a living from their music platform and have billions of people on stage listen to them. To achieve these goals, the streaming audio giant must thrive and gain market share in the world’s largest markets. And because it operates at a level of disadvantage in China due to the government’s preference for local internet companies, Spotify has focused a significant portion of its investment on the same other country with more than a billion people: India.
According to the numbers
Spotify entered the Indian market in February 2019, and since then, it has made rapid gains there compared to its streaming audio competitors. According to App Annie, at the end of September 2020, Spotify had 42.1 million monthly active users (MAUs) in India – pulling ahead of local competing Ghana and just behind market leader JioSaavn. If it maintains this growth pace, it should soon become India’s premier music service (if it hasn’t already).
In its last three earnings announcements, Spotify has made it clear that its performance within the Indian market has been outstripping executives ’expectations. One way to continue that growth – beyond the reports from third-party services like the Annie App – is to focus on how Spotify’s “Rest of World” segment is growing by far. to the company as a whole. In the first quarter of 2019, “Rest of World” accounted for 13% of Spotify’s total MAUs, but by the fourth quarter of 2020, it accounted for 19%. Much of that growth is probably due to India, which shows that the company is attracting customers there faster than it is in Europe and America.
So we know that Spotify has been winning over users in India, but how come has he been doing that? Well, for one thing, the company is pricing its services there to reflect both Indian consumer habits and download speeds. For example, he announced that a version of their paid membership service called “Premium Mini” will be available to Indian customers for around 100 rupees per month ($ 1.38). It also offers a version of the downloaded app called Spotify Lite that will help make the most of the service for unbalanced networks in emerging markets. crop.
Finally, Spotify is investing in local podcast content to help develop the value proposition of its free service. With Indian subscribers paying a fraction of what those in Western markets do for the service, the company needs to do more to make money in that market through advertising. Podcasts should be a big part of that push.
India’s flow capacity
Why is India so critical to Spotify? Well, the country is expected to have a population of nearly 1.5 billion people by 2025, and streaming is already the preferred choice of music listeners there with a share of 73% of its revenue. industry. Smartphone usage is also on the rise in the country. In 2017, only 23% of India’s population used a smartphone – by 2022, 36% is expected to have one.
These numbers illustrate the extent of Spotify’s availability in India. The service is riding a big tail from the growth in music streaming and the influx of smartphones in the country. If it can sustain growth against competition, the service could reach 150 million or even 250 million MAUs in some time in the next decade, while Spotify could already getting close to market absorption in Europe and North America. And with a leading position in the Indian audio streaming market, the service will reach a management target of one billion users faster than many investors think.