Indian Music Service, Taking Page From Spotify, Goes Pro

Western music fans have no shortage of digital music services to choose from, and that abundance is spreading around the world. Apple’s iTunes is now in 119 countries, and others are racing to plant their digital flags everywhere. This week, for example, Spotify opened in Italy, Poland and Portugal, bringing its reach to 23 countries.

But just as interesting, and in the long run perhaps as significant to competition, is the rise of services that serve regional markets intensely. One is Saavn, a Spotify-like streaming service that specializes in Indian music, and has garnered 10.5 million monthly users with advertising-supported free listening. This week it will announce that it has taken another page from Spotify’s book, by offering a premium version at $4 a month that eliminates the ads, lets users listen to songs offline andwill eventually add other features like higher quality audio.

Saavn, which has offices in New York, India and Mountain View, Calif., has a catalog of 1.1 million songs in nine languages and is available in more than 200 countries, with about 70 percent of its consumption within India, said Rishi Malhotra, one of its founders. Like Spotify, iHeartRadio and other Western services, it is an official partner of Facebook. About 80 percent of its use is on mobile devices, Mr. Malhotra said, and when the premium service, Saavn Pro, is opened in March, it will at first be available only for Apple devices.

The pricing is significantly lower than Western services. “We wanted to make it globally acceptable,” said Mr. Malhotra, who is based in New York. “The $10 price point that you see from a lot of music services we use here is way out of reach from what would fly in India or a lot of other emerging markets.”

Saavn believes it can succeed in India n! ot only through its catalog of Bollywood hits, but through technological touches that may be meaningful only to Indian listeners. One example is the ability to search for a Bollywood song based on the actor who lip-synchs it â€" often more memorable to fans than the “playback” singer who actually provided the voice.

If successful, Saavn Pro could give the company an advantage in India’s quickly developing digital music market, which already has a handful of streaming services, like Dhingana, as well as a strong presence in downloads from Nokia. Yet that market is still tiny for a country of India’s size and overall media spending. According to the International Federation of the Phonographic Industry, recorded music had only $141 million in trade (or wholesale) value in 2011. A recent report by Ernst & Young said that music and radio combined count for only 2.4 percent of India’s media and entertainment spending, which for 2011 it estimated at $18 billion.

Part of the reason for music’s small proportion of India’s media economy is that popular music in India is dominated by the film industry. But a greater reason is piracy; the federation estimates that 55 percent of Internet users in India go to unlicensed music services on a monthly basis. That is slowly starting to change, music executives say, as courts there crack down on infringement and legitimate digital services proliferate. Apple’s iTunes opened there in December, and Nokia says it sells 1.4 million songs a day at its download store in India.

And Indian record companies are approaching digital business without the baggage that has been complicating deals with Western labels and services for more than a decade, Mr. Malhotra added.

“The labels! in India! are not reluctant about digital,” he said. “It’s not like they are protecting against some established, older revenue stream. It’s all found revenue for them.”

Ben Sisario writes about the music industry. Follow @sisario on Twitter.