Audio OTT platforms see ‘silver lining’ despite ad revenue dwindling during the lockdown
The music streaming industry is upbeat that the surge in consumption and positive changes in consumer behaviour will sustain long after the lockdown is over
TV viewership has seen exponential growth in the last fortnight since more people started to work from home. More time spent at home inevitably translated to more time spent in front of the television. But what about the ones who want to break the tedium of TV for some time and still stay entertained? Enter audio OTT. Music apps and radio consumption has also seen a significant rise according to the Kantar report, which pegs the increase at 42%.
While the Industry players acknowledge the surge in traffic, low advertisement revenue still continues to be a problem.
“We have seen a jump in the consumption of our audio podcast originals and sparklers on the Red FM app and also a syndicated platform where people consume our podcast. This jump is approximately 20-25 % more than the regular daily average”, said Nisha Narayanan, Director & COO RED FM and Magic FM.
But Narayanan pointed out that the spike in audience engagement did not translate to increased advertisement revenue. “The impact of revenue won’t be much because there are fewer ads that are getting served on our content on YouTube and Facebook. The audio podcast platform is at an infancy stage of monetization and there also the inventories are underutilized”, she added.
Gaurav Wadhwa, Co-Founder and CEO, Big Bang Music, explained why despite the increase in consumption, audio OTT platforms are not witnessing any spike in revenue. He said, “In India, the biggest revenue drivers for the streaming services is advertisement. While the consumption is increasing due to people stuck at home with extra time at hand, the advertising is dropping. Today, a lot of brands who have committed to advertising revenues are pulling out because their products are not getting sold in the market due to lockdown. There is no point in creating a marketing awareness for a product that people can’t purchase.”
He further elaborated that, “Because the regular advertising is dipping, the rates per stream will also go down. Streaming services will have to come up with new alternative streams of revenue.”
Wadhwa believes that the current phase of lockdown have altered consumer habits which will continue once the normalcy returns. He said, “The silver lining in the whole scenario is that, along with podcast consumption, the genre-based consumption is also growing. Earlier, most people in India consumed music on the basis of what's popular or the latest release. But, due to the availability of time people have started exploring new genres and listening to a curated playlist. This change in consumer behaviour is expected to last even after things go back to normal. Hopefully, once the market opens up again, brands will start seeing music in a new light and an alternative stream of revenue could be created.”
Spotify's latest report titled ‘How Social Distancing Has Shifted Spotify Streaming' confirms Wadhwa's claims of change in consumer behaviour due to the lockdown.
The report says the Spotify has witnessed an increased interest in news podcasts. It also says that artists who livestream concerts are seeing a spike in listening. And, there is a surge in fitness and cooking-related podcasts.
Agam Chaudhary, CMO, Digitalabs (A division of Laqshya media group) think that because of lockdown, the premium subscription of audio OTT platforms will go up and that will contribute to the revenue of the streaming services. He said, “Both advertising and subscription revenues are on the rise and is expected to go further north as we move further into the lockdown period with limited activities available to the public. Different players have seen varied rises in percentage consumption and the limited time subscription packages have been welcomed and grabbed by both hands.”
He further added, “If early signs are to be believed, the ad revenues along with the subscriptions, which were traditionally less than 1% of the user base, are rising exponentially. While the subscriptions revenue is much higher than the advertisement revenue per user, the situation is likely to change for sure.”
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