Licensing Dispute: Zee Music Hits' Exit No Music To Spotify Ears

In the past couple of days, users of the music streaming platform Spotify have found hours of their playlists shaved off. The music streaming giant has removed Zee Music tracks from its app, as well as browser sites, after negotiations for a renewal of their licensing agreement fell through.

This has robbed its Indian users of several popular tracks, including the No. 1 track on Spotify India over the past two weeks -- Apna Bana Le from Bhediya (2022).

In fact, Spotify’s Daily Top 200 Songs chart for India included nearly 15 Zee Music tracks — Maiyya Mainu from Jersey (2022), successful music albums from the movie Kalank (2019) and Pal Pal Dil Ke Paas (2019), Makhna from Drive (2019), Kala Chashma from Baar Baar Dekho (2016), and Zaalima from Raees (2017) — before they became unavailable to listeners on Wednesday and remain so until a new agreement is signed.

Though Spotify had 500 million monthly active users globally (as of February 2023), there is no clarity on its India user base.

“I have lost three hours from my Hindi music playlist on Spotify. Thankfully, I had a nearly identical playlist on Gaana.com, and will be listening to that until there’s a resolution,” a user told Business Standard.

So, what does this mean for Zee or Spotify, in terms of impact on their revenues? Experts believe the delay will not hurt Zee Music a lot. Karan Taurani, SVP Elara Capital, explains: “Generally music companies have got a minimum guarantee arrangement with these platforms. One can estimate that Zee Music would be getting nearly 10 to 15 per cent of revenues from a platform like Spotify.” Most music companies, such as Zee, have diversified their digital offerings across the platform. YouTube often claims the largest share. “Thus, a single platform like Spotify will claim close to 10 per cent of Zee’s revenues.”

An employee working at a major music streaming company told Business Standard that unlike in the West where Spotify dominates the music streaming market, the company is still struggling to cater to the Indian subcontinent’s music taste.

Spotify entered India only in 2019, and by then, others had taken leading spots. “Not only do Spotify’s competitors like Gaana or JioSaavn have more extensive Indian playlists, their search results are also more sensitive to the taste of Indian audiences. For instance, a search for Shah Rukh Khan’s romantic hits on Spotify will not list out his songs in order of their popularity; you may find Ye Kaali Kaali Ankhein or Kal Ho Na Ho somewhere deeper into the playlist, mixed with his more obscure songs.” The employee also said this is primarily because Spotify’s algorithm needs more usage data on Indian music to better calibrate these searches.

According to JioSaavn’s data, it has over 100 million monthly active users, while Gaana claims to have crossed 185 million monthly active users in 2020. More importantly, there’s YouTube — an app that comes preloaded on to Android phones — which is arguably the most popular destination for Indians to get their music fix for free. Zee Music has nearly 94 million subscribers on YouTube.

Last year, the music company cut its ties with Gaana, a few months before the audio-streaming platform became a subscription-only service.

Meanwhile, Spotify India has been trying to break out of its nearly 50:50 revenue mix for subscriptions and advertising and lean more towards the former, with such India-specific offers like mini-subscription plans.

Globally, Spotify is the leading audio streaming service, with 489 million users and 205 million premium subscribers across 180 regions. Last year, the music platform's growth in India, South East Asia and Latin America had helped it cross the 450 million mark in global users in the quarter ending September 2022.

With a large chunk of hit Indian songs missing from its playlists, this rapid growth might hit the pause button.