Music to ears: Give quality, will pay

Are Indian consumers, cosseted by bargain-basement prices and a culture of freebies, giving 'pay for quality' a serious dekho? At least those conscious of matters like quality, seem to. Take music streaming. It's moving into a stable business model as price-sensitive Gen Z listeners switch to subscription plans. The digital-native is pushing this industry to deliver better consumer value and, in the bargain, improve realisation for producers. True, music streaming has depressed earnings of musicians by culling physical sales. Such is the march of technology. And, yet, it has cleaned up piracy that posed an existential threat to the industry.

Broadly, streamed music follows the same pricing model as sales of physical music. Revenue is shared on the basis of audience size - number of times a track is downloaded - and platforms spend more on royalties than on tech. The ad-based model of free music that cannibalised revenue is shrinking, with consumer behaviour shifting towards tech-enabled discovery and functionality of the kind Spotify excels in. Consumption overall increases with music played from multiple devices. Gen Z is both technically savvy and value-conscious. The market for music must necessarily evolve to their requirements.

Improved distribution works particularly well in fragmented markets like India where discovery benefits outweigh other gains of streaming. The market is small because of India's demographic profile and delayed data access. These will be corrected over time. Slow growth in substitute forms of consumption, like radio, will speed up the transition to paid subscriptions. The unit economics of listening to streamed music is extremely favourable in a price-sensitive market. Rising adoption in areas like digital payments improves access to streaming music, as do entertainment services coming bundled with cellular subscriptions. Paying a small, often piddly, fee cuts through a lot of clutter. It holds a lesson for other sectors from digital publishing to home entertainment: for quality value, will pay.