5 Things To Know About The Digital Music Market In Indonesia

JAKARTA The growth in online music consumption has increased. As many as 38 percent of Indonesians use on-demand music services at least once a week.

However, in terms of recorded music revenue, Indonesia is right behind New Zealand (population: 5 million). This is mainly because Indonesia is a market where freemium streaming models are common.

To learn more about the challenges faced by artists and local labels, how digital streaming platforms (DSPs) try to turn local free users into customers or why the hyperlocal genre is increasing, see Dahlia Wijaya's explanation, Country Manager Believe for Indonesia below. Hopefully it can be your entry guide for the Indonesian music market.

For several years, Indonesia's music market has experienced stable growth, how much is it related to the development of music streaming?

One thing to know about the Indonesian music market is that it is strongly supported by the growth in digital music consumption. According to the 202322 IFPI Global Report, streaming represents a share of 90.6 percent of the total music revenue in 2022 in Indonesia, accounting for $75.4 million, an increase of +36.7 percent from 2021. And between 2019 and 2022, the average annual growth rate is 35 percent per year.

This very strong growth was first explained by the increasing penetration of Internet use: according to the Catadata and BPS 3 reports in 2022, the total number of internet users in Indonesia rose from 133 million in 2018 to 210 million in 2022.

But this is also because Indonesians are large consumers of on-demand music. According to a report published by Google, Temasek and Bain Company 1 in 2022, 38 percent of people use on-demand music services at least once a week. In comparison, the average is 28 percent for the SEA region. And 13 percent of users use music services as requested for at least an hour per day. This is especially true in urban areas, where 57 percent of digital users use on-demand Music services, according to the same report.

The internet is not well distributed in all regions, especially in small towns and villages. But some major cities on the islands of Java-Bali, Sumatra, Kalimantan, Sulawesi and even Papua already have better access now, and they also tend to have a more dynamic local world of music. Previously, this art center only focused on Jakarta/Surabaya, but shifted and began to spread throughout the region.

What are the peculiarities of the streaming market in Indonesia, and who are the main actors?

In terms of digital music consumption, the dominant players in Indonesia are Spotify, YouTube (including YouTube Music &; Shorts), Resso, TikTok, Apple Music. There is also a local platform called Langit Musik.

Most of the DSP offers freemium and premium packages, although Indonesians like music, they don't always want to pay to access it. So, most of them are still a freemium business here, and are highly video-use-oriented, representing about half of the streaming revenue. However, we estimate that less than 1% of the entire population pays for premium packages. In comparison, Thailand has about 3 percent, China is around 9 percent, and the US is more than 35 percent paid subscribers.

Converting free users to paid users is a long and difficult process for DSP, related to their user education to the benefits of premium models. Thus, conversion in Indonesia is at an early stage as for other markets at the same premium development stage.

Low credit card penetration in Indonesia poses technological barriers, in addition to inequality within the internet. To overcome this, DSP can offer bundled music and mobile subscriptions, and handle e-wallet payments through local platforms. This strategy is the most effective with adult listeners who have higher income and value the ad-free experience.

Mobile collection is another interesting option that is being implemented by DSP. Some of them derive agreements with local telecommunications operators so users can subscribe to their streaming service via their mobile package, benefiting from subscription discounts or allocated data just to listen.

Most DSPs offer freemium and premium packages, but if Indonesians like music, they don't always want to pay to access it. So, most of them are still a freemium business here, we estimate that less than 1 percent of the entire population pays for premium packages.

Does streaming democratization change the habits of listening to users? And in this case, what music genre is most loved in Indonesia?

About five years ago, music market consumption was 70 percent international and 30 percent local. Lately, however, the market has become much more local, people consume a lot of Indonesian and Javanese songs. According to our analysis, consumption sharing has shifted to 60 percent international / 40 percent local.

The main genre of music here is Indonesian Pop (in Indonesian). Then it spreads to Javanese pop, namely pop in Javanese (55% of people in Indonesia are Javanese). Other local genres include pop Minang, Batak music, Sundanese music, Manado music, Papuan music, Ambon music... To fulfill public enthusiasm for local modern pop, we started the footsteps of KithLabo who worked with very popular artists such as

Indies, Yura Yunita, Gangga, Idgitaf, RAN, Kunto Aji, Rendy Pandugo and Hal.

The genres that continue to trend locally on YouTube are dangdut, Javanese pop, Malay pop and K-Pop. K-Pop is very popular here, and has surpassed Japanese pop, which was still popular a few years ago.

The dangdut case is interesting: It's regional music, it's generally sung in Javanese, and it's mainly based on dance, like what we can see in Indian music. Dangdut fans like watching videos for choreography, just like they love listening to songs. That's why YouTube is their preferred platform.

Most DSPs support local and hyperlocal music, and most of them have hyperlocal playlists. For example, Spotify launched a new local campaign called #SpotifyIdentityku in October 2022, to celebrate the cultural diversity and Indonesian music identity. Six artists have been selected to be the faces of this campaign and five of them are Believe artists, so we are very proud!

Videos account for about 50 percent of streaming revenue. What's the reason?

As I mentioned about dangdut, regional music in Indonesia is often a close integration between music and dance. Everyone likes to see pictures and listen to music at the same time. The audience wants to see dances, how musicians play, etc. That's why YouTube makes such a contribution to regional music. And it needs to be reminded that Indonesia ranks 3rd in the world in terms of YouTube users and 2nd in terms of TikTok 4 users.

Short videos began to make a difference for music in Indonesia when TikTok appeared three years ago. That is the beginning of the pandemic; Everyone wants something to fill their time. We see that more people find songs through videos of short forts, whereas previously it was only via YouTube

Currently, most of the artists here are pre-released on short video platforms, such as YouTube Shorts or TikTok: they share 15 or 30 seconds of songs, or music videos, up to seven days before release, to get the audience's attention. So, when the full release comes, everyone knows the song.

In Indonesia, artists can release one new song every week. Regional labels can even have new video releases every day, driven by the fact that YouTube's algorithms will push their channels and content to larger viewers, if they upload quality content consistently.

Another interesting feature of the local music market is the incredible number of new songs - sometimes hundreds - released every week. What explains the speed of this hingar bingar?

In Indonesia, artists, and especially regional ones, can release one new song every week. Regional labels can even have new releases every day and each release can be equipped with music videos.

In Indonesia, artists, and especially regional ones, can release one new song every week. Regional labels can even have new video releases every day, driven by the fact that YouTube's algorithms will push channels and content to larger viewers, if they are active and upload quality content consistently.

In addition, TikTok and Shorts algorithms can attract attention to music videos and make people come to watch their full version on YouTube. This is something our team has observed in some of our artist videos.

In the dangdut music world, there has also been a strong trend in the last two or three years to cover the song. The same song can be recorded by five different artists at the same time and released on five different labels. Dangdut bands and artists are looking for songs that will go viral and reach millions. And while surprising, they often succeed, each cover of the same song can easily reach millions of viewers.

This is a trend that has been going on over the last few years and is still around. It's hard to say whether this trend will last. But I believe in exclusivity and orisinality of songs that can create a strong engagement between artists and fans. Therefore I continue to encourage producers to create exclusive content.