The Indian music industry faces rising content costs, fewer big-budget films, and concentrated monetisation. Collaboration between music labels, production houses, and OTT platforms can unlock new growth opportunities.
By Karan Taurani & Kumar Taurani The Indian music industry faces a structural challenge: rising content acquisition costs, fewer commercially attractive films, and concentrated monetisation channels. Greater collaboration between music labels, production houses, and OTT platforms could unlock new opportunities for content creation, audience engagement, and sustainable monetisation. The economics of India’s film music industry have changed significantly post-Covid.
While music consumption continues to grow, Hindi cinema is seeing a structural shift towards fewer, larger, event-driven theatrical releases. More importantly, the availability of big-budget films with strong music potential remains constrained. Large studios and production houses have gained bargaining power, while labels are compelled to enter long-term tie-ups or pay substantial premiums to secure commercially attractive content.
The challenge is that music acquisition costs are rising faster than the industry’s ability to monetise content. Unlike earlier periods, when labels could monetise IP through physical sales, telecom services, radio, and digital licensing, today’s incremental consumption is increasingly concentrated across YouTube, Spotify, and social-media platforms. While digital distribution has expanded reach, monetisation remains dependent on advertising yields, subscription economics, and revenue-sharing arrangements.
Labels have limited control over pricing and consumer relationships. Consequently, music rights are being acquired at increasingly aggressive valuations, while the ability to recover those investments remains uncertain. This is particularly relevant for expensive Bollywood soundtracks, where commercial success depends heavily on the film’s visibility and audience reception. The next phase of growth could emerge from deeper collaboration between music labels, production houses, and OTT platforms, rather than aggressive bidding for expensive film soundtracks.
Several large music labels have already expanded into film production, demonstrating the benefits of integrating music creation and content production. However, partnership-led models could deliver similar benefits without the financial risks associated with producing films. Music labels possess expertise in identifying talent, creating commercially appealing songs, and building long-term IP. OTT platforms specialise in original content production, storytelling, digital distribution, and subscriber acquisition.
Collaboration could create meaningful synergies. OTT platforms could partner with established labels to develop soundtracks for original films and web series. Successful music could improve content discovery, attract viewers, and potentially support subscriber acquisition and retention. Conversely, music labels could benefit from the popularity of OTT content, which can significantly expand the reach and consumption of associated soundtracks.
Labels own extensive libraries of older songs that could be licensed for OTT films, web series, and original productions. These songs can enhance storytelling, generate nostalgia, and improve audience engagement, while providing labels with incremental licensing revenue and renewed streaming consumption without substantial new content acquisition expenditure. The industry must also diversify beyond premium Bollywood soundtracks.
Long-term studio partnerships, OTT collaborations, and co-investment structures could improve content visibility, reduce bidding pressure, and create additional monetisation channels. Ultimately, the industry’s challenge is not insufficient consumption but an imbalance between acquisition costs and monetisation opportunities. This is the first of a two-part series The writers are Respectively EVP, Elara Capital, and Chairman, Tips Music. Disclaimer: The views expressed are the author's own and do not reflect the official policy or position of Financial Express.
