5 things to know about Indonesia's Music Market with Dahlia Wijaya
With almost 279 million inhabitants, divided into some 1,340 ethnic groups speaking about 700 different languages, Indonesia is the fourth largest country in the world in terms of population, and the archipelago of 17,500 islands is the largest country in Southeast Asia
Although Indonesia's GDP per capita is relatively low, it is compensated by a large population, increasingly connected thanks to growing internet penetration. As a result, the country's digital economy is booming: it is expected to reach a value of $130 billion by 2025 and is up by 22% YoY1. This growth is also seen in online music consumption: 38% of Indonesians using a music on demand service at least once a week.
However, in terms of recorded music revenues, Indonesia ranks right behind New Zealand (population: 5 million). This is mainly because Indonesia is a market where the freemium streaming model is prevalent.
To learn more about the challenges faced by local artists and labels, how DSPs are trying to convert local free users into subscribers or why hyperlocal genres are on the rise, meet Dahlia Wijaya, Believe's Country Manager for Indonesia and your go-to guide for the Indonesian music market.
For several years, Indonesia's music market has been undergoing steady growth, how much is it related to the development of music streaming?
One thing to know about Indonesian music market is that it’s strongly supported by digital music consumption growth. According to IFPI’s 2023 Global Report2, streaming was representing a 90.6% share of total music revenue in 2022 in Indonesia, accounting for $75.4m, a figure that was up +36.7% from 2021. And between 2019 and 2022, the average yearly growth rate was 35% per year.
This very strong growth is first explained by the increasing penetration of Internet use: according to a 2022 report by Katadata and BPS 3, the total number of Internet users in Indonesia went from 133 million in 2018 to 210 million in 2022.
But this is also because Indonesians are big consumers of on-demand music. According to a report published by Google, Temasek and Bain Company1 in 2022, 38% of people use an on-demand music service at least once a week. In comparison, the average is 28% for the SEA region. And 13% of users use music on-demand services for at least one hour per day. It’s particularly true in urban areas, where 57% of digital users use a Music on demand service, according to the same report.
The Internet is not well distributed in all areas, especially in small towns and villages. But several key 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 music scene. The artistic center was previously only focused on Jakarta/Surabaya, but it’s shifting and starting to spread to all regions
What are the particularities of the streaming market in Indonesia, and who are the major actors?
When it comes to digital music consumption, 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 DSPs offer freemium and premium plans, but if Indonesians love music, they don’t always want to pay to access it. So, it is still mostly a freemium business here, and very much oriented towards video usage, which represents about more than half of the streaming revenue. Yet, we estimate that less than 1% of the entire population pays for premium plans. In comparison, Thailand has about 3%, China around 9%, and the US over 35% paid subscribers.
Converting a free user to a paying user is a long and hard process for the DSPs, linked with the education of their users towards the benefits of a premium model. As such, conversion in Indonesia is at early stage as it was for other markets at a similar premium development stage.
Low credit card penetration in Indonesia poses a technological barrier, in addition to disparities in Internet coverage. To overcome this, DSPs can offer bundled music and mobile subscriptions, and handle e-wallet payments through local platforms. This strategy is most effective with adult listeners who have higher income and value an ad-free experience.
Mobile billing is another interesting option that is being implemented by DSPs. Several of them conclude agreements with local telecom operators so that users can subscribe to their streaming services via their mobile package, obtaining benefits such as a subscription discount or data allocated just for listening.
Most DSPs offer freemium and premium plans, but if Indonesians love music, they don’t always want to pay to access it. So, it is still mostly a freemium business here [...] we estimate that less than 1% of the entire population pays for premium plans.
Did streaming democratization change the users' listening habits? And for that matter, which music genres are most loved in Indonesia?
About five years ago, the music market consumption was 70% international and 30% local. Lately, however, the market has become much more local, people consume a lot of Indonesian and Javanese songs. According to our analysis, the consumption split has shifted to 60% international / 40% local.
The main music genre here is Indonesian Pop (in the Indonesian language). It then extends to Java pop, which is pop in the Javanese language (55% of people in Indonesia are Javanese). Other local genres include Minangkabau pop, Bataknese Music, Sundanese Music, Manado Music, Papua Music, Ambon Music… To meet the public’s enthusiasm for local modern pop, we started the imprint KithLabo who works with extremely popular artists like Hindia, Yura Yunita, Gangga, Idgitaf, RAN and Hal.
Genres that keep trending locally on YouTube are Dangdut, Pop Java, Pop Melayu and K-Pop. K-Pop is very popular here, and has surpassed Japanese pop, which was still popular a few years ago.
The case of Dangdut is interesting: It’s a regional music, generally sung in Javanese, and is mainly based around dancing, like what we can see in Indian music. Dangdut fans love watching the video for the choreography, as much as they love listening to the song. That's why YouTube is their preferred platform.
Most DSPs are supportive of local and hyperlocal music, and most of them have hyperlocal playlists. For instance, Spotify launched a new local campaign called #SpotifyIDentitasku in October 2022, to celebrate the diversity of Indonesian culture and musical identity. Six artists have been selected to be the face of this campaign and five of them are Believe artists, so we are very proud!
You mentioned earlier that video accounts for about 50% of streaming revenue. What is the reason for this?
As I mentioned about Dangdut, regional music in Indonesia is often a tight integration between music and dance. Everyone enjoys seeing the images and listening to the music at the same time. The audience wants to see the dances, how the musicians play, etc. That's why YouTube is making such a contribution to regional music. And it is worth reminding that Indonesia ranks 3rd in the world in terms of YouTube users and 2nd in terms of TikTok users4.
Short-fort form videos began to make a difference for music in Indonesia when TikTok appeared three years ago. It was the start of the pandemic; everybody wanted something to occupy their time. We notice that more people discover songs through short-fort form videos, when it was only through YouTube before
Today, most artists here do pre-releases on short-form video platforms, such as YouTube Shorts or TikTok: they share 15 or 30 seconds of a song, or of a music video, up to seven days before the release, to get the audience's attention. So, when the full release comes around, everyone already knows the song.
In Indonesia, acts[...] can release one new song every single week. Regional labels can even have new videos releases every day, encouraged by the fact that YouTube algorithm will push the channel and its content to a larger audience, 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 this frenetic pace?
In Indonesia, acts, and particularly regional ones, can release one new song every single week. Regional labels can even have new videos releases every day, encouraged by the fact that YouTube algorithm will push the channel and its content to a larger audience, if they are active and upload quality content consistently.
Moreover, TikTok and Shorts' algorithms can draw attention to a music video and make people come watch the full version on YouTube. This is something that our teams have observed on several of our artists' videos.
In the Dangdut music scene, there has also been a strong trend in the last two or three years to do cover songs. 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 as surprising as it may, they often succeed, each cover of the same song can easily reach millions of viewers.
This is a trend that has been going on for the last few years and is still there. It’s hard to say if this trend will last. But I believe in the exclusivity and originality of a song that can create a strong engagement between artists and fans. Therefore I continue to encourage producers to create exclusive contents.
Joining Believe in 2019, Dahlia Wijaya has been Believe's Country Manager for Indonesia since 2021. Wijaya has over 10 years of experience in the music industry, having worked in several departments of two of the biggest local labels, Nagaswara & GP Records, mastering the recording label business from A to Z. Having previously worked with big local artists such as Wali, Dewa 19, Andra & The Backbone, or Mulan Jameela. Now in Believe, Dahlia and her teams develop and contribute to the success of famous acts like Tulus, Pamungkas, Hindia, Idgitaf, Nadin Amizah and many more (local and hyperlocal artists.) Believe's strategy is to provide the best services to artists and labels, sharing with them our expertise in digital music and increasing the visibility and streams of their releases through our marketing tools.
Dahlia, who is one of the few women in a senior position in the Indonesian music industry, hopes to help create a more equitable and diverse music industry by continuing to educate and mentor women (artists, composer, producer, etc.) in this industry, and encourage them to inspire other women.
1. Source: e-Conomy SEA 2022 | Bain & Company
2. Source: IFPI GLOBAL MUSIC REPORT 2023
3. Source: The State of Indonesia’s Digital Economy in 2022 | FULCRUM
4. Source: Essential YouTube Statistics — DataReportal – Global Digital Insights / Pengguna Tiktok Indonesia Terbesar Kedua di Dunia (dataindonesia.id)