The Indian music industry is projected to grow at a 13.4% CAGR to Rs 7,800 crore by 2027, from Rs 5,300 crore in 2024, according to Tips Music. Sector revenue is also expected to reach Rs 10,000 crore over the next three to four years, from about Rs 3,000–4,000 crore currently. India is already the fastest-growing music market globally by volume, with total music streaming rising 34% in 2023.
The Monetisation Gap: Why 15% of Volume Only Equals 2% of Value
Despite its scale, monetisation remains limited. India accounts for nearly 15% of global streaming volume but contributes only about 2% of global music industry value. This gap persists even as digital media has become the largest segment of the media and entertainment industry, contributing about 32% of total revenues.
Within music, digital licensing accounts for 62% of industry revenues. The next phase of growth is expected to be driven by paid streaming and subscriber monetisation, supported by underlying industry data.
From Ads to Subscriptions: The 250 Lakh Subscriber Pivot
As per the FICCI–EY Media & Entertainment Report 2025, India recorded about 4.8 lakh crore music streams in 2024. Of this, about 4.6 lakh crore streams were free or ad-supported. Paid subscribers accounted for 15,400 crore streams.
Paid subscriptions increased from 70 lakh in 2023 to 105 lakh in 2024 and are expected to cross 250 lakh over the next three years. Despite the lower share of paid streams, revenue impact remains significant. Audio subscription revenues more than doubled in 2024 to Rs 700 crore. Globally, subscription streams typically generate three times the revenue of ad-supported streams.
Platforms have also exercised pricing power, as seen in Spotify’s recent 20–25% increase in subscription prices. This shift, combined with a growing paid subscriber base, could improve revenue realisation. Tips Music is positioned to benefit from this trend.
Tips Music owns a catalogue of more than 34,000 songs across over 25 languages. As of Q3 FY26, its YouTube subscriber base stood at 145.3 million, with annualised quarterly views of 53.2 billion.
Monetising the 34,000-Song Legacy Vault
About 85% of the company’s revenue comes from its legacy catalogue, primarily songs from the 1990s. Older tracks such as Soldier, Soldier and Tere Liye continue to trend on Instagram, driving streaming volumes.
The company monetises its music rights largely through licensing. It earns royalties from platforms such as YouTube, Spotify, JioSaavn, Apple Music, and Amazon Prime. Digital licensing accounts for 75% of total revenue.
YouTube and YouTube Shorts also contribute to monetisation. Tips currently follows a fixed-fee model for Shorts and expects to shift to an advertising-led revenue-share model over the medium to long term.
Most consumption remains ad-supported. Paid subscriptions account for about 10% of total revenue, but revenue from paid users is growing more than 50% year-on-year. Industry subscription revenue is projected to grow at a 40–50% CAGR.
Beyond digital platforms, Tips earns from television broadcasting and public performance rights, including royalties from music played at public venues. The company recently partnered with B4U TV to expand its television presence.
A Conservative Accounting Moat
Tips follows a conservative accounting policy for content costs. It expenses the full cost of new content in the quarter of release. This results in immediate recognition of content investments in the profit and loss statement.
The policy avoids deferred costs on the balance sheet and leads to clearer earnings visibility. Once content costs are absorbed, catalogue revenues largely flow through as profit. Management states that this structure supports long-term profit generation.
Peer company Saregama capitalises content costs and amortises them over several years. Tips reported a return on capital employed of 105% and return on equity of 86%, reflecting low capital intensity and upfront expensing.
Margin Expansion Driven by Lower Content Costs
Revenue rose 21% year-on-year to Rs 94.3 crore in Q3 FY26, driven by the release of 108 new songs, more than 50% growth in paid subscribers, and continued traction of legacy content on digital platforms. Operating EBITDA margin expanded to 79.0% from 71.6% in Q3 FY25, aided by a 39% decline in content costs. Net profit rose 33% year-on-year to Rs 58.7 crore.
The 20% Revenue and Net Profit Guidance
Management reiterated its FY26 revenue growth guidance of 20%. It raised net profit growth guidance to 25% from 20%. For FY27, the company targets 20% growth in both revenue and profit. Over the longer term, it expects growth of 25–28%, while maintaining content acquisition spend at 25–28% of revenue.
Transitioning From Fixed-Fee to Revenue-Share Models
The FY27 release pipeline includes several Bollywood films, along with regional films and non-film singles. The planned shift of YouTube Shorts to an advertising-led revenue-share model is expected to support revenue growth, given over one trillion Shorts views in India since 2020.
Navigating the Shift From Long-Form to Viral Shorts
The rise of Shorts has led to a decline in long-form YouTube views. Management attributes this to changing consumption patterns. Shorts currently drive volume with limited revenue contribution, which is expected to change as monetisation moves to a revenue-share model.
At Rs 549 per share, Tips trades at a price-to-earnings multiple of 37x, close to its 10-year median of 33x and peer Saregama’s 32x.
