With Gaana’s increasing popularity, will ‘freemium’ be enough to convince Indian users to jump ship to Spotify?
According to a report published last week, Spotify has geared up to launch in another major music market.
In as soon as six months, the streaming music giant will roll out its service in India.
The company had already broken ground in the country. Last March, Spotify opened an office in Mumbai, hiring 300 people.
Yet, according to a separate report from Bloomberg, Spotify may launch in India with a limited catalog.
As the company will face stiff competition in the country, executives will reportedly rely heavily on free, ad-supported streaming to convert subscribers. Predictably, major labels have frowned upon that strategy, as they receive much, much less from ‘freemium’ streams.
Last year, Spotify’s free, ad-supported streams had an eCPM of $2.11. Subscription-based streams had a significantly higher eCPM of $6.19. Combined, Spotify had a blended eCPM of $3.01.
Not exactly the figure major label executives hope for. As a result, the company has only secured licensing deals from “many, though not all, of the largest labels.”
MBW, on the other hand, has claimed that Spotify has yet to secure licensing deals with any of the major labels. But, the site’s ‘sources’ previously stated that major labels had halted the streaming music giant’s international expansion — and were outright blocking India. Executives allegedly refused to grant the streaming music giant the necessary licenses to roll out in other countries. Spotify most recently launched in the MENA (Middle East and North Africa) region without any problems.
But that’s not the biggest problem. Now, one local streaming music rival has revealed just how difficult it will be for Spotify to successfully launch in India, even with a perfect licensing slate.
Gaana’s insurmountable lead.
Upon launching in the region, Spotify will face off against well-established competitors for control of India’s growing music market.
Gaana has over 80 million monthly users. Valued at over $1 billion, JioMusic and Saavan merged last June. Barthi Airtel, a local telecom company, offers subscribers a streaming music service for free – Airtel Wynk. Reliance Jio, another major telecom company, had also previously offered SIM users JioMusic for free.
Like Spotify, Gaana offers music fans two tiers of service: a free, ad-supported service and a subscription-based model.
The company also reportedly brings in $5 million in revenue each year. Earlier this year, Tencent Holdings, which owns Tencent Music Entertainment, invested $115 million in Gaana alongside Times Internet, the Indian service’s owner.
Capitalizing on its success in the region, Prashan Agarwal, the company’s CEO, explained that Gaana aims to reach 200 million total users in the next two years.
“In the next two years, we think the market will grow from 150 million users to over 400 million users and we would like to lead the market with over 50 percent market share.”
Yet, Agarwal admitted the service’s paid subscriber base “is in lower single digit only.”
According to Quartz, Gaana may very well achieve this lofty milestone. At 80 million currently, the company has already locked down over 50% of India’s 150 million music app users.
The streaming music service has also surpassed all search traffic for music apps in the country. Local rivals Wynk and Hungama continue to flatline in terms of interest on Google Trends.
Should Gaana gain a 50% share in the next two years, other local streaming rivals may make up the rest. Amazon, Google Play, and Apple Music also have a foothold in the region. They’ve yet to reveal their total subscriber base in India.
So, once Spotify launches in the region, it may very well remain behind the pack in terms of overall subscriptions.
Not exactly what restless investors want to hear.