Indian music streaming app Gaana has switched to a subscription-only business to avoid the company’s closure after failing to search for new investors or an acquirer. The Tencent-backed company’s decision was revealed by an email sent to some music partners of Gaana.
Gaana said in that email that it is ending the free music streaming service after talks with potential buyers didn’t succeed. Indian telecom giant Bharti Airtel was the potential acquirer. However, Airtel has not given any comment on this, according to a report by Reuters.
Gaana competes in the Indian streaming market, which statistics company Statista estimates to be worth USD 700 million this year, against services like Spotify, Apple Music, and Airtel's Wynk music app.
In the email sent by Gaana’s head of content and partnerships, Sachin Kamble, said that the company could not bring in fresh investments and sought support for a new service model of paid subscriptions. Sachin Kamble wrote in the mail, “Now we are at a crossroads – wind down/find a way to continue … We have decided to give this another try. Hence, we have closed streaming for free users today and are moving to a paid only model. We will need your support on this, or else we will have to shut down completely.”
Sandeep Lodha, Gaana CEO however, refused the possibility of shutting down business. In a message sent to the news agency Reuters, he wrote, “We are not shutting down.” Sachin Kamble did not give any remarks on this.
It is noteworthy that since 2020, India has intensified the scrutiny of investments from countries with whom it shares a land border, mainly China, in an effort to prevent opportunistic mergers during the COVID-19 outbreak. The crackdown worsened later that year as a result of a border dispute between China and India, which has since stopped billions of dollars' worth of investments from coming into a number of industries, including the technology and auto sectors.
Gaana had struggled to obtain funds from investors, including China’s Tencent. In 2018, the Chinese technology and entertainment conglomerate Tencent made an investment of $115 million in Gaana. In 2021, Gaana had raised $40 million in debt from Tencent.
In 2020, Gaana was valued at $500 million and the app has more than 100 million users. With monthly rates beginning at Rs. 99 in the paid model, Gaana’s music app does not provide customers with free streaming from Friday 9th September 2022.
Gaana is facing difficulty to survive with the entry of new multinational streaming services like Spotify, Apple Music, YouTube Music, Amazon Music etc. The sector has become very competitive in the past few years. The industry also has other Indian players like Airtel’s Wynk Music, JioSaavn etc which are backed by telecom services.
