Indian music streaming platform Gaana has said that it is changing to a subscription-only business model to prevent the company’s closure after being unable to obtain new funding or an acquirer. The Tencent-backed company’s decision was revealed by an email sent to some music partners of Gaana.
According to a report by Reuters, Gaana said in that email that it is ending the free music streaming service after talks with a potential acquirer did not succeed. Reportedly, Indian telecom giant Bharti Airtel was the potential acquirer. However, Airtel has not given any comment on this.
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 paid only model. We will need your support on this, or else we will have to shut down completely.”
However, Gaana CEO Sandeep Lodha refused the possibility of shutting down the 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 notable that in order to prevent opportunistic mergers during the COVID-19 epidemic, India has tightened the inspection of investments from nations with whom it shares a land border, particularly China, since 2020. A border dispute between China and India later that year led to a worsening of the crackdown, which has since prevented billions of dollars worth of investments from flowing into several 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, the company was valued at more than $500 million. 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.
With the entry of multinational music streaming services like Spotify, Apple Music, YouTube Music, Amazon Music etc, the sector has become very competitive. The industry also has other Indian players like Airtel’s Wynk Music, JioSaavn etc which are backed by telecom players, making the scene extremely difficult for players like Gaana to survive.
