EXCLUSIVE Fighting to survive, Tencent-backed Indian music app Gaana turns to subscriptions


NEW DELHI, Sept 9 (Reuters) – Tencent-backed Indian music streaming app Gaana has switched to a paid subscription model to avoid shutting down after failing to secure new funding or find a buyer, according to an email sent to some music partners seen by Reuters.

Gaana, also backed by the Indian Internet Times, said in the email that talks with a potential buyer had “failed”, without naming the other party.

Two sources with direct knowledge of the matter told Reuters the talks were with Indian telecommunications giant Bharti Airtel (BRTI.NS). Airtel did not immediately respond to an emailed request for comment.

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Gaana competes with Spotify (SPOT.N), Apple Music and Airtel’s music app Wynk in an Indian streaming market estimated by data firm Statista at $700 million this year.

In the email sent this week, Gaana’s head of content and partnerships, Sachin Kamble, said the company had been unable to “bring in new investments” and asked for support for a new paid model of the service.

“Now we are at (a) crossroads – relax / find a way to move on … we decided to try again. Therefore, we have closed streaming for free users today and (move) to the model fee-only,” Kamble wrote in the email.

“We will need your support on this, otherwise we will have to shut down completely.”

Gaana CEO Sandeep Lodha told Reuters in a text message: “We are not closing.” Kamble declined to comment.

Asked about the email, a spokesperson for Gaana said in a statement that the message was sent to musical partners “during private negotiations” to reach agreements.

“These statements are read out of context. Gaana is a solid company that is more focused on the subscription business with the intention of being a sustainable business for years to come,” he added.

Tencent (0700.HK) and Times Internet did not immediately respond to requests for comment.

On Friday, Gaana’s music app did not allow free streaming for users, offering monthly plans starting at 99 Indian rupees ($1.24). The app has over 100 million users.

In 2020, the company was valued at more than $500 million, according to Indian tech news site Entracker.

One of the sources said Gaana had struggled to raise funds from investors including Chinese Tencent. Since 2020, India has strengthened investment surveillance of countries with which it shares a land border – including China – to deter opportunistic takeovers during the COVID-19 pandemic.

The crackdown deepened after an India-China border clash later that year that has since withheld billions of dollars in capital inflows into the auto and tech sectors, among others.

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Reporting by Aditya Kalra and Munsif Vengattil in New Delhi Editing by Sanjeev Miglani and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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