Gaana's new instant app feature signals growing competition in music streaming space

Competition in the music streaming space is heating up as players are getting aggressive with newer features to woo listeners.

Currently, the music streaming market is as big as 150 million users and it is expected that 100 million users will come online, which is what the music over the top (OTT) players are targeting by coming up with innovative services.

Take the example of Gaana, that recently, in partnership with Google Playstore, launched an instant app. The new app is available in 2 MB size, which is 15 percent of the actual app that is around 14-15 MB.

The instant app will offer all features of the main app, except the premium ones which is available for only Gaana Plus users.

But how will the instant app benefit Gaana and will it be a viable option for the platform?

Talking to Moneycontrol, Gaana CEO Prashan Agarwal, said, “We have huge focus in terms of the next 100 million users that will hit the internet. We need to give them an understanding of how the Gaana app works and given that a lot of the users are on 2G, 3G connection that might not have best of (internet) speeds and downloading an app that is 14-15 MB in size becomes a challenge.”

He added that it will not impact Gaana’s business because the instant app is targeting those who bounce off from the page.

“We get additional downloads and currently that number is half a million from the try now feature (the feature is available to the android users who can click on the ‘Try Now’ button on Gaana’s Playstore). This is an addition to whatever users we are getting,” said Agarwal.

For Gaana, this is a strategy for the next two years to create an experience for its users that are from remote locations. Plus, it is not for a limited time.

The platform is also looking at getting 250 monthly active users (MAUs) in next two years.

But Gaana alone is not experimenting with unique features. YouTube Music in June had come up with a mixtape feature called smart downloads that automatically downloads up to 500 songs depending on the listener’s likes and interests.

The smart download process takes place at night when the phone is connected to the wifi and the user can also set the limit for the number of auto downloads.

It is these unique features that shows every music OTT player is upping its game to penetrate deeper in the Indian market where people spend more time in listening to music than users globally.

But is the intense competition worrying Gaana that claims to be leading the space in terms of monthly active users (MAUs) as it currently has as many as 100 MAUs.

According to Agarwal, today only 10 percent of the Indian population is on music streaming platform. “So, the market penetration is low and as multiple players become invested in terms of educating the customers more people will know about music streaming,” he added.

He thinks that competition will accelerate the music penetration amid the Indian population. He estimates that from 150 million online music streamers, it will grow to 400 million monthly active users (MAUs) on the back of investments done by all the players in this space.

Spotify that came to India in February this year is also aggressively marketing its product and got on board actor Anil Kapoor.

While one of its ads talks about the background feature that lets users access camera and other apps while listening to music on Spotify, Agarwal says that all music streaming apps have that feature and it is not unique to any one platform.

In fact, he said that "it is the beauty of the music streaming apps that they can work in the background."

If the international players are taking note from their global learnings, local players are banking on the consumption patterns of the Indians which signals that the next wave of growth is regional.

“If you look at top 20 metros we get almost 70-75 percent current users from there and the remaining comes from tier III and IV markets and we are seeing more penetration of these kind of users and that is why we have made investments in features like voice assistant, lyrics in many languages and we have songs available in 29 languages and we think that tier III and IV customers will be a majority soon on the app, said Agarwal.

For Gaana, regional penetration has grown by 25x which means the consumption of songs in Punjabi, Tamil, Telugu has grown much faster than Hindi and English content.

“We have invested heavily in Punjabi music and now we are investing in Tamil, Telugu, Bhojpuri. We think that 50 percent of consumption on Gaana will be regional music which presently is 35 percent,” he added.

Although the music streaming market is seeing growth in the user base not many are willing to pay for the services. Hence, most of the players are offering more free features.

But how are these platforms earning money?

It is through ads as the advertising industry has taken note of the growing interest of Indians in this industry.

Gaana has both subscription based and advertising based model and the revenue split is 50:50.

“The biggest advertisers on our platforms are OTT platforms like Amazon Prime Video, Netflix then we have startups like Swiggy, Uber Eats. New age OTTs to new age startups to OEMs like Vivo, Oppo these are the bigger categories. FMCG is slowly catching up but majority investments come from OTTs, followed by food ordering apps and then OEMs,” said Agarwal.