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"Acquiring customers is just one piece of the equation": Prashan Agarwal, CEO, Gaana
As Times Internet's music streaming app crosses a milestone - 100 million monthly active users - we chat with the CEO of the platform about his users, challenges and 'the next 100 million'.
Besides music trends, genres and tastes, the conduits through which personal music is consumed have also changed: the Discman followed the wearable Walkman, then came the mp3 player, and, finally, after the iPod wave, our mobile handsets became our personal music players. While all of this was unfolding, a parallel world was evolving - that of music platforms, that rely heavily on two kinds of modern day magic... the internet and algorithms. These online music streaming platforms enable users to stream music directly on their devices, without necessarily downloading music files. Presently, among the major players in India are Gaana, Jio Saavn, Amazon Music, Wynk, and relatively newer entrants like YouTube Music and Spotify.
Prashan Agarwal
The Times Internet team announced that Gaana, its 'freemium' music platform, just crossed a major milestone: 100 million monthly active users. A Deloitte report suggests that in December 2018, there were nearly 150 million music streaming users in India. On the occasion, we chatted with Gaana CEO Prashan Agarwal about the platform, the users it boasts, their behaviour patterns and the path ahead.
Agarwal joined Gaana in May 2016 as COO before taking over as CEO in February 2018. Prior to joining Gaana, Agarwal had founded multiple tech start-ups like Proptiger, an independent real estate advisor, and 19miles, a marketplace for buying and selling used cars. Before his entrepreneurial outings, he worked at organisations like Naukri and GE Infrastructure.
Gaana, an overview...
Gaana was launched by Times Internet, digital arm of the Times Group, in 2011, a time Agarwal refers to as the era of the web. Gaana provides both Indian and international music content featuring music from 21 languages including Assamese, Hindi, Urdu, English, Bengali, Odia, Gujarati, Kannada, Marathi, Punjabi, Tamil, Telugu, Malayalam and other Indian regional languages.
Agarwal says about the launch days, "The real revolution started in 2015 when the app economy started to develop in the country. People were seen carrying mobile phones as an entertainment device. As smartphone penetration grew, so too did consumption of entertainment on-the-go, including music in audio and video form. That's when the growth really started and the platform witnessed a monthly active user base of around 10 million. The next phase was Jio's data wave, in late 2016. That, coupled with the advent of smartphones, made the mobile a bigger venue for entertainment."
Today, 80 per cent of Gaana's users come from the top 20 cities. Agarwal feels rural users are "catching up fast", though and expects the next 100 million from the smaller cities and towns, basis the growing demand for Indic language content on the app like Punjabi, Bhojpuri, Telugu music, for instance.
About 15 per cent of the listeners today come from Maharashtra, 12 per cent from Uttar Pradesh and 10 per cent from Delhi. In the last year, tier II city usage grew fastest (96 per cent), followed by tier I (84 per cent) and tier III (78 per cent). Around 10 per cent of Gaana's total user base is from outside India.
To what does Agarwal attribute Gaana's growth? "Our saliency was very high," he answers, "and the brand had a recall of over 90 per cent. We also understood the Indian consumer better and better and provided a very simple song-based user interface. That gave us traction in terms of users who were boarding the bandwagon of the internet..." According to him, Gaana infiltrated the big league 2017 onwards and witnessed around 3X growth in the last two years from around 40million users.
Gaana offers music in 16 languages. The team introduced 12 Indic languages two years ago for users unable to read English. "We saw huge traction for this, especially in Southern India. This was coupled with the voice assistant. Soon, we were seeing almost 24 per cent of users selecting the non-English interface," says Agarwal, who sees a lot of potential in the small town user pool looking for an experience on the app in their native language. "Apart from the top six cities, the others are more localised in their approach," he shares.
But would this impact the radio industry in India? Jehil Thakkar, partner, Deloitte India thinks otherwise. "People tend to look at radio as a very music oriented medium but it's actually not. The hook of radio is actually its local nature. People listen to the Rjs along with other local content. I expect that both will coexist," Thakkar says.
Early day woes...
The initial challenge was simply to get the name right and take the product to the people. "The idea was to get a colloquial name and it was the first big thing we got right was zeroing in on 'Gaana'. Next, was getting the campaign right..." He's talking about the catchy 'Bas Bajna Chahiye Gaana' TV ad; it's been five years since the campaign first broke and the jingle is still easily recalled. "Those two factors were key as far as educating customers to come to the platform went," Agarwal says.
In 2011-12, a lot of Gaana's early adopter pool overlapped with the internet and tech savvy segments of the population. "We started in the web era. I think the early users were internet-savvy, 30-year-old IT professionals who adopted the desktop-based Gaana website. The idea gained pace around 2014 with mobiles becoming more common but was still largely an urban phenomenon," he says.
In February 2018 Gaana raised $115 million from Chinese internet giant Tencent to invest in technology and develop AI-led systems to personalise user experiences. Developing a subscription-based offering was also on the cards then, a plan that took shape in 2013 with the launch of Gaana Plus, a pay, ad-free version of the product.
Reliance Jio Infocomm acquired Saavn, another audio OTT platform in March 2018. The merged entity of Reliance Jio Music and Saavn is pegged at a combined valuation at US$ 1 billion. Reports suggest, global music streaming platform Spotify which launched recently in India had raised a total of $2.8 billion in funding over 24 rounds with the latest being on Jan 8, 2018.
Spotify claims to have bagged over a million users in India in less than a week of its launch in February. Google's Youtube music claimed to have raked in 3million downloads in the first week post its launch in March. Amazon had launched its music streaming service limited to Amazon Echo members initially and then extended the service over mobile applications and the internet.
Reports suggest that globally streaming has emerged as a significant contributor to the overall growth of music consumption. This growth, however, has been different for countries around the world. The Deloitte 'Audio OTT Economy in India - Inflection Point' report cites the IFPI Global Music Report 2018 according to which United States tops the chart in terms of revenue at US$ 2.8 billion followed by India at the 16th position with US$ 87.3 million. According to reports, Apple Music has 56 million subscribers and Spotify has 191 million monthly active users globally.
...to the revenue game of today
Gaana's revenue is split 55:45 between advertising and subscription. "Both have been growing 100 per cent year-on-year and it's evenly split..." Agarwal says. For paid subscriptions, the platform offers HD quality audio along with an ad-free version of the product. The paid subscriptions also allow users to download songs. A monthly subscription costs Rs 99, a three-month subscription costs Rs 199 and a yearly subscription costs Rs 299.
"We first experimented with a new price point of Rs 399 a year. With this, we saw the subscriptions grow almost 4.5 times. We realised that there is a price point at which users feel comfortable. People are looking to subscribe, they want HD quality music, but the price needs to be right..." he says. Gaana also offers a special annual pack for students at a discounted price of Rs 149. His paying subscribers are primarily the discerning ones who love HD quality music and who like to download music.
This year, the idea is to land a layered strategy which caters to customers' tastes and helps unbundle the subscription front: "Someone wanting an ad-free experience, but not HD quality or download option can pay a different price from someone who wants an ad-free, HD experience with downloads. This is something that we are planning to test," he explains.
Gaana's pricing was followed by price cuts by Apple Music. The previous charges of Rs 60, Rs 120, and Rs 190, for students, individuals and families, respectively was replaced by new monthly charges of Rs 49 for students, Rs 99 for individuals, and Rs 149 for families. Jio Saavn offers a monthly rate of Rs 99 and an annual pack at Rs 399. For Spotify it's Rs 1189 annually, Rs 389/three months, Rs 719/six months, Rs 129/month, Rs 39/seven days, Rs 13/day . Amazon Music, which is part of Amazon Prime membership, is priced at Rs 129 per month or Rs 999 per year.
Interestingly, the habit of storing music on one's phone is on the decline and only exists as a phenomenon in smaller towns. "People today are streaming more and more. Subscribers who get downloads for free also don't download songs today. With data and connectivity, a download doesn't hold the same charm it used to..." he adds.
Also, download habits in smaller cities and towns are also expected to die down, as they get more exposure to the diversity of content available in the music streaming space.
The music streaming segment...
The target now, Agarwal tells us, is to grow the ecosystem to 60 per cent of the population. "With a total user base of 150-160 million, we have just touched 10 per cent of the population. We have a strong brand and we have gone regional with our brand campaign; to bring them on board, the primary strategy is to push the brand via regional advertising coupled with OEM (original equipment manufacturer) partnerships for distribution. We launched TV ads in five Indian languages (English, hindi, Tamil, Kannada, Telugu) instead of just a template Hindi ad. We are preferred partners with smartphone brand Vivo while other distribution partnerships are underway," he says. MG Motor's SUV Hector, for instance, has inbuilt access to the Gaana app.
The music streaming category is a fast growing one with more than one promising player. YouTube, a pioneer in the space of online streaming, just made its entry into the music space with YouTube Music. Then there's Spotify, another major global player. Gaana's Agarwal thinks the competition will only help grow the ecosystem: "The Indian music streaming market is still in its infancy. To mature, it requires huge investment for education and it helps when there are three or more strong competing players. The growth happens much faster then."
Sure, but that also means he has to work that much harder to differentiate his product from the rest. Gaana's USP, Agarwal argues, that the has brand has been around for over seven years and makes a better match for India. "The existing algorithms don't work in India and there is at least an 18-24 month gap between new players and Gaana. A copy-paste method for any player won't work; one needs to really understand the Indian customer. We understand their tastes," he reasons.
In India, Agarwal adds, "The songs are different. There's no jazz, no rock, there is basically Bollywood which is a mix of everything."
He likens Gaana's user base to a house: "Acquiring customers is just one piece of the equation. Retention is key and you need to ensure that your bricks don't leave. That has been a big focus area and we have invested a lot into understanding our users and in trying to recommend music as per their tastes, so that the retention remains high. We see 73 per cent consumption of the recommended songs and that's a huge testimony to the fact that the recommendation is working for us." he says.
Music to content...
Apart from songs, the team has also invested heavily in creating exclusive content with items like Gaana Originals, non-film music, exclusive film music releases, Gaana podcasts, and cricket commentary.
Recall that Gaana had bagged exclusive rights to release the music of Salman Khan starrer Race 3 (2018) and more recently, John Abraham starrer RAW (2019).
Here's how the content is classified: "There's non-film music which is heavy with content by Punjabi artistes like Diljit Dosanjh, there's non-film music which is mostly Hindi, then we have podcasts with the likes of Asish Vidyarthy and Shankar Mahadevan based on storytelling and comedy themes, there's huge traction on the non-film front too... we continue to invest with labels to create non-film music and then support it with a distribution push to reach the masses in order to create a space where non-film hits are made. Besides Bollywood, which churns around 2,000 songs a year, there is little for artistes on the non-film front."
Genres on the app include comedy, cricket, astrology and devotion. Some of the podcasts are experimental at the moment and further investment will depend on consumer reaction and choice.
Recently, Gaana unveiled two new features, namely, Gaana Video, an exclusive vertical video format built for mobile, and Artist Dashboard, a self-service dashboard for artistes to access insights and analytics about fans.
About the video push, Agarwal says, "These are not regular music videos, but specially curated moments that artistes share with fans. Users listen to music on Gaana and in the background we would like them to spend more time on the screen. Lyrics is the first initiative on that front, followed by video content."
The marketing mix...
Over the last two years Gaana has been advertising heavily on digital, Google and Facebook mostly. ATL, primarily TV and OOH, support this effort. Hoardings help on the B2B front - the music industry. The brand's previous ad campaigns were all about 'connecting people over music', but new ads will be about educating users about specific features like voice search, lyrics, etc.
"In our initial brand campaigns, the entire marketing machinery was about emotions and connecting people through music. Now we're investing in educating users about the new features on our app. The brand campaigns will change accordingly," informs Agarwal.
Gaana's ads so far have heavily targeted the youth. Agarwal explains, "Earlier, we were targeting the 25-40-year-old user base, but we have been consciously moving the age bracket down. We think the Millennial population is the biggest entertainment consuming population out there. Today, almost 45 per cent of the Gaana user base is in the bracket of 13-25 years!"
He hastens to add that though the ads address the youngsters, the content portfolio caters to all age groups and targets the senior lot as a niche audience. "As they become savvy, they will definitely look at streaming music on their phones..." he foresees.
We ended our chat with a special question: What's Agarwal's biggest nightmare? The answer: To face growth without proper tech infrastructure. "We constantly push our tech and infrastructure teams as growth cannot always be projected," he admits.