For music streaming apps, growth lies in tier 2 and 3 cities: Gaana CEO

Music streaming app Gaana crossed 100 million monthly active users (MAU) in March 2019 and its CEO, Prashan Agarwal, believes for further growth, targeting tier-2 and 3 cities is the way to go because "the next 100-200 million users will pretty much be from those cities". Gaana claimed its user growth was the fastest in tier-2 cities (96%), followed by tier-1 cities (84%) and tier-3 cities (78%) in the last year.

Here are the excerpts:

The competition is rapidly increasing in the music streaming space with the arrival of Spotify and YouTube music. How do you see it?

The penetration of music streaming is only 10% in the Indian market with around 150 million users, the market needs to grow to 600 million in the next 2-3 years. We all need to invest significantly, for that, more competition is good as companies will invest to educate the users and grow the market because that's the need of the hour.

Gaana has the lead of at least 1-2 years over other streaming apps and its entire product experience is geared towards Indian customers, this would be hard to replicate by the competitors who came recently.

What do you have to say about the growth in tier-2 and 3 cities?

Tier-2 and 3 cities were a part of the strategy and the regional music needs to be promoted. We started promoting Punjabi music and artists to the Hindi listeners almost 2-years ago and that phenomena are now seen in Tamil, Telugu, Bhojpuri and other languages.

Tier-2 and 3 is the way to go because the next 100-200 million users will pretty much be from those cities. We are doing exclusive content in newer languages to promote non-film content

There have been price-cuts in subscription charges recently, is it due to rising competition?

We did not cut prices because competition came in, we reduced the charges (user fee?) to Rs 399 from Rs 999 a year back because that was need of the hour. The Indian customer is value conscious and users were not willing to pay Rs 999 a year for a music app, so we found a sweet spot at Rs 399 where we saw 4.5 times subscriber growth last year.

From subscription standpoint, we're talking about top 3-4 million customers in India who have the capacity to pay, a lot of competition is building up in that space but we are a huge country, so the idea is to let the market mature, give a fantastic free user experience, create a layered unbundled subscription strategy so that users give you some money down the road.

Experience is the reason a user will give us money and not because there is a brand from US that will be the sole reason.

What has been the main focus area for the growth?

We are seeing a huge rise in the millennial population and were focused on emotional ad campaigns to build a connect. Our 45 per cent of users are in the age group of 15-25 years.

This year, we changed the strategy to do more feature focused brand campaigns. We are launching voice assistant in the latest campaign with the idea to attract millennial population as these users will be willing to pay in about 3-4 years as they become used to the app experience.

Older users continue to be a niche audience for us. From an active brand perspective, we believe the millennial population is where our demography lies that is why it’s our focus.

Are you planning for more associations?

We will try a lot of bundling strategy this year, we have a partnership with PayTM and Flipkart and are also working with the likes of Zee5 and SonyLiv for bundled offer for the subscription price of around Rs 499 where you get SonyLiv and Gaana. Currently, we are running the sane offer with Zee5 and Gaana.

What would Gaana Video and Artist Dashboard bring for users and artists?

We launched Gaana Videos to ramp up engagement rates as it is a strong parameter for earning advertisement revenues. Initially, we introduced the song lyrics feature and saw people spending more time so the next step was to bring exclusive videos.

Artist dashbaord is launched to bring some transparency to the artist, our data is usually available with the labels, now artists will get the idea about followers, monthly traction and understand how their fans are consuming their music on the app.

What has been the impact of connected devices on streaming apps?

We are a part of that but the numbers are small. We are on Alexa and Google Home and have seen a good traction on both the devices, but these devices have a limited distribution and they are not as big in terms of scale. The market needs to shape up within 3-4 years where at least 10% of the population have voice assistants.