SPOT Spotify Technology SA

By Newley Purnell 

NEW DELHI -- The most popular music streaming service in India, the world's biggest untapped digital economy, isn't from Spotify Technology SA or Apple Inc. Instead, it is a local rival little known outside the country.

Noida, India-based Gaana, named after the Hindi word for "song," has used a hyperlocal approach and cut-rate pricing to beat the competition and attract 152 million monthly users. That is more than half of Spotify's global user base, double Apple Music's global count and far more than YouTube Music and Amazon.com Inc.'s music services.

Indian consumers are flocking to Gaana, analysts say, because it has been built for them. It has a library of more than 45 million songs, mostly from India and in more than 20 regional languages, including auto-tuned Punjabi-language pop ballads, Hindi hip-hop and devotional tunes for the Hindu monkey god, Hanuman.

While some of its international rivals also boast voluminous libraries of global hits, most lack the depth of regionally specific songs from India that Gaana offers.

"You have to understand the consumption habits by region and even by city," Gaana Chief Executive Prashan Agarwal said.

Gaana has an edge over international rivals because, he said, its teams have more local knowledge, conducting research across the country to uncover emerging artists and unlikely listening trends.

With only about half of India's 1.3 billion people online, global tech firms have been scrambling to establish themselves in the world's biggest pool of new internet users. Hundreds of millions of people are sending their first WhatsApp messages, buying their first items online -- and streaming their first songs -- as data prices plummet and inexpensive smartphones proliferate.

"Every global player is trying to get a share in India," said Abhilash Kumar, an analyst at India's Counterpoint Technology Market Research. "The market is very nascent and not at all saturated."

Many Indians have an intense relationship with music. It is part of celebrations, religious worship, movies and cultural traditions. Indians spend an average of 21.5 hours a week listening to music, some 20% higher than the global average, according to consulting firm Deloitte.

When the internet became affordable, music was one of the first things that many Indians consumed on their smartphones. This trend explains why the world's most-watched YouTube channel is T-Series, which shows Indian music videos and has racked up tens of billions more views than any other channel.

Sweden's Spotify and YouTube Music launched in India early last year and have been advertising on billboards and online. TikTok parent Bytedance Inc. last year chose India as one of two markets, along with Indonesia, to test its first-ever music streaming app, called Resso.

Apple Music and Amazon Prime Music have been available in India for several years but haven't been able to match Gaana's popularity.

International growth in emerging markets is key for Spotify. The company has been looking to boost its listener base in new countries like India. Dow Jones & Co., publisher of The Wall Street Journal, has a content partnership with Gimlet Media, a unit of Spotify.

Apple is eyeing digital services such as music streaming as it faces a maturing smartphone market at home.

Music-streaming revenue globally hit $24 billion last year, according to Counterpoint. India so far accounts for just a sliver of that, some $200 million in 2019. But streaming revenues in India are projected to climb to $400 million by 2023, according to TechSci Research, and should continue to rise as hundreds of millions of new digital listeners turn to their mobile devices for music.

While Gaana has a head start, it will need to continue to innovate to stay ahead of the competition, analysts say. Another music-streaming service popular in India is JioSaavn, which is controlled by Reliance Industries Ltd., one of India's largest conglomerates. Many Indian consumers shop around continuously and will abandon services if they find a better deal or juicier offerings elsewhere.

Gaana's global rivals don't disclose recent user counts for India but say they are also customizing their offerings for the country. Many have offered plans at substantially lower prices than in developed countries. Spotify, for example, launched a light version of its app that takes up less space on phones.

Spotify says its service is growing quickly and that it aims to appeal to all music lovers in India. YouTube Music says India is one of YouTube's biggest video-viewing markets, and that the company is seeing good adoption of its music streaming service. Apple Music has worked to localize its offerings for the country. Representatives for Amazon Music and Bytedance's Resso declined to comment on their user counts or India strategies.

Gaana -- which launched in 2011 and is backed by Indian media firm Bennett Coleman & Co. and China's Tencent Holdings Ltd. -- has developed special technical features for users in India. Customers can search for artists or songs by voice, a benefit for those with limited literacy skills or who have difficulty typing on smartphone keyboards in Indic languages.

Gaana also offers price advantages. There is a free version with advertising and paid plans starting at 12 rupees (17 cents) a month for students. Spotify also offers a free version, but its least expensive ad-free monthly plans start at around 80 cents. Apple's service starts at about 70 cents, while YouTube Music starts at about $1.10.

Gaana can charge less in part because, unlike its global rivals, the service doesn't have to worry about undermining its product if it charges significantly less in India than in other markets. Gaana's mostly Indian music is also less expensive to secure rights, analysts say.

While international players are still newcomers, Gaana is leveraging the trove of data it has collected on users' listening preferences to recommend new tunes, Mr. Agarwal said. That is a bonus for first-time music-streaming consumers who are unfamiliar with the interface.

Harshit Batra, a 20-year-old university student in New Delhi, started using Gaana's premium service last year. He listens to artists such as Indian composer A.R. Rahman and Pakistani singer Atif Aslam, and said he prefers Gaana because it has a wider selection of music and a simple user interface.

"My subscription expires this month," he said. "I plan to renew."

Write to Newley Purnell at newley.purnell@wsj.com

(END) Dow Jones Newswires

February 02, 2020 09:20 ET (14:20 GMT)

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