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

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A man listens to music as he waits for his train at Churchgate railway station in Mumbai, Dec. 5, 2012. REUTERS/Navesh Chitrakar

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

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

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

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Gaana is competing with companies like Spotify (SPOT.N), Apple Music and Airtel’s Wynk music app in an Indian streaming market estimated by data company Statista to be worth $700 million this year.

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

“Now we are at (a) crossroads – relax / find a way to continue … we have decided to give this one more try. That is why today we have closed streaming to free users and (will) switch to a paid model,” Kamble wrote in the email.

“We need your support with that, otherwise we have to shut down completely.”

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

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

“These statements are taken out of context. Gaana is a strong company that is increasingly focused on subscriptions with the intention of being a sustainable business for years to come,” it added.

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

As of Friday, Gaana’s music app did not allow free streaming for users, with monthly subscriptions starting at 99 Indian rupees ($1.24). The app has more than 100 million users.

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

One of the sources said Gaana was struggling to raise funds from investors, including China’s Tencent. Since 2020, India has been monitoring investments from countries it shares a land border with — including China — to deter opportunistic takeovers amid the COVID-19 pandemic.

The crackdown deepened after a border dispute between India and China later that year, which has since held up billions of dollars in capital inflows into the auto and technology sectors, among others.

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