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Gaana Takes Investment From Micromax To Get Ahead In India’s Music Streaming Race

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Gaana, one of a posse of music streaming services aiming to make it big in India, has enlisted the help of Micromax, the country’s largest smartphone maker, to get ahead of the competition and reach its goal of 100 million users.

The deal will see Micromax, an Android smartphone maker that previously caught the attention of Alibaba’s investment team, invest an undisclosed sum in Gaana. But, more importantly, the company will bundle Gaana’s music app on its devices. Micromax sells two million phones per month, that’s exposure that could vastly increase Gaana’s reach — which currently stands at 20 million active users and 30 million downloads to date.

This isn’t just a pre-loading deal. Gaana is planning customized software integrations with Micromax hardware to make it more than just a ‘bloatware’ style app that is pre-installed to the disappointment of new phone owners.

“It’s the equivalent of Gaana becoming Spotify of India and the Apple Music of India, in one,” Satyan Gajwani — CEO of Times Internet, the company behind Gaana — told TechCrunch via email.

Times Internet itself is a fairly big hitting investor in India. It has made strategic investments in Uber and once-hyped Fab, and has partnerships with Business Insider and Gawker. So why is it turning to outside investors for help with Gaana?

“We are raising money in high opportunity businesses like Gaana so that they can operate independently and nimbly, with separate, business aligned management,” Gajwani explained. “We believe that the tradeoff of centralized control and 100 percent ownership is worth it for the business independence, autonomy, talent recruitment, and value opportunities that exist at the business unit level.”

There’s also the strategic benefits to be gained.

“We are excited about this because it gives us the best of both worlds. Gaana is the strongest direct to consumer music service in India, but with this partnership with Micromax, we leverage their unique position with consumers to upfront valuable and useful services,” the Times Internet CEO added.

That distribution angle is important since Gaana is up again some well-funded competitors. New York-headquartered Saavn picked up a $100 million Series C led by Tiger Global this summer, while Hungama raised $100 million earlier this year. Global services Rdio and Apple Music are also present in India, but the latter is yet to arrive on Android, which accounts for the overwhelming majority of India’s smartphones, and has no free tier listening option either.

That latter point is a big deal, Gajwani explained, since the concept of mobile music streaming remains nascent and smartphone adoption, while growing, is modest across India. For those reasons, and more, local music services are focusing on gaining wide adoption with ad-supported, free services, rather than revenue from paid-only options at this point.

“In five years, we will have over 500 million smartphone users in India, so we are at 6 percent market penetration,” Gajwani said. “We still have a lot of growth left to tackle before prioritizing driving the paid service.”