GP Music, Gaan, Toongtaang and the Future Of Music Streaming In Bangladesh
Globally, subscription music streaming is experiencing a more than a good time. In 2016, Spotify, Apple Music saw a big jump in revenue and in fact, pushed the revenue of entire music industry higher for the first time in years. According to RIAA, the industry grew 11 percent last year, to $7.7 billion in retail sales, after years of decline and “streaming, a category that includes Spotify, Apple music, Pandora and YouTube, accounted for 51 percent, the first time it has contributed the majority of revenue, reports Bloomberg.
Most interesting part is that paid service from streaming services contributed the vast majority of the revenue while the ad-supported version of Spotify, Youtube and others contributed less than a fifth of paid streaming. In the US alone 23 million people paid for listening and watching music accounted for $2.5 billion in revenue whereas ad-supported version brought in a mere $469 million. Sales of albums, CDS and singles fell over 20 percent in 2016.
This indicates a clear shift in the market in favor of the subscription, as Farhad Manjoo of the New York Times writes: “in the last few years, and with greater intensity in the last 12 months, people started paying for online content. They are doing so at an accelerating pace, and on a dependable, recurring schedule, often through subscriptions. And they’re paying for everything.” Although a majority of users for all the music subscriptions services still free ad-supported version but there is a clear change in direction. Paid streaming is coming out as a viable model.
Overview of music streaming in Bangladesh
We have a couple of streaming services in Dhaka, Grameenphone’s GP Music being the largest one with 100k-500k downloads according to Similar Web data. From a previously pay-per-song model, the platform has turned itself into a subscription service. Users can stream music both online and offline. We did quite a critical review of GP Music when it launched but the service has apparently improved over the past years.
It offers a one-month free trial and then you can choose daily, weekly and monthly packages and runs on both mobile and general wi-fi internet. Previously, the service was exclusively for the GP users but we could not find out whether that still applies or not. We have reached out to GP for active subscriber data and other information and we will update this story as we receive more data.
GP music is important for GP as part of its digital strategy, although there is the question of net neutrality whether an operator can offer such service without independent guidelines and proper transparency. That said, GP music is arguably the largest such platform for now in Dhaka.
There is another recently launched service called Gaan. Founded by Shaju Kazi and Saef Al Nazi in 2015, the platform sees a steady growth and high rating on app stores. On android around 50k-100k people downloaded the service. It is not clear how the service plans to monetize. However, it can easily introduce a freemium model as it grows.
The most recent player in the space is Toongtaang by G&R, a Soundcloud type service. The platform is still in beta and largely scrappy. Anyone can upload their music or any sound for that matter and get a cut of ad revenue it generates. Since G&R is an ad-network, it will be able to play around monetizing the platform as it goes.
All these services, however, are at the very early stage to be taken seriously. Moreover, market dynamics for the music industry is fundamentally different in Bangladesh than what it is in any other part of the world. Bangladesh lacks an ecosystem for grooming and empowering new musical talents and music industry is littered with piracy.
‘Scale’ is a common question for anything on internet. If you are building a platform the essential challenge you need to address is the challenge of ‘scale’. Hence, your capacity to getting to more people fast is a competitor advantage.
There are a few aspects you need to think about when you are considering dynamics for a streaming service. One aspect is, of course, the musicians and creators. The advantage creators have in the internet age is that they can easily reach out to as many people as they can without the help from a middleman. For a musician, this middleman was record labels. They used to find our music talents and then help them to reach more people. Now that a creator can reach out to users through social media and youtube and other platforms, the role of record labels has reduced to mere discovery of musicians and investing in them which is a very important piece in the entire system.
Then comes the making investment in musicians so that they can make music and also helping them to reach to more people. The other aspect, which is changing rapidly, discovery. Aggregators, any kind of it including youtube to Facebook to GP music, play an important role here because users tend to go to places where they can find most of the things they want. Hence, the platform with most collection will ultimately attract more users. This situation has other effects as well. As a platform start to attract more users, it will also attract more creators because creators also want to get to more users and earn more.
Challenges for GP music
GP music, no matter whether it is an independent service or only for GP users, is essentially a part of GP’s broader digital strategy. Otherwise, as an independent business unit, it does not make sense for GP to run a music streaming service because economics does not work in favor of such a business. And according to disruption theory, well-run businesses usually run away from low margin areas which for GP is its current business. The central idea, as I illustrated in my recent piece on GP’s overall strategy, is that GP mobile number is the platform and GP music is just a component of that platform. The idea essentially to make the case that a GP mobile number is not a mere mobile number, you get other benefits as well, and at the same time growing the revenue by selling digital services and data as everyone is coming online.
This strategy has a lot of merits, as I wrote before. And of course, it is a brilliant one. And I’m not sure but there might be other aspects to it as well. However, the critical flaw in this idea is that it significantly reduce the chance of GP music to succeed if we take the aggregators theory in consideration which means, creators will go to the platform that can bring the more users and more revenue. While a GP number offers an strategic advantage to GP music, it becomes its Achille’s heel as well. I’m sure, GP is a smart company and they will figure it out.
And this gives other players a huge upside. Although you still have to compete with youtube.
In order to make streaming work in Bangladesh, it will take more than a mere streaming service. We have some great platforms, particularly driven by different television channels, and labels that are helping discover great musical talents but much more needs to be done. While we continue to celebrate successful ones, discovery should also continue.
As I said before, market dynamics in Bangladesh is different. It will take time to build a streaming service at scale but indicators are definitely in favor of such a platform. Growing smartphone and internet penetration, young median age, changing pattern of content consumption and most importantly surging popularity of subscription service around the world all support viability of a streaming service. That said, it will take a significant investment in infrastructure.
The future of music is different. In one where we will see individual musicians to have huge power given that they are able to create differentiated content and platforms to empower a lot of these creators.
Internet has changed the dynamics of almost every business. In Bangladesh, we are just getting started and it will take a while to feel the impact but there is a big change on the way.