Gaana, though, is now going to have to do without a standout catalog in India, after publicly falling out with local record company Tips Music Industries.
This is a big deal in India: Tips Music, part of entertainment firm Tips Industries Ltd., is in the leading pack of labels in the country, with a catalog exceeding 25,000 songs and over 28m channel subscribers on YouTube.
Its roster, including music from local stars including Arijit Singh, Badshah, Atif Aslam and Diljit Dosanj, remains absent from Apple Music and Spotify, but is available on JioSaavn.
After reaching a stalemate in negotiations, Gaana has accused Tips of demanding “exorbitant minimum guarantees” in a proposed payout structure which the platform says it “not viable”.
“Somehow we couldn’t reach a common ground. I am truly disappointed for [millions] of music lovers and fans of Tips Music across the globe by this strange decision of Gaana.”
Kumar Taurani, Tips Industries Ltd (pictured)
Tips has pulled its catalog from Gaana while accusing the streaming service’s management of making a “strange decision” in not reaching a deal with the label. Tips warns that it will be “baffling for music listeners to see Gaana Music not extend [its] contract with Tips Music Industries”.
“During one of the worst crisis situation[s] being faced by India and the rest of the world it’s a sad & double whammy news for the millions of music lovers that India’s leading music app Ganna failed to renew its licensing deal with Tips, which has resulted in takedown of Tips’s content from the platform,” said Tips in a statement.
The Managing Director of Tips Industries Ltd (and Tips Music), Kumar Taurani, added: “I am deeply saddened at these developments, we all believe universally that music can heal the wounds and we tried to make it work but somehow we couldn’t reach a common ground.
“I am truly disappointed for [millions] of music lovers and fans of Tips Music across the globe by this strange decision of Gaana.com.”
“Given the high cost of royalties and demands of exorbitant minimum guarantees (with no linkage to revenues of music OTT players) by Tips and their music catalog’s affinity with our customer base, it is not viable for us to pay them high royalties as demanded by them for their music on our platform.”
Prashan Agarwal, Gaana
Gaana CEO Prashan Agarwal said: “Given the COVID–19 situation, it’s all the more important for all kinds of businesses to focus on building a sustainable economic model. Revenues have suffered across industries and the music streaming & broadcasting (OTT) industry is no different.
“Given the high cost of royalties and demands of exorbitant minimum guarantees (with no linkage to revenues of music OTT players) by Tips and their music catalog’s affinity with our customer base, it is not viable for us to pay them high royalties as demanded by them for their music on our platform.”
In other words, Agarwal is indicating that Gaana refused to pay out minimum guarantee payments to Tips that weren’t linked to Gaana’s own revenues – which will likely have taken a hit, advertising wise, during the recent pandemic.
He also appears to hint that, in his view, the popularity of Tips’ music on Gaana doesn’t warrant the minimum guarantees that Tips was requesting.
Added Agarwal: “While we had the options of compulsory licensing and statutory licensing, we have currently taken a call not to go down that path to reduce our costs.
“It is now more important than ever for the music label fraternity to realize that music [streaming providers] have played a vital role in curbing piracy in the country and with high royalty rates they should not make a hole in the same bucket that they are eating from.”
In a subsequent interview with Medianama, Tips’ Kumar Taurani said that he expected his company’s full label catalog to have been removed from Gaana by May 24.
He further revealed that Tips continues to negotiate with Spotify over the potential arrival of its catalog on that platform.
Taurani told Medianama: “The industry norm [for individually negotiated deals in India] is Rs 0.10–0.15 per stream. That varies company to company, sometimes it’s Rs 0.10, sometimes Rs 0.12 or Rs 0.15, once it even went up to Rs 0.18, I heard.”
(Rs 0.10-0.15 per stream, for the benefit of our non-India readers, is currently the equivalent of $0.0013 – $0.002 per stream.)
According to the IFPI‘s most recent Global Music Report, India’s local recorded music market saw wholesale revenues of $181.4m in 2019, up 18.7%. However, streaming subscription revenue only grew by 5.3%, from 41.6m to $43.8m.
That was some way behind the global subscription streaming growth, which IFPI says was up 24.1% year-on-year. (In addition to COVID-19, could this relative under-performance from streaming subscription in India have heightened tensions between Gaana and Tips?)
Tips Industries generated 6,673.88 Lakh from music audio & video in the 12 months to end of March 2019 according to its latest annual report, which works out at approximately $8.8m at current exchange rates.
In May 2019 at the Bombay High Court, Tips Music won a landmark case after issuing a lawsuit against local streaming service, Wynk.
The latter company argued it should be protected from copyright infringement via an existing statutory license in India designed to allow broadcasters to play music.
However, Mumbai High Court judge SJ Kathawalla ruled that Wynk was “knowingly infringing upon the plaintiff’s copyrights” – potentially setting a crucial precedent for rightsholders in the territory.Music Business Worldwide
