On the heels of Spotify’s recent announcement that it’s launching in 13 new markets in the Middle East and North Africa, bringing its service to 78 markets in total, Variety has learned that a launch in India is expected as soon as the next six months and will offer an extended free trial period — longer than the 30 days of full-access Spotify offered in Vietnam and South Africa earlier this year. According to Sweden’s Di Digital, plans to buy an Indian competitor have failed to materialize, so Spotify will enter the market of more than 1 billion on its own.
That Spotify is eyeing the region is hardly surprising. For years, the company has been making noises about launching in India and announced in March, just ahead of its public listing, that it has opened an office in Mumbai and hired 300 people. Indeed, office bearers doing the ground work out of a space in the Bandra Kurla Complex business district have been buzzing about a launch that could come as soon as the next six months, according to local insiders.
As Spotify has grown exponentially in the years since its 2008 launch, the company has justified its rapidly rising operating costs by claiming that its profits will increase along with its number of subscribers — an optimistic “rising tide lifts all boats” argument that cofounder and CEO Daniel Ek has had on repeat for years. But in reporting it had reached 83 million paying subscribers in July, Spotify also disclosed that net loss for the second quarter roughly doubled to $461 million. Add to that equation a plummeting stock price and ferocious competition from some of the world’s richest companies, and the Swedish streamer could find itself with only so many boats left to raise.
Of the two most populous countries, China’s internet laws are so restrictive that attempting to gain even a toehold in that market is a complex and easily frustrating mission. And India’s market is already dominated by local services like Gaana (which in August said it passed 75 million users and in February secured $115 million in funding from China’s behemoth Tencent and Times Internet), Saavn (which in March merged with JioMusic in a $1 billion-plus deal), Hungama, Airtel Wynk and others, as well as well-funded American services like Google Play, Apple Music and Amazon. According to Di Digital, Saavn and Gaana Music were two companies eyed as a potential acquisition.
Another hurdle: Insiders said earlier this year that the major labels have threatened to impede Spotify’s progress in the region by blocking licenses in the territory in retaliation for the streamer’s efforts to license acts directly, bypassing the record companies. However, multiple sources now say that a pathway has been cleared by the majors, and Ek downplayed any licensing problems during an earnings call in July, saying such issues are “commonplace in this industry and nothing related to our overall strategy,” according to India Times.
Even if the licensing is secured, more obstacles remain. In addition to the fierce competition from local streamers like Saavn and Gaana (which sources say Spotify had considered purchasing in the past), Spotify could be staring down a potentially slow conversion from free to premium (a two-year free trial would mitigate delay that concern, but not for long). There are also linguistic challenges in marketing to a country with 1.33 billion people and dozens of dialects; and broadband difficulties: although Internet access is inexpensive in India, infrastructure is still developing in many areas.
However, Spotify faced similar challenges in Indonesia and Africa, and launched in those territories anyway. For its just-announced entry to United Arab Emirates, Saudi Arabia, Kuwait, Oman, Qatar, Bahrain, Algeria, Morocco, Tunisia, Jordan, Lebanon, Palestinian Territories and Egypt, Spotify is launching with a fully Arabic user experience, offering music fans local and international music and regionally-curated playlists, including Today’s Top Arabic Hits, Oriental Chill Vibes, and Arabic EDM. Users in the territories have both free and subscription models available.
In fact, as the world’s largest streaming service, Spotify and has played a huge role in reviving the global music industry. Yet Spotify faces an equally enormous pressure to sustain as investors cool on the company. It has lost an estimated $12 billion in value in recent weeks, dropping from a late-July peak valuation of more than $35 billion to around $22.9 billion today. Aiming to boost its flagging stock price, Spotify announced earlier this month a plan to repurchase up to $1 billion worth of shares.
With reporting by Naman Ramachandran and Anurag Tagat