In the early 2000s, during the heyday of the cable TV business, Rishi Malhotra was a young vice president at HBO, charged with figuring out how to sell on-demand programming. Over several years, he turned HBO On Demand into a $100 million business. “One of the things I learned from HBO was that really premium, unique content helps build a brand,” he says, “and it’s something people will pay for.”
In 2008, Malhotra decided to take his skills to Saavn, a business-to-business company that distributed Indian music to platforms such as iTunes and Amazon. By 2010, Saavn had transitioned into a streaming service, and in 2018, it was renamed JioSaavn after Indian conglomerate Reliance Industries acquired the company and merged it with JioMusic, the streaming service run by telecom Reliance Jio. Now, says Malhotra, JioSaavn has between 100 million and 200 million monthly active users.
Malhotra took over as Saavn’s CEO in 2014, just before mobile data rates plummeted, making India one of the most competitive streaming markets in the world. Since 2019, local champions JioSaavn, Gaana and Wynk Music have competed with startups like Hungama, as well as global titans Spotify, Apple Music, Amazon Prime Music and YouTube Music, for a share of the Indian market and its population of 1.3 billion. In 2018, India’s recording business generated $156 million in revenue, according to global music industry organization IFPI — a 24.5% increase from 2017 — and streaming accounted for 70% of that total.
Malhotra now leads a team of over 300, divided among the company’s offices in Mumbai, Bengaluru and Gurgaon, India; New York; and Mountain View, Calif. Amid the necessary travel, he makes it a priority to squeeze in five hours of guitar practice every week. The father of three says it helps keep him connected with his creative side, which he developed playing in bar bands in Nashville, where he grew up, and in St. Louis as a Washington University pre-med student. “In today’s age, you have to be a smart creative,” he says. “You have to look at processes, management and [profit and loss] — but you also have to have a creative touch in how you lead and the kind of work culture you create.”
Saavn was the first audio streaming service in India, so you had a lead. When you came to the company in 2008, what was the biggest problem you needed to solve?
Indian music was so disorganized, and we have over a thousand labels, none of which had categorized their catalog for digital hygiene. There was no metadata, and what was there was inconsistent and inaccurate. We knew we could build a solution; we could organize the disorganized.
India’s telecom revolution resulted in a music-streaming explosion, and now you’re competing with local companies but also multinationals like Spotify, Apple, Google and Amazon. How has that changed your strategy?
We’ve been doing this for a long time, so we have the data, products and understanding of regionalization and localization — whether that’s playlists or how we speak to consumers or what content deals we greenlight. For us, India is not a secondary market like it is for Apple and Spotify. This is our market.
Only 1% of India’s streaming consumers pay for subscriptions. In 2018 JioSaavn cut its prices and it’s now among the cheapest mainstream options. How has that helped in attracting subscribers?
In 2019 we’ve grown by 300% in paid subscriptions, and 70% of our revenue is driven by subscription. Among the diaspora, we have a pretty good concentration of users who pay. The more valuable a service gets, two things happen simultaneously: The conversion rate goes up, and the number of people leaving the platform goes down. In India, music was pirated for so many years that it was almost equivalent to free. But we know that people want to be on music apps. Well over 100 million users are spending 45 minutes to one hour per day on them — and if you have their time, you can generate value from that.
Gaana just announced it has 152 million monthly active users. Is there a reason you haven’t announced your figures since Reliance Industries acquired Saavn in 2018?
The press optics in the country are very dangerous because it costs a lot of money to overmarket. We got caught in that years ago, when we were in our private equity days. Then we decided, “Let’s focus on real users and real engagement.” If we didn’t have those numbers and didn’t have that depth, there’s no way all of these labels and artists would be coming to work with us.
Is Gaana still your most important rival?
Yes — and we monitor the competition daily. We’re always paranoid. There are certain things that they do better, and there are a lot of things that we do better. When you’re building a business, it’s not just what you’re doing that day, but what’s your next day’s plan. Every service has to achieve scale and meaning before it can monetize. We’ve reached those measures, and now the entire company is focused on monetization. Even pieces of content we greenlight, we look at how it can be monetized. Everyone says, “Get Indians to pay.” I don’t look at it that way. I look at it as, “Produce value that’s worth paying for.”
In 2017, you launched Artist Originals, an initiative that you’ve called an “in-house streaming label.” How does that work?
We realized the service could be a one-stop shop for an artist. We were also sitting on a lot of data, like artists becoming popular on JioSaavn who weren’t on the labels’ radar. We don’t sign anyone who’s already on a label — we only sign independent artists. JioSaavn shares ownership of the master recordings and the publishing. Traditional record labels are still, and will always be, our biggest partners. At the beginning, there was a little bit of irritation from labels, but when we met with them, we said to think of it as A&R.
One of the Artist Originals tracks — “Bom Diggy” by Zack Knight and Jasmin Walia — became a huge Bollywood hit. Are you essentially creating a synch operation?
You’ll see some job descriptions being posted online for synch. We have film producers calling us, and we just got an inquiry from one of the big, over-the-top television players for a movie [because] they needed some music recommendations. A lot of the stuff that comes to us — we’re the first to hear it. Other labels passed on “Bom Diggy” before it came to us.
Last August, the Indian Music Industry trade organization said the total number of monthly active listeners for the country’s streaming services is 250 million. But three services claim to have over 100 million monthly users each. Does that mean there’s a need for a third-party validation system?
That would be a great thing for the country. There are all these different platforms available and proxy data you can pull from different telcos, but if there were a group that became the validating source, that couldn’t be influenced, it could be really powerful. You’d save a lot of money that’s now wasted on marketing and could be allocated toward innovating on product. But it’s not just about the number of users — it’s how engaged they are and how much data they’re using. Those things don’t lie.