A Queensland startup has bold plans to take on some of the biggest names in the startup world: Spotify and Apple.
Music streaming service Guvera is aiming to become an established, household name in the streaming world, putting it in direct combat with some of the most well-known and established tech companies globally.
But CEO Darren Herft says that instead of competing directly with streaming powerhouses like Spotify and Apple Music, Guvera is employing a unique business model and targeting different regions that are under-served by the larger streamers.
Targeting different markets
Last year saw the Australian startup aggressively target emerging markets where a streaming service is yet to dominate.
In a coup, Guvera secured licenses to get Bollywood music on the platform, something neither Apple Music or Spotify have yet been able to do.
“Our real focus is on emerging markets – that’s one of the strategic directions the company has taken,” Herft tells StartupSmart.
“We’ve been able to both obtain the music licences to build a product and build some IP that focuses on emerging markets like south-east Asia, India and Latin America.”
Herft says this has helped pour fuel on the startup’s global expansions.
According to Herft, Guvera had one million subscribers 12 months ago and now has over 16 million.
As of June last year, Spotify had 75 million users, with 20 million of these being paid subscribers. Apple Music, which was launched late last year, says it already has 10 million paying users, while Pandora has an estimated 81.5 monthly active users.
But Guvera is making moves in emerging markets that its larger competitors are yet to target, with 6.5 million of its users coming from India.
“We’re focusing on emerging markets and India is leading the way,” Herft says.
But the company isn’t focusing solely on these lucrative emerging markets, with Herft saying they still want to service countries like Australia where Spotify and Apple Music are already prominent players.
“At the end of the day consumers want to get access to a high quality music platform – that doesn’t vary,” he says.
“They want access to their favourite music when they want, on-demand. That’s quite similar in all markets.
“We’ve been able to elevate ourselves into the top couple of music streaming companies in Australia based on the volume of music streams.”
Not yet profitable
Despite this growth in large markets, Guvera is yet to approach profitability. According to the Australian Financial Review, the startup lost more than $80 million in the financial year ending June 30th 2015, and lost a further $30 million in the year before.
When this topic is broached, Herft refuses to comment on any financial figures, instead pointing to a series of partnerships that Guvera signed towards the end of last year.
“The most important message that we’re happy to share is that in the last 20 weeks of 2015 we brought on 17 brands in Australia paying six figure sums and above,” he says.
“It’s been a good end to the year so far as validating the model and working out what brands are willing to pay.”
Guvera doesn’t focus on subscriptions for revenue, instead setting its sights on brand partnerships and advertising.
“Their products are slightly different,” Herft says.
“They’re focused more so on the subscription tier than the ad frontier. At Guvera we’ve focused more on the ad frontier as well as the subscription frontier. We have a full access product and great functionality with non-disruptive advertising.”
In Australia the company has partnered with the likes of Virgin Mobile, American Express and the Australian Open.
There’s been continual speculation surrounding a large IPO for Guvera, but Herft refuses to comment on the prospect of going public.
The Gold Coast-based company has also faced legal troubles that have shoved it into the spotlight for all the wrong reasons.
After expanding aggressively into the UK market through the acquisition of Blinkbox from Tesco, the company was soon shut down and is the subject of a legal case in the UK in April.
“We’re looking forward to having our case heard and we’re fairly confident the courts will come to the right conclusion,” Herft says.
“It’s a shame – we would have liked to grow Blinkbox in the UK but it wasn’t to be.”
For Herft and his team, it’s a constant battle to be recognised in the same conversations of its larger, better known rivals.
“We’re one of four major music companies: There’s Spotify, Apple, Pandora and Guvera,” he says.
“We’re looking forward to becoming more of a household name in all the countries we’re operating in.
“Our real focus is to grow the number of brands we’re working with and have a really strong finish to 2016.”