Dhingana, a much-loved music streaming service once, shuts shop

Dhingana, much loved music streaming service, shuts shop

Music streaming service Dhingana has shut down after much speculation. Started by brothers Snehal and Swapnil Shinde in 2008 -- both previously with Symantec and Yahoo! respectively -- Dhingana raised USD seven million from Helion Venture Partners, Inventus and Lightspeed Venture Partners in 2012. For a while now, there were rumours about a shut down but Dhingana had declined to comment. With the following message on its site, these rumours have been put to rest. Dhingana has indeed closed shop.

In May 2013, Dhingana had claimed to have reached 10.5 million monthly users and a close battle was on with their competitors Saavn and Gaana. The investors and co-founders of Dhingana felt the need for a strong leader at the helm and brought in Rohit Bhatia as the CEO.

There were some hiccups along the way with music labels pulling out of the licensing agreement. A source familiar with the operations noted that, “After the funding came in from Helion and Lightspeed, music labels became unreasonable about how much they wanted for licensing. They were suddenly asking for 4X of what was paid before.” The industry anyways requires a good amount of financial clout and Dhingana failed to keep up. “Ganaa and Saavn have the muscle behind them with organisations like the Times Group and Hungama backing them. Hungama is a leading publisher and distributor of Bollywood content and is a shareholder in Saavn,” the sources say.

Twitter has been abuzz with conversations on Dhingana post the shut down.

Like most music industries across the world, the Indian music industry is also faced with the challenge of piracy. In March 2012, the Calcutta High Court directed ISPs to block sites that illegally allow downloading of songs. Sites like songs.pk, pakisongs.com etc were directed to be blocked by the High Court but this has not resulted in a major reduction in piracy.

Other common challenges faced by the music streaming industry include absence of lengthy tie ups with music labels, ad-based revenue model and absence of sustained subscription-based model. Availability of free music on other sites, including Youtube is another major challenge.

The online retail space also appears to be heading towards a three-four player segment and the ones who survive are the ones with strong financial backing and tie ups with music labels.

Reacting to the development, Sanjay Anandaram, a prominent investor and mentor in the Indian startup space, says, “Listening to music -- streaming or downloads -- is obviously a wildly popular activity world over. However, for Indian music, given the rampant piracy, the reluctance to pay and complicated payment and royalty structures vis-à-vis license holders, the business becomes very challenging. Even companies like Spotify, for example, have had to raise over $0.5 billion (yes, billion) in funding over almost seven years to get to where they are now with paid listeners.”

The shutdown of Dhinagana is sad but it also has a lot of learnings for entrepreneurs and investors alike. The music streaming industry stands at a critical juncture and waits for a disruption.