Reliance Industries Limited (RIL) has agreed to a deal to buy out music streaming platform Saavn for $104 million in cash and rest in stock, to merge it with its own digital music service JioMusic, valuing the combined streaming entity at about $1 billion.

In the cash and stock deal for Saavn, the Mukesh Ambani owned company will hold roughly three-fourths of the merged entity, with JioMusic’s implied valuation at $670 million, RIL said in a statement to the press.

In addition to the merger, Reliance will also invest up to $100 million of which $20 million will be invested upfront. According to the statement, the investment intends to enable “growth and expansion of the platform into one of the largest streaming services in the world.”

The transaction is subject to customary closing conditions.

RIL is acquiring a partial stake from the existing shareholders of Saavn, including Tiger Global Management, Liberty Media and Bertelsmann among others. The three co-founders of Saavn, Rishi Malhotra, Paramdeep Singh and Vinodh Bhat, will continue in their leadership roles the press note stated.

How will Saavn-Jio Music be affected?

What will be interesting to see is how the merger affect the current nature of both services. Jio Music for one is free for Reliance Jio subscribers, has it’s own app and is tied down to a Jio Phone number. Jio Music is not operator agnostic, i.e. if you have an Airtel connection you cannot sign up for Jio Music.

Saavn, on the other hand, is both platform and operator agnostic, you can download the app on any supported device (Windows, Android, iOS) or even launch the service from a web browser. Saavn offers a free tier as well as a premium tier priced at Rs 99 a month. Saavn’s service itself is more curated and in our opinion polished compared to Jio Music. Saavn also hosts some original content including podcasts and radio shows.

The biggest question ultimately is what will happen to Saavn’s premium subscription and will existing subscribers be affected in any way?

Saavn strategic partnerships

In November 2017, Saavn had announced two new strategic investors – New York-based Senvest Management LLC and the global entertainment company, Endeavor from Los Angeles. Saavn had added that its partnership with Endeavor will promote more collaborations between Western and South Asian artists and producers.

Senvest, on the other hand, privately owned hedge fund sponsor, as per Bloomberg. Saavn had said that it was Senvest’s first investment in India. 

Endeavor is the parent holding company of talent agencies William Morris Agency and IMG. William Morris Agency is one of the oldest talent agencies and its client list included Charlie Chaplin, Elvis Presley, and Marilyn Monroe. In recent times, the agency handles actors Ben Affleck, Hugh Jackman and Matt Damon.

The competition

Amazon launched its Prime Music service in India last month across a multitude of devices and platforms. The music service is offered as part of Amazon’s Prime membership. Prime Music has content deals with music label such as T-Series, Venus MusicSony MusicSaregama, and Zee Music Company.

Apple Music is also available in India for a subscription fee of Rs 120 per month. Apple service is available on a multitude of platforms including Android phones/tablets and Windows PCs, which is out character for Apple whose services are restricted to its own walled gardens.

Another major player in India, the Times Internet owned Gaana announced last month that it has raised funding of $115 million from Chinese Internet giant Tencent and its own parent company.