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Guvera to exit Australian market

By | Published on Wednesday 27 July 2016


Australian streaming service Guvera is pulling out of its home market it has been confirmed, as the digital firm continues to deal with the fallout of having its planned IPO blocked by the Australian Securities Exchange.

As previously reported, loss-making Guvera withdrew from a number of markets and put two of its subsidiary companies into administration after its ambitious attempt to float the company failed. Meanwhile, despite insisting that its core business is ad-funded free streaming, Guvera’s freemium level in Australia was cut back, with users told to upgrade to a paid-for account to access lost functionality.

Guvera confirmed to Aussie tabloid The Courier-Mail that it was exiting the Australian market this morning, after the company sent a memo to its shareholders that read: “Unfortunately, the time has come for Guvera to withdraw from the Australian market, this will come into effect in the following week”.

The note to investors went on: “We have decided that in order to achieve sustainable and long-term goals, we will focus all efforts in key emerging countries, such as India and Indonesia. Research shows that in these countries consumers simply can’t and won’t pay for the streaming of music and we feel we can return the greatest value for our shareholders [there]”.

There is some logic to that decision, in that the labels and music publishers who put a huge strain on streaming start-ups by demanding large advances and financial guarantees will generally be more flexible with services in countries that didn’t traditionally generate much revenue for the record industry.

Partly because rights owners recognise different business models may be required in these countries, and partly because there is less risk in participating in lower-return free services when there is no real CD, download or premium subscription market that might be negatively impacted by a ready supply of free music.

Though, while Guvera may be right to conclude that consumers in markets like India and Indonesia are much less likely to sign up to a premium service, therefore making ad-funded more attractive there, that still leaves unanswered the more important questions, is there enough interest from advertisers in those territories to fund free streams?

Co-founder Claes Loberg, who replaced Darren Heft as CEO earlier this month, has reportedly “temporarily relocated to Indonesia and India to work closely with several key partners”. So perhaps he can try to answer that question while he’s there.