Carvaan 2.0: WiFi-enabled nostalgia

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March 1, 2021 6:52 AM

Saregama looks to create additional revenue streams with the new versions of its music player

Saregama earns a 20-25% profit margin through retail sales of Carvaan.  Saregama earns a 20-25% profit margin through retail sales of Carvaan.  

Saregama created the portable music player Carvaan in 2017 — designed to resemble a radio from yesteryear — for technophobes. It was born out of the observation that songs from the ’50s, ’60s and ’70s are difficult to access for music listeners. “The 40+ Indian living in smaller towns, today, is not very comfortable with the contemporary music media — be it smartphones, memory sticks, or download options,” the company had said at launch. Saregama MD, Vikram Mehra, calls it the “lean-back listening experience”, one that cuts out interruptions like ads and notifications, and requires no intervention from the user.

Four years on, Carvaan is more than just a device that plays Rafi’s hits. Carvaan 2.0 connects to WiFi, thus opening the device, which previously came with pre-loaded songs, to the world of podcasts and other audio content. People can sing along with the karaoke feature in the latest version of the product, create playlists on the Carvaan mobile app and connect with the device through the app. Going ahead, the company wants to extract advertising and subscription revenue from the product.

Tuning up for revenue

Carvaan always had Bluetooth functionality, which meant it could be used as a wireless speaker if a user chose to do so. Further, none of the audio content (songs or podcasts) is exclusive to the Carvaan platform. Despite these factors, Mehra expects Carvaan 2.0’s ability to render podcasts at the turn of the dial to appeal to the same cohort of listeners it targeted when the product was launched — people looking for convenience above all else.

Presently, Saregama earns a 20-25% profit margin through retail sales of Carvaan. Through podcasts, it wants to move from the one-time margin business to an initial margin plus advertising and subscription fee-driven model. Mehra hopes that Carvaan’s promise to share 40% of ad revenue with content creators will attract them to the platform. However, that’s still some time away. It may take the company at least another two years of selling Carvaan 2.0 to begin monetising podcasts.

In 2017, Saregama said it was targeting a potential market size of 25 million homes. According to Mehra, the product has reached 10% of this market size as of February 2021; it has sold a total of 2.26 million units (overall) until Q3 FY21. Carvaan 2.0 was launched in mid-2019.

Old-world charm

Carvaan’s success in creating a new product category of preloaded music players inspired a few others to replicate the business. But those have not proliferated as much.

“With Carvaan, one is not just investing in a music experience, but in nostalgia. A partner who can bring a memory to life at the press of a button,” says Karthik Nagarajan, chief content officer, Wavemaker India.

Even as the product’s aesthetics and music content are hailed as its unique selling points, whether its modern avatar will be as groundbreaking as its predecessor, is a matter of debate. Anchit Chauhan, director – brand strategy, Dentsu Webchutney, says that people will be less likely to buy a piece of smart technology from Saregama, as opposed to Google or Amazon. “Carvaan was launched at a time when there were only Bluetooth speakers. Now that smart speakers are popular, they are competing with Carvaan, because using a voice command is more convenient than pushing a button,” he adds.

Carvaan will have to be careful with the nature of content when dabbling in podcasts. “Podcasts are a very intimate and one-on-one form of content unlike music, which is community or group-driven sometimes,” points out Nagarajan. He says it is difficult to imagine a Carvaan device in the middle of a living room airing a podcast that the entire household is hooked onto. “It may work for fictional or devotional audio content, but certainly not for the conversational kind.”

A study on digital audio advertising by Xaxis revealed that 97% of surveyed users listened to music on their smartphones. Despite this, 71% advertisers surveyed said they spent less than 10% of their advertising budgets on audio ads. Podcasts are a sub-segment of digital audio advertising. Carvaan may not have it easy, considering how music streaming platforms have been struggling to attract advertisers.

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