Global and local music streaming companies are slow to grow in Africa
Boomplay, Spotify, Deezer, Simfy, Waw Muzik and Mdundo... International and local music platforms are finally taking off with the support of operators who hope to increase their revenue.
The beginning of 2018 was marked by the launch of Sweden’s Spotify, the global giant in the music streaming sector, in South Africa, its first venture in an African market. In South Africa, where competing platforms such as France’s Deezer or US-based Apple Music were already available, streaming should, according to a study by PwC, generate some R709m ($50.8m) in 2022, more than three times what was generated in 2017.
However, South Africa remains an exception. Everywhere else, the digital music market remains dominated by ringback tones (RBTs). According to an expert in the field, personalised ring tones and on-hold tones will still account for almost all digital music revenues in three years’ time in Kenya and Nigeria, albeit these figures do not take into account online music consumption, via YouTube, illegal streaming sites and peer-to-peer file sharing.
“Digital is a market full of potential, but today it is not our main source of income,” says Franco-Malian Moussa Soumbounou, general manager of Universal Music Africa for West and French-speaking Africa. Like many, he is betting on the explosion of streaming in the coming years, thanks to the adoption of smartphones, the deployment of mobile broadband and the reduction in internet data costs.
However, he is quick to point out that “in Africa this growth will not happen without the collaboration of telecom operators”. Without their distribution strength – more than 95% of internet access is via a smartphone – their mobile payment tools which make it possible to compensate for the low banking rate (15% on average south of the Sahara) and their collection capacity, there can be no take-off of music streaming.
But up until this point, telecom operators were too greedy, industry sources say. “They took more than 50% of the digital revenues generated by subscriptions, which made it almost impossible to launch a streaming service,” says Yoel Kenan, founder and CEO of Africori, a digital distributor specialising in African music created in 2012 and based in Johannesburg, Lagos and Nairobi.
“Today,” he says, “the rules are changing as operators realise that their revenues are increasingly dependent on data – and therefore on traffic generated by music and video in particular – and no longer on voice.” The door to negotiations, previously closed to content providers, now seems open.
A new music streaming application, Waw Muzik, with a 100% Afro-urban repertoire and designed in Abidjan, will be launched in Côte d’Ivoire in September, in partnership with the French telecoms operator Orange. This local streamer, one of the few in French-speaking Africa, has signed a licensing and distribution agreement with Universal Music Africa, a subsidiary of the world’s leading record company.
“Today, local initiatives are multiplying, supported mainly by mobile telecommunications operators, who use music as a lever to attract users to their mobile data offers,” says Bernard Mazetier, director of broadband and internet marketing at Orange Africa and the Middle East. In Tunisia, the French telecoms giant markets this type of offer in partnership with Anghami, the leading music streaming platform in the Arab world, which is based in Dubai and Beirut.
In Côte d’Ivoire, Anghami customers who buy data plans between 2.5GB to 15GB are granted one month of unlimited access to Deezer’s premium service. Anghami is a shareholder of Deezer. In the Ivorian market, which is dominated by Orange (52% of sales in 2018), these value-added services represented around 7% of its revenue last year, or more than €50m ($56.1m). Orange Money commission income amounted to €900,000 in 2018, with a mobile-payment penetration rate of 53% in the country.
The cost of data slows down the explosion of streaming
As a sign of operators’ interest in this sector, MTN acquired Simfy Africa at the end of 2018, which has since been renamed MusicTime. Kenya’s Safaricom also has its own digital music service, the Songa application, for which lowered the daily subscription fee from KSh25 ($0.24) to KSh5 ($0.05).
In parallel, the Chinese mobile phone manufacturer Transsion is pre-installing its entry-level and mid-range Tecno, Itel and Infinix smartphone brands, which are currently flooding the continent, with the Boomplay app. This streaming and downloading platform claims to be the leader in Africa with 36 million users at the end of 2018, and 2 million new users each month.
Global vs. local
The low penetration of streaming giants on the continent is due to the relatively high price of their offers compared to local streamers, which are also accessible only to those who use can international payment tools. In India, where it launched its activities in March, Spotify had entered the market with a subscription price equivalent to $1.70 per month. In one week, it acquired more than 1 million users.
In Africa, where the high cost of data is still slowing down the explosion of streaming, global platforms have not yet opted for this strategy. Above all, their catalogues remain mainly oriented towards international content, while local music, as everywhere in the world, remains largely preferred to imported music. “My priority is to support the structuring of the market. Digital technology will certainly contribute to this, provided that the specificities of each territory are taken into account and that local professionals are included,” says Universal Music Africa’s Soumbounou.
Since his appointment in May 2018, Soumbounou has been working on building local networks. At the regional headquarters in Abidjan, where its competitor Sony Music also has an office, it employs around 20 people and covers 22 French and Portuguese speaking territories. In eighteen months, the label’s catalogue has grown significantly, from three artists to about 30, with personalities such as Sidiki Diabaté, Dj Arafat, Toofan, Tenor, Kiff No Beat and Locko.
50% of Mdundo’s turnover goes to African artists
“One of the main obstacles to launching an online music service in Africa is the acquisition of licenses,” says Martin Nielsen, a Danish entrepreneur and head of Mdundo, a Kenyan music platform created in 2014. “In Western countries, it is enough to sign licensing agreements with major players and established aggregators to buy music, but on the continent, the latter have a weak presence,” he adds.
To win over its 2.5 million active monthly users, Mdundo works directly with more than 50,000 African artists, to whom the application pays 50% of its turnover. “In Europe, internet users stopped downloading music illegally when they had access to a good alternative. It is this alternative that we must build,” Nielsen concludes.