Will McBain examines its growth across the continent
Africa’s music industry is taking off. After exploding on dance floors across the world, Afrobeats – the exciting sound emerging from West Africa – has entered global music’s consciousness. Its stars now expect a strong market to develop at home. The market’s potential is amplified by Africa’s vast youth population and increasing smartphone connectivity. More than 60% of Africans are under 25 years old, and are increasingly taking to music streaming alongside their global counterparts.
The largest player in Africa’s nascent music streaming market is Boomplay, a Chinese start-up whose app is pre-installed on Chinese-made Transsion smartphones. Transsion is the second biggest supplier of smartphones in Africa, and Boomplay’s growth has mirrored that of the handset. The company says it attracts an additional 2m subscribers each month, signing them up to either an ad-supported free platform or an ad-free platform costing the equivalent of $1.50 per month.
Boomplay has signed licensing deals with major US labels Sony, Warner, and Universal Music, and plans to move into further African markets, as it attempts to secure first mover advantage. Globally dominant streaming giants Spotify, Amazon Music and Apple Music have a limited presence on the continent, mostly due to the higher prices of their services and a limited specialist African content offering.
Local services on the rise
It’s within this ecosystem that local music streaming companies are carving out a role. In Nigeria, where a rapidly growing population surged to 201m last year, smartphone penetration is set to grow to around 60% by 2025, as data costs come down.
“We don’t expect the likes of Spotify or Apple Music to come here and do it for us,” says Chidi Okeke, the creator of uduX, a new Lagos-based subscription streaming service. “We know our people really love music, and we’ve been careful to make sure we’re actually solving a problem, by designing the platform in a way that the African subscriber would want to have his music available, at a cost they’re willing to pay.”
For $1.30 a month, uduX claims to be the first domestic service in Nigeria to offer high-quality audio and HD music videos on its app, and curates content for different regions. With over 520 languages spoken in Nigeria, many artists find popularity in specific states or regions.
“Because of all the data we’ve gathered, we’re trying to curate in a way that suits all the different parts of Nigeria,” says Okeke. “We know what people in Lagos are popping to, but in the north and east it can be completely different. Our playlists will be tailored to all the particular regions. Nobody should be able to better curate African music than us.”
After a six-week “soft” launch in spring 2019, uduX signed up roughly 65,000 subscribers, and will re-launch in February.
According to Statistica, revenue from music sales in Nigeria is expected to grow to $44m in 2023 from $26m in 2014. The monetisation of music is also growing in East Africa, where Kenya-based distribution and streaming service Mdundo had 2.5m active monthly subscribers paying $1.90 per month in 2019.
Founded by Danish entrepreneur Martin Nielsen in 2014, and working directly with over 50,000 artists, the business allows local musicians to upload their music, manage their catalogue and commercialise their content. The app pays 50% of its turnover (60% from the full subscription service) to independent musicians. Mdundo also has agreements with Warner Music Group, and other major licensing firms.
“The majority of all music consumption across Africa is from illegal music blogs, peer to peer sharing, or in other ways distributed without benefiting the rights owner,” says Nielson. “It’s therefore important to create a platform that the musicians can trust. We do that by providing our musicians with a detailed dashboard to access download data in real time”.
According to Mdundo’s owner there are over 150m searches for African music every month, but less than 10% of those requests are served through legal music services. Many Africans choose to listen to music from unlicensed pirate websites. But as legal services thrive, licensing offers a lucrative income stream.
Market on the verge of a boom
South Africa’s Capasso licenses the music of African artists to both local and international streaming companies. Chief operating officer Wiseman Qinani Ngubo forecasts that the market is on the verge of a boom. “Our numbers indicate that streaming revenue across multiple territories in the region, excluding South Africa, has had an increase of over 62% year on year. This signals the readiness and the appetite for streaming,” he said in a December 2019 statement.
For many years, the continent’s telecoms operators have been significant partners of the music industry, selling ringtones and taking over 50% of digital revenues generated by streaming subscriptions. Now, as telecom operators seek to move customers to data plans, and away from pay-as-you go airtime, they’re trying to deepen their industry links.
MTN, Africa’s largest mobile operator, has released pay-as-you-play streaming service MusicTime! in Nigeria, and one industry insider said that revenues from music have switched from around 61% from ringtones in 2017, to 60% from streaming now. The industry helps facilitate payments for streaming services, with Boomplay and other apps making use of M-Pesa, one of the key mobile payment methods.
“The gatekeeper is the mobile environment, the telecom operators,” says Yoel Kenan, CEO of Africori, a pan-African digital music distributor. “The fact that they’re really trying to embrace ways of supporting streaming services across the continent is very encouraging, and gives us hope that in the next few months and years we’re going to see a real expansion in streaming revenues.”
Revenue set to grow
Nevertheless, the industry faces challenges. The cost of data remains out of reach for millions of Africans despite falling prices. Data from the Alliance for Affordable Internet shows that 1 GB of data costs 8% of income on average across the continent, compared to 2.7% in the Americas and 1.5% in Asia. The organisation defines affordability as when 1 GB of mobile data is priced at no more than 2% of average monthly income. Expensive, data-heavy music and video streaming remains a luxury for many, especially in countries with sluggish economic growth.
But with infrastructure improvements underpinning faster internet speeds, the rise of more efficient payment methods, and the growing youth market, industry players are confident that advertising revenue will follow the expansion of streaming – and the popularity of Afrobeats.