Despite massive new opportunities, Africa’s mobile operators are failing to grasp the digital music play

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Not a month goes past without some new African digital music platform or service being announced. There are two them in the story below but beneath this constant flow of activity is the sound of the wheels failing to bite the turf. The problem? You guessed it. The mobile operators are stuck with a historic ecosystem that marginalizes the talent and a business they don’t understand. Russell Southwood looks at the good news and the bad news.

TECNO (the brand name of Shenzhen Transsion Holdings Ltd) sold 46 million phones in Africa last year, of which 45% were in Nigeria. Its phones are at the budget end of the market, making their smartphones attractive to young, new users. All its Android smart phones now go out preloaded with its music service Boom Player and it is launching a new Android smartphone at the end of this month.

Preloading gives it the “iTunes advantage” as it can quickly scale its user base and the beta’s 300,000 users demonstrates the advantages of this approach:”The Boom Player service is available globally on any phone that has the app. It works everywhere, even for the diaspora.” Of the 300,000 beta users, the main countries are Nigeria and Kenya.

After the beta is over, users will have two choices: downloading (N20 per song or N100 per album) or to subscribe, getting access to all the music for N500. The Boom Player service users have access to most genres of Africa music including: Afrobeats, Afro-Juju, Benga, Pop, Afro-Pop, Hip-Hop, RnB and Reggae. The current two most popular artists on the platform are Burna Boy and 2Face.

The net revenue split is 60% to the artist and 40% to TECNO which is currently better than the deal on the table from most mobile operators. To see full story click here. 

Adziik.fr is planning a high profile marketing campaign in September 2015. It is one of Africa’s francophone music platforms is Gabon-based Adziik.fr founded by Eyeghe Yannick which also has an Anglophone version of its web site:”It’s not particularly targeted at one or the other but aimed at both. We want francophone users to discover Anglophone music and vice-versa.”  The idea came from his and his friends frustration at not being able to find the music of a big African music artist on any of the international music platforms like iTunes.

The site has gone for curation over a large catalogue. It has 50 albums and singles as well as e-books (Maison d’Editions Dagon, for example) and e-magazines: the latter two being mostly in French. But the artists chosen are drawn from Gabon, Ghana, Kenya, Burundi, Cameroon, Nigeria (Ice Prince) and Senegal. It’s also in discussions with artists from DRC. It has also digitalized the books it has taken on from some publishers.

Payment is through all the “classic methods”: credit cards and Pay Pal; prepaid cards and mobile money (in Ghana and Gabon). An album costs 5-6 euros and a single one euro. There’s been no marketing yet as they have been working on getting the catalogue right. In September 2015 it will do a more high profile launch and it’s just finalizing the budget for this event.

(As an aside, part of all this digital activity will soon be audio from South African Internet radio start-up ion.fm. It has nothing to do with music because of the complications of paying music rights but it does have plans to expand its operations across Sub-Saharan Africa. Growth has been phenomenal in South Africa so it will be interesting to see how it fares elsewhere. Watch founder Ryan Dingley on the link here:

But beneath all the activity, the digital music market is very slow with only a few hitting regular users (who buy regularly) in the low hundreds of thousands.

According to Yoel Kenan of Africori:”Nobody’s doing well from what I’ve seen. Any streaming service depends on the mobile operator and there are so many problems there: data quality, data pricing, user interfaces…and so on. Some interfaces have 9 steps the user has to go through to register”

“The operators are good at selling telco products but not good at selling music and entertainment. They feel the need to drive data use with music so they sign music deals. They don’t look at the details and hope it will work. They’ve gone from having a high level of confidence to all it’s very difficult. For the artists outside of South Africa 90% of digital revenues still come from ring tones.” Ring tones remain the largest part of music revenues, not digital downloads or streams, something which you would imagine might start changing round about now.

“The mobile players come from ring tones where everybody in the food chain has created an unhealthy ecosystem. They have made the content developer (music artists who generate the revenues) the smallest part of the revenue share. The mobile companies who are the main purveyors of digital music revenues are using it to get into a new cycle of digital growth by being a bit nicer (on revenue shares) but it’s so far from where it should be.”

Another person who spoke to us who is familiar with the mobile operators’ music operations pointed out that mobile operators tend to believe they have the marketing clout to make things successful but it’s not the case:“Operators don’t have the power they thought they had. You get bigger effects through social media like Facebook.”

He made the point that despite some mobile operators taking on people with music backgrounds “unless it’s a core product” it simply doesn’t get the care and attention it needs. So the mobile operators are in danger of replicating all the problems they had with VAS products: samey content catalogues bought “off the shelf”, low status in-house managers and no grasp of developing tomorrow’s African content today.

A recent survey by Informa of its AfricaCom attendees said they all felt that the mobile operators will remain at the centre of the ecosystem. It’s clear that they either have to change and get their act together or find themselves sidelined by those who can do the job better.

787 - Music Report 

 

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Africa’s Innovation Agenda – Getting beyond the half-truths we tell ourselves to unfolding opportunities

3D Printing in Africa – A Slow Burn Movement with huge potential that has yet to find its growth path

Separating Hype from Reality in the Fizzy World of Africa Start-Ups – VC4Africa survey findings


Education entrepreneur Obinna Ukwuani, Exposure Robotics’ plans to launch the first African STEM secondary school in Nigeria


Videos interviews to watch:

787 - Iono.fm's Ryan Dingley Video clip

Iono.fm's Ryan Dingley on his online audio radio start-up and its pan-African expansion plans

William Bird on using Commotion Wi-Fi mesh software to provide free Internet South African cties

Andrew Rudge, Reach Trust on expanding the mobile reach of its African ed & health service

Joel Macharia on his start-up Abacus that will allow Kenyans to trade shares online

Albert Mucunguzi, PC Tech on the Ugandan start-up scene and its future prospects

Andrew Rudge, Reach Trust on expanding the mobile reach of its African ed & health service

Ryan Yoder, ActivSpaces on the challenges faced by start-ups in Cameroon

Will Tindall on Emerging Crowd, an online platform for emerging market companies to raise equity

Sacha Poingnonnec, Africa Internet Group on the challenges of running an online business in Africa

Felix Kimaru, Totohealth on empowering mothers with health information via SMS on their mobile


Fernando de Sousa, Microsoft on what the business model is for TV White Spaces in Africa


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