Nigeria’s growing digital music distribution market valued at N16.2bn

Digital Content

The growing online platform for digital music distribution in the country is now being valued at $100 million, about N16.2 billion, according to analysts with Spinlet, with iROKING and iTunes dominating the market.

Digital distribution outfits have sprung up in the last six years, making it possible for the spread of local music online and for investors to tap into an estimated $10 billion digital market globally

“Investors in digital music distribution are seeing huge potential for profits,” says an analyst.

The internet has become an important element of modern economic infrastructure recently, fundamentally changing how people interact, how consumers shop, and how products and services are designed, developed, marketed, and delivered. The internet has also changed how businesses operate and interact with one another.

The increase in digital trade, which has had significant impact on the United States and global economies, is offering Nigerian artistes and their music to be heard in different parts of the world. Thus, bringing about increase in revenue for artistes.

In 2012 alone, according to the United States International Trade Commission, digital music contributed $4.1 billion to the US economy.

In one of the highest-profile moves so far, Universal Music Group and Samsung Electronics announced in August the creation of The Kleek, a pan-African digital music service, which features music from Universal’s international catalogue and from local artistes like the Power Boyz in Angola, DJ Vetkuk in South Africa, and W4 in Nigeria.

Mark Redgaurd, marketing manager, Spinlet, says digital music is a major paradigm shift happening globally. Music is moving from physical purchases to digital downloads and streaming, and Nigeria is definitely part of this. According to him, market for online music has been very positive.

“We see tremendous amounts of potential in Nigeria and across Africa. The market is very nascent. As such, the market value can vary with little degree of accuracy. I don’t think anyone knows its true potential. Digital distribution has certainly made an impact and will continue to do so for the long term,” he says.

Digital music distribution has continued to spread its tentacles across the continent. In December last year, South Africans were given access to the iTunes digital music store from Apple. Around the same time, one of the leading internet streaming music services, Deezer, a French company, expanded across much of Africa.

And in several countries, including Nigeria, local digital music operations like iRoking have started to attract large numbers of listeners and investors. Recently, it attracted $8 millon from Tiger Global Management.

Ayeni Adekunle, CEO, Blackhouse Media, agrees there are huge opportunities in this emerging market for music distribution.

“It is possible to make the best we can of it,” says Adekunle, if stakeholders put their best foot forward. Whether it’s Spinlet or iTunes or Iroking or Notjustok, what’s certain is that digital is the future of distribution. Look at the feat Jay Z has scored, with his MCHG deal with Samsung.”

Digital music must have affected the performance of other channels of music distribution like CDs. Michael Odiong, special project manager, Premier Records, says in the last four months CD sales have dropped by 8 percent, saying that “in the last three to four months CD sales have dropped. More people are switching to digital sales. We have more music applications coming in now, giving consumer diverse offerings online.”

To him, this new trend is forcing old record label companies like Premier Records to diversifying their platform for music sales.

“We are diversifying and working with the likes of iRoking and Spinlet for digital distribution and with Konga.com for physical sales. We are trying to make sure we maximise every available online platforms for the sale of our music. We are also working with rhapsody and iTunes,” he discloses.

Digital form of music distribution has been argued to be a good alternative to physical form as most stakeholders believe it will help curb piracy.

“If you look at what Spotify is doing, and the fact that the telcos are using RBTs and CRBTs as ways of pushing music, and with iTunes opening up to the Nigerian market, you’ll see clearly that we’re quickly moving past the Alaba era. I think the system is opening up to digital distribution. We are very optimistic and all key players are adapting to follow the trend.”

Some industry analysts say digital music platform has fuelled piracy instead of decreasing it. To them, the rapid evolution of internet technologies and the ways they are used make it easy for consumers to share music through their mobile phones or laptops.

They argue that widespread access to and use of the internet has been made easier by mobile devices such as smartphones, tablets, gaming consoles, televisions, and TV set top boxes (digital video recording devices), which makes it increasingly difficult to track how music is shared and protect intellectual property.

Adekunle argues further that piracy cannot be totally eradicated, saying “no one can eradicate piracy, really. But if we make music products available to consumers at the right time, and in the right places, piracy can be reduced to the barest minimum.”

In addition, Odiong says digital online is the biggest pirates itself and record labels may go into extinction in the near future, as “the pirates are everywhere and downloading music for N100,” adding that it is killing the market.

“Yet artistes see it as the biggest means to promote themselves. They believe they can just make a song, upload it online. The money they will make from it is not so important to them. They just want to be heard. They don’t see it, but for records label it is a big problem. Record labels are going into extinction. There is no formal structure to protect them in the country. It is a major problem. More record labels are folding up. It is only the old ones that are surviving. It is the frustration that is forcing the artistes to go online.”