Meet The Mobile Apps Streaming Music To Africa
Africa’s mobile telecom market is second only to Asia in scale, and it’s growing almost as fast, Quartz reports. In sub-Saharan Africa alone, mobile penetration is expected to reach 75% of the population and 700 million connections by 2016, according to GSM Association. Add the continent’s vibrant and localized music scene, and you’ve got a great opportunity for a regional mobile music streaming service.
Founded in Tampere, Finland in 2006, Spinlet is a mobile music streaming service which distributes both local and international music, expanding the reach of parochial tunes to users in the diaspora. The startup hovered in gestation until its 2011 purchase by Verod Capital Management, an investment company from Lagos, Nigeria, which decided to apply the service’s ideas to Africa.
“The aim was to make the company the largest distributor of digital content in Africa,” recalls Neil Schwartzman, the Canadian-via-South-Africa CEO of Spinlet. With 650,000 registered users spread across Nigeria, Kenya, and South Africa, as well as immigrant communities in India, the U.K. and the U.S., Spinlet is about to drop a pay wall system which will require users to purchase subscriptions to the service. An ad-supported version will be free, while users can sign up for a two day subscription or a one month package.
“The interesting thing about the music landscape across Africa is only a small percent are signed to well known African labels or international labels,” Schwartzman explained. “We found there was about 85% of music landscape was undiscovered.”
Schwartzman says Spinlet sent teams of “content acquisition executives” into the bars and cafes frequented by local musicians in Nigeria, Ghana, Kenya, and South Africa, in order to get local music from the source.
“Our overlap with iTunes is only 50% – we have unique content,” Schwartzman said.
Of the revenue generated from ads and soon subscriptions, 60% goes to the artist, and 40% to Spinlet. Spinlet sends artists emails listing the number of times their tracks were played on the platform and their earnings. Artists are paid pro rata per stream.
Competitors include iROKOtv in Nigeria, and Gidilounge, a web and smartphone service which streams African music to 6 million users a month. 90% of sub-Saharan Africa’s 445 million cell phone users have low-cost phones, with only 10% using smartphones, according to the New York Times. Unlike music streaming apps like Spotify, Songza or Gidilounge, Spinlet’s simple Java client means it can even run on non-smartphones, widening its reach in the region. Its deals with international and African labels also means it holds a wide range of music.
“People download one song from this blog or that blog, but you never find an entire album with metadata and album art,” Schwartzman explained. Spinlet offers users a cohesive service, giving artists and labels social metrics of fan base consumption. And unlike blog distribution, artists earn regular payouts from their streams. At the end of the month, Spinlet will be launching an “iTunes of African content,” which will be a music player built inside a web browser allowing download of full tracks and albums.
Spinlet accepts credit cards as well as local payment companies like M-PESA in Kenya, which is used by over two thirds of Kenya’s adult population, according to The Economist. Spinlet users can also pay through their pay-per-use cell subscriptions (unlike other regions, most African cellphone users do not have contracts). Schwartzmann estimates 80-90% of users pay through SMS , where the fee simply comes off the subscriber’s bill. Despite being the most popular choice, this option has the highest transaction cost for Spinlet, and the company may soon be looking into restructuring its payment profiles to attract alternate payments.
“The paradigm shift from downloading to buying a subscription will take some time,” Schwartzmann admits, but remains hopeful the company will succeed in monetizing. Spinlet aims to stream videos, as well as further developing the media ecosystem to create content sites to promote artists, publishing venues, and concert touring infrastructure. Of these ventures, publishing would make the most sense – if Spinlet owned the rights to music, it would then be paying itself to stream songs.
The majority of the company is owned by Verod Capital Management, while founders have small minority equity, and some equity is held by major executives.
As to whether African users are willing to pay for mobile music streaming remains to be seen.