Digital-Music-Report-2014

africaEmergingopportunityDespite its huge influence onmusic repertoire across theglobe, most countries in Africahave not historically beensignificant markets for the internationalmusic industry. Today, that is beginningto change. Digital technology is enablingthe recording industry to effectively reachmass numbers of consumers across Africafor the first time. Across the continent,international record companies areworking to establish innovative servicesand invest in A&R.Africa’s economies are growingrapidly and smartphone penetration,though small, is soaring. The InternationalTelecoms Union reported in March 2013that mobile broadband penetrationin Sub-Saharan Africa increased from2 per cent in 2010 to 11 per cent in 2013.Sean Watson, managing director of SonyMusic Entertainment Africa, says: “Theforecasts for smartphone growth in Africaover the next few years are staggering.”“The forecasts forsmartphone growth inAfrica over the next fewyears are staggering.”— Sean Watson, Sony MusicEntertainment AfricaDigital services arebeing establishedInternational services are opening forbusiness, domestic platforms are growingstronger and new services are beingdeveloped. Ulrik Cahn, VP digital businessemerging markets, Universal Music Group,says: “You can really feel that somethingimpressive is happening with digital musicin Africa now. Two years ago, the digitalbusiness was almost all ringtones, todayproducts and services are taking off andinterest from our global partners in thecontinent is greater than it has ever been.”“You can really feel thatsomething impressive ishappening with digital musicin Africa now.”— Ulrik Cahn, Universal Music GroupAfrica already had a domestic digitalmusic business, partnered with leadingregional and national telco operators.These include MTN Nigeria, with 17 millionsubscribers, and Safaricom, with 10 millionsubscribers, have helped build a sizeableringback tone market. International recordcompanies are establishing strong localdirect relationships with local partners— telcos, aggregators, local services,publishing societies and independentlabels. Digital revenues to internationalcompanies in Africa are currently smallbut fast-growing: South Africa, theregion’s largest market has seen digitalmusic revenues take off in 2013 followingthe arrival of iTunes and several musicstreaming services, such as Deezer, raraand Simfy. Digital revenues doubled in theyear, accounting for 14 per cent of a totalmarket worth US$63 million.International services such as Deezer,iTunes, Simfy and YouTube are now alsooperating across the continent, and whilethey are still small compared to the telcos,insiders estimate iTunes now accountsfor 40 to 50 per cent of digital revenuesin South Africa. Other established localservices include Spinlet and iRoking inNigeria and Mdundo in Kenya.THE KLEEK, a pan-African mobilemusic streaming service, backed byUniversal Music and electronics giantSamsung, and licensed by Sony Music,launched in March 2013. THE KLEEK offersan interactive voice response service aswell as an app featuring a huge rangeof playlists. The app is preloaded onSamsung smartphones whose owners canuse it free of charge. Randall Abrahams,managing director, Universal Music Southand sub-Saharan Africa, says: “Music fansin Africa have never had access to such arich and engaging licensed service before,THE KLEEK marks a sea change in thedevelopment of the digital market inthe region.”Guillaume Quelet, VP, digital businessdevelopment, Sony Music Entertainment,who looks after three Francophonemarkets in North Africa, says partnershipswith mobile carriers are key. “It’sabout creating services that appeal toconsumers in pre-paid markets who oftenhave limited disposable incomes. I thinkthere will soon be exciting new deals thatwill also include unusual features such aslive tours.”38