Spotify to enter the Zambian Market
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Spotify, the world’s largest streaming service by users is planning on formally entering the African market by expanding into 40 African countries. The list of new countries includes Nigeria, Ghana, Uganda and Zambia just to name a few, a potential market of more 700 million Africans. Previously the company only had operations in South Africa, Morocco, Algeria and Egypt which drew criticism from many. Their main competitor, Apple Music, announced their plans of formal expansion into Africa in early 2020 and have since gained .The only question is how accessible is the full Spotify package. Assuming Spotify maintains their standardised pricing arrangements it is estimated to cost users $9.99 or K200 monthly to access the service. That accounts for nearly 20% of the average monthly income in this country. Out of the companies 159 million users 71 million pay for the premium. So while the company’s expansion is a sign of relief to many, it still does not address the gap in the quality of African streaming market. In this article I will do a short analysis of the music streaming market in Zambia and assess the real benefit of the entry of Spotify.

 

 

Benefiting the Creatives  

There is a huge opportunity that will be created for collaboration with the continent’s biggest artists. When Apple Music entered Nigeria, they partnered with upcoming singer Tems, who released her debut EP ‘For Broken Ears’ on their platform last year. The album kicked Burna Boys ‘Twice as Tall’ off the top of the Nigerian streaming charts, breaking 4 million streams in just November to reach a total 7.6 million views. She was brought in on the ‘Africa Rising’ discovery playlist where upcoming artists like Amaarae, Omah Olay and Joeboy have benefitted from the international exposure. Tems now has more than 60% of her listeners based in the United States or United Kingdom as a result of the partnership, meaning artists do not need to rely on African listeners and can actually use the platform to breakthrough globally. Recently the Zambian DJ El Mukuka was signed to Ultra Records, one the largest lables in the world. He has already collaborated with Nigerian superstar Adenkule Gold in a track due to come out on March 5th, a sign of the potential of young Zambian artists. Currently African artists are subjected to little to no compensation for their work. Companies like Mvesesani are estimated to provide artists with just 30% of their sales income from purchases on their site. This is still a more profitable structure than that with large streaming giants. The largest contributor to royalties is Apple Music with $0.0076 per stream (artists real income after fees paid to label is $1 per 10,122 streams), Spotify comparatively pays half at $0.0026 – 0.0049 per stream (real income $1 per 20,000 streams).  The question will be, is the exposure worth a smaller proportion of sales? Most artists only earn a third of their music sales, the real benefit is unlikely to be realised anytime soon. 

The impact can also be assessed based on the impact on independent creators outside of music. The podcast industry for example is worth nearly $12 billion and is increasing every year. Certain publishers like Flip Africa and Tech Cable have built a strong viewer base off of their weekly podcast series as interactive media becomes increasingly appealing. Spotify has committed to curating an entirely new podcast experience for their African users and creators, with substantial incentives to partner with their platform. Last year the company announced an exclusive with Joe Rogan, the host of the Joe Rogan experience, worth $100 million. Applications like Mingletainment prioritise radio and podcast media on their platform and have gained 60,000 downloads in the process. These applications will likely be under threat due to Spotify’s appeal to creators, however localized applications (in native language) may not be affected. 

 

Cover art for the upcoming feature song Lost by El Mukuka and Adenkule Gold

 

The Competition from African Music Streamers 

Last week Mdundo was featured on CNN with the promise of being the ‘Spotify for Africa’. The company is run by Martin Nielson and was successfully listed on the Danish stock exchange last year raising $6.4 million (4,000,000 shares issued). The company claims to gain 135,000,000 downloads per month and boasts a user base of nearly 1.5 million people. The company operates in a similar business model to Mvesesani and MTN where the user has access to a market place to purchase music, though they offer all downloads for free and offer a streaming service as well. MTN Music+, a streaming service offered by Africa’s largest telecom network, aims to capture at least 20% of the company’s users onto the platform. Currently they claim to have 30 million songs and it is available in Zambia for K2 per month. Local companies will likely not be threatened by Spotify as the full service is simply not affordable to the majority of Africans and they can appeal to creatives with higher fees. Free services like Audiomac have dominated the African market but have suffered from a limited selection. At the end there is no clear best option as every streaming service specializes in their own sector. Nonetheless the free streaming option which is not available on apple music means the majority of Zambians/ Africans will be able to access high quality music from huge artists for the first time.

Conclusion 

In summary, despite the full Spotify package being unaffordable for the majority of Zambians, the streaming giant presents a solution to fragamatised African streaming industry. The simultaneous move into the largest market in Africa (Nigeria) means we may not benefit immediately from the increased artist exposure, but it signifies a start. Personally,  as a Spotify user, I have had to get used to shifting through youtube to get my fix of the latest music. While it will be missed, I will not miss having a drained battery. Spotify presents a huge opportunity for local artists to build their reputations globally and at the same time provides a huge sigh of release to those who wanted a simple and free solution to accessing music. We look forward to the formal release date.

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