Will Spinlet & co Survive Spotify, Deezer & Google Music?

Note:  The big question was “Will Spinlet and others survive the coming onslaught from Deezer, Spotify, Google Music and others?”  When I say Spinlet and others, I should actually be saying Spinlet. Iroking, while not officially dead, is reportedly in zombie mode – releasing the majority of their local team. They may also not renew their content contracts, a good number of which will expire in 2014. But that’s not what we’re talking about now.]

 

They’re here to conquer and ride on the biggest creative wave in a generation. They’ve been called different names – Africa’s iTunes, the Music Store for Africa etc and they’ve all been launched to a lot of fanfare and music. Spinlet, Iroking and other services being created to deliver African music are vying for supremacy and the share of African wallets.

But one only has to glance over the ocean and wonder how they’ll fare when (and this is a definite when) the global players – Spotify, Deezer, Google Play and of course, iTunes – decide put boots in Africa.

 

The Catalogue (Or Lack of It)

ice-prince-deezer

Ice Prince’s new album was on Deezer the same day it appeared on Spinlet

Spotify has over 20 million tracks. Deezer is the world’s largest streaming service with over 30 million tracks. Local players don’t have anything resembling this but it’s not just the catalogue size that matters, it’s also the content.

Local players focus on Nigerian music – taking advantage of an abundant supply of tracks but seem to ignore one fact. While most people enjoy local music, they often don’t listen to it exclusively. While Africans are rediscovering their sound, tastes are international and global platforms have a leg up if they can deliver a mix of music from across the world – Nigeria included.

This is already happening. When I first started using it, Deezer had a very slim Nigerian catalogue. Today, it is growing its local music collection, releasing Ice Prince’s new album the same day as Spinlet.

 

The Money

jerry-maguire-show-me-the-money

So, on the request of Mr Maguire:

While I absolutely hate using capital raised as a predictor of company success, there’s a local adage that says “it’s money they use to chase money”. Better funded companies have more resources to win the market – marketing, licensing, software development as well as throwing the kind of parties the music industry loves.

To be fair, all these businesses have an international footprint (even though Deezer doesn’t operate in America) while our local players operate, well, locally. That being said, you do wonder how much longer local firms can hold up against a business that can literally throw money at a valuable market indefinitely.

Smartphones & Data

michael-douglas-smartphones

Yup! Blue Horseshoe loves Tecno

One of the big arguments I hear for our local platforms is “Africa is different. Data is expensive so people prefer to download instead of streaming. We’ve also got feature phone apps and the global players don’t have them”.

No one is sure when smartphones will overtake feature phones in Africa but there are many signs that the end may be nearer than we imagine. Cheap Chinese Android phones are making smartphones more accessible and Nokia’s Asha is making feature phones mimic smartphones. The future isn’t here yet but it’s hurtling towards us at a thousand devices a minute. Once a large part of the addressable market is using smartphones, the feature phone “advantage” is gone. Besides, the people most likely to spend money on digital music are using smartphones anyway.

Data is getting cheaper and faster. MNOs are driving the effective price of data down by bundling more and more incentives when you buy a data bundle. Wireless providers are increasing connection speeds but not touching prices. That means that people will get more comfortable with using more data (including streaming). It also means that they’ll be able to access these apps the same way the world does.

Advantage: Spoteezer.

 

Shrinking Revenues

These were the good old days

These were the good old days

In the good old days, when an artiste released an album, Alaba would pay the artiste a large (or small) flat fee for the rights to the album. While it was not an ideal situation, some artistes got it better than others – MI Abaga reportedly walked away with N20 million from Alaba for his sophomore album – MI2: The Movie. Today, those cheques are much smaller across board due to dwindling album sales.

As a result, artistes are finding income in other places – live performances, shows, endorsements as well as mobile music (ring back tones etc). In addition, digital music is becoming a real revenue option for musicians – there’s no real limit to their earnings so it stands to reason that artistes would place their music where they can earn the most. In a realistic setting, that means the platforms with the most users. As the African Diaspora continues to play a large role in media consumption today (just ask Iroko TV), musicians should and will continue to ensure their music is on as many global platforms as possible thus reducing the advantage being experienced by local players.

 

 

All Hope is Not Lost

So are Spinlet & co on the equivalent of the Bataan Death March? I don’t think so. There are a few things that I think can create real value in those businesses, especially if they’re ready to do a few ‘weird’ things.

 

Help the Artistes First

Will This Approach Change the Industry?

The aim of every artiste is to sell as much music as possible. Your aim should be to help the players achieve this. Instead of placing the music on the company’s player (alone) and leaving the artiste to take their music to iTunes and co, become a one-stop shop for digital distribution. This seems a bit counter-intuitive but this system would mean that artistes would think of whoever did this as the defacto destination for local digital music.

There’s a new [as yet un-launched] startup called Free Me Digital that I find interesting. Instead of launching a competing music player, they’re helping artistes put their music on digital platforms the world over. That’s a bit like what CD Baby was doing.  They’ve paid out about $250 million to artistes and were sold for $22 million.

 

Invest in back catalogues

You know what I’d really like to see on Spinlet? Fela’s entire catalogue. Now that would be worth something. I mentioned earlier that Deezer had become the biggest streaming player in the world. A lot of that was by buying back catalogues of artistes they had. This was the thing I liked the most about Gbedu FM – apart from new music, it had Nigerian music from the eighties and nineties – a much more rewarding experience.

 

Buy or Invest in NotJustOK.com

This one is so easy, I have no idea why no one has done it before. NotJustOk is a truly remarkable site, not just because of its traffic but because the song download data is a great predictor of what music is becoming popular and what artistes could do very well with some support. Think of it as a feeder system for the main platform. Furthermore, the ability to cross-sell music – “hey, if you like this song, you’ll like this one from Burna Boy which you can buy here” – is very interesting.

And this leads me to my final point…

 

Become a quasi-record label

tonto-itz-ova

There is no doubt in my mind that Nigeria record labels are ripe for disruption today. A less charitable mind may declare them on the ropes. Between internal squabbling and high-profile departures, Nigeria’s labels are straining under the weight of piracy and monetization issues – leaving many artistes to go it on their own. So what stops these brands from investing directly in artistes they think will do well (see why you should invest in NotJustOk?) and leveraging their digital sales platform to recoup their spend?

 

So what do you think? Can local players survive the coming onslaught from global music startups? Should they invest in music more directly? What do you think will happen? Please let’s know in the comments.

39 Comments

  • upnepa says:

    1.I agree that people are beginning to stream more as data gets cheaper and connections get faster. The problem I have with Spinlet is that it doesn’t let me move my songs to the PC. I’m on my PC for almost 16 hours a day. I also like that Hype M and Soundcloud continue my stream when I switch to my laptop from my phone.

    2. I’m a little bit worried about this paying for songs system and piracy download. The mainstream Nigerian artists we listen to offered us their first tracks and allowed us move them around our devices for free. Suddenly they want us to think their against piracy – the accelerator to their hammering.

    3. 4 shared, rapidshare and hulkshare have entire albums of artistes for free. Streaming services here will have to figure out how to cut these people off from content. Somehow. Assuming we’re all against piracy.

    • Seyi Taylor says:

      Spinlet now sells music on PC I think. DMCA works pretty well as Iroko has shown. If you can prove your content is being shared illegally on a website, you can get it down. Fact is artistes are now more into selling performances than selling music. In fact, they’ll give out the music for free so they can get lots of shows and ring back tone downloads.

  • Finbarrs Oketunji says:

    Nice piece Seyi. The crucial evolutionary point is now. Record labels can establish a culture of paying for downloads (be it via subscription or per track). Of course, illegal downloading of music is having a massive impact on profitability but they can use it to their advantage. Remember label owners (they crawled and cried like babies) and Steve Jobs are the reason we have iTunes today? Label owners can put an end to illegal downloads once and for all. After all, they are the ones sending their songs to blogs for promotions which is understandable. These blogs are their digital-foot-soldiers (if I am allowed to say that) – why not tell them to disable the download buttons? Even Notjustok has a download button under their music player.

    I am all for the acquisition of Notjustok but the buyer should have a solid plan for the platform. They will have to disable the download buttons and change it to buy buttons. e.t.c.

    If there is a unified front on the distribution of music in Africa, I strongly believe Spinlet and other music startups in Africa will survive the storm that is Spotify & Co. While I don’t have any unique visitors metrics for Deezer and Notjustok. I want to believe users are more likely to search Notjustok, Jaguda and
    tooxclusive for latest music before they get on Deezer.

    • bennybing says:

      Good point. I do agree on the unified front. I slightly agree with replacing the download button to ‘buy’, but are the consumers ready purchase the music? The American and international consumer behaviour is very different from that of the African consumer, whether locally or overseas.

      • Finbarrs Oketunji says:

        True. Music is consumed in a variety of ways (radio, internet and tv) but we are consuming music the same way as the Americans and international audience. Behaviors might be slightly different because we love freebies but we shouldn’t be enabling them by assuming they are not ready to purchase music. When you starve them of sources for free music won’t they end up purchasing? It is either now or never.

        • Benny Bing says:

          What happens when one site buys an artist album and then post online for free? Like the case with Brymo’s MDS or Ice Prince’s FOZ

          • Finbarrs Oketunji says:

            Things like that will be inevitable but there is a reason these labels have lawyers right? I mean Audu Maikori is a lawyer. 🙂

            Whois the site publishing albums for free. Write a formal letter to the hosting company. Trust me; they will want to avoid legal issues. They will instruct the site owner to take it down or delete it themselves.

            I agree, it is a culture that won’t change overnight but we have to start somewhere.

          • Benny Bing says:

            Well said. Btw congrats on the amazing app. Looking forward to more amazing stuff from you!

          • Finbarrs Oketunji says:

            Thank you Benny. Wishing you guys all the best at Gidilounge.

      • Shaf2k says:

        I agree but buy will never replace download. there are just too many people out there that will offer the same product for free. In the case of music there’s always someone that will pirate a work and unfortunately there’s no real policing in Africa to stop it. Too many avenues that makes it easy to spread a file whether over bbm, email or even soundcloud.

    • Seyi Taylor says:

      I definitely think that working with blogs to distribute music is very important. There’s definitely a culture of piracy but there’s also appreciation for good music. Artistes can decide which tracks they want to give out for free and which they want to sell.

      One of the big underlying issues is that artistes are focusing on live performances and endorsements as their primary sources of income. Labels are weakening and there’s a lot of “going it alone”. I think that at this point, it might also be important to rethink the label structure. Perhaps something more closely resembling United Artists – a company almost acting like a union could work in the medium to longer term. The aim should be to figure out how to make money from SELLING music again, not just performances.

      The reason why I was serious about back catalogues and deeper selection is that I’m not sure foreign players would go through the trouble of stocking the long tail of African music. There’s a lot of indie stuff on NotJustOk that’s not available anywhere – think Soyinka’s Afro etc. That kind of stuff will probably always be more at home on Spinlet/Orin/GL than Deezer.

  • bennybing says:

    Seyi, firstly Spinlet and iRoking arent the only players in this game. As a tech entrepreneur, you should do your research and find out who the other players are, that are actually making waves and what they are bringing to the table. Grouping them as “Spinlet & co” is highly irresponsible.

    Secondly, Global music startups ‘might’ survive but the question is “is it worth it for them?”. Most of these global players are trying to stay afloat in their own markets. Look at Pandora and spotify.

    I do agree your catalogue is very, very important. Spinlet and Gidilounge have very decent catalogues. You have to understand that adding African music into these ‘global players’ catalogues doesnt benefit the African music industry because it will get drown out by the popular genres like Pop, EDM, Hip-hop etc. Spinlet, Gidilounge, Orin and others are filling a void that these players cant. Look at what Yala Music did for Arabic music, which has a huge market.

    Take the case of Gidilounge which started out as a blog & music player and has now moved into the music streaming business. They have been consistent and successful with understanding what the users want, user behaviour etc. They have a huge back catalogue of Juju, Fuji,and Afrobeat music, delivering this in a very unique way different from these global players. Understanding your users and market is essential to success.

    Capital revenue raised is never an indicator of success. Never. Sure these global players have an international footprint, but so does Gidilounge and Orin. Spinlet is slowly trying to capture the diaspora and might be success. It’s important to understand the business model of these local players too.

    • Segun Odutola says:

      Benny 1 question about gidilounge; do they hold licenses for music they stream? If not, they definitely should not be in the conversation.

      At the end of the day, the music sales thing will happen; we just need millions of users on the internet

      and it will be a company or a digital platform online that will modofy digital music consumer behavior.

      Just like how Itunes changed the game after Napster went down. It will evolve, but the ratio between free consumers and paying consumers will always favour free consumers.

      Just let’s wait for NEPA situation to be concluded and permanently corrected and you will see millions come online within a year.

      The notjustok idea is interesting because they
      had a big hand in how Nigerian music is consumed today digitally. We shall see how things turn out in 5 years and I can already tell there will be more players entering the music space.

      • Benny Bing says:

        Yes Gidilounge does hold licenses for music they stream. You should check them out. I also agree with your point of the digital music behaviour changing in a few years. As for the NotJustOk idea, the business model has to change with the creation of a quality product that can actually compete with the rest of the other players. If not, it’s simply a high traffic blog.

    • Seyi Taylor says:

      Thanks a lot for you thoughtful response and great of you to weigh in.

      There’s a reason I didn’t place Gidilounge in this list; apart from distributing music, Gidilounge does something Spinlet & Iroking don’t currently do – create and distribute original content. As minor as that distinction is, I suspect that this will continue to put Gidilounge in a unique position in the near future. What do I mean? If I have a Deezer account, I’ll look there for Ice Prince’s FOZ before I go to Spinlet etc BUT I know that I have to open Gidilounge if I want to listen to No Rubber or the Verastic Show. As long as that exclusive content remains and I like it, I will keep the Gidilounge app on my phone.

      It’s for the same reason Netflix and Amazon are creating original content. By positioning itself as mobile/digital radio (with the ability to select music), I don’t consider GL in the same category as Spinlet/iRoking – functionally, they’re basically music players.

      “Capital raised is never an indicator of success” – I never said that. I said I didn’t like it as a *predictor* of success. That being said, deeper pockets offer more opportunity and only the most stubborn of us would deny that.

      • Benny Bing says:

        I see your point. Makes sense. So my next question is, in your opinion what would local startups have to do to attract and keep you as a consumer of African music?

        • Seyi Taylor says:

          Hard question. I will consume African music regardless. Whether I will consume it on your platform is another matter. I honestly think that trying to go head-to-head with foreign players is a mistake.

          They can’t/won’t create original content – that’s a killer in any universe. And original content isn’t just talk shows – live performances, indie stuff, mashups etc. NotJustOk does original stuff. They’re not going anywhere soon. Gidilounge should, in my mind, double down on original content (licensed or created) to create brand loyalty and then work at developing a broad and deep catalogue. You said it yourself, #norubber trends on twitter during the show. Original content FTW!

          Also, if there’s a way for artistes to release straight to a platform and get promotion there (I believe this is where Spotify is going), it would help increase the uniqueness of the platform.

        • upnepa says:

          I really like the shows. Like really

    • Disclosure. Benny works with/is affiliated to Gidilounge 😀

  • ChikaUwazie says:

    The other question I want to add to this is why we haven’t focused on the other avenues that are missing from the music industry in Africa. I feel like everyday we are talking about music apps that either allow you to stream or download music but I rarely see an analysis on the fact that very few are going into other arenas. I like the fact that the website Free Me was highlighted because they are one of the few going into the arena of helping artist getting discovered. I have yet to see a website that aids in discovery. While I enjoy Notjustok to listen to upcoming artist I feel thats the last you hear on some of these artist once they post new material. What about helping these upcoming artist that have great material but really are not being heard? Or like Seyi said an avenue to discover olds music. Its really difficult to find older Nigeria music. I am also shocked that no one has talked about lyrics (disclaimer I launched a lyric website). You will be shocked on how many people are actively looking for lyrics of music. There are a few entering that game. In all there are a lot of missing opporunties in the music industry that have not be fully explored and I feel this is a major issue in Africa.

  • FatherMerry says:

    Great article. I just think it might take extensive re-orientation to get Nigerians to start paying for music. It’s almost like Nigerians generally do not believe they should pay for content – be it books or music or apps. Where do you start from with a widespread mentality like that? Goodluck to anyone who wakes the people up.

    • Benny Bing says:

      The free mentality is slowly changing in the African market both locally and internationally with the emergence of quality products. With proper safe guards in place like Seyi mentioned below and a unified front with the start ups and labels, re-orientation should be easy.

  • Dikachim says:

    I had a conversation about this digital music thing yesterday with some people. For me, I said, whoever is gonna crack it will have to build on the existing structure. The existing structure is simple, blogs. You have to work with the blogs if you have plans of selling Nigerian music successfully.
    Again the songs have to be easily available and cheap. I can’t pay for a music album for 1,600 Naira($10) when a physical CD is 100 Naira. Digital albums should be 80 Naira.

    One more thing, artwork. Believe it or not, a great number of us buy music on iTunes for the brilliant artwork that comes with the songs. In fact, I find it hard to play a song without beautiful artwork. I’m that vain, sorry.

    In simple English, work with the existing blogs, make the purchase easy, price cheap, add the bells and the whistles(good bitrate, beautiful artwork) and you just might make a difference.

    • Ezeani says:

      Dikachim, you hit many points I have been preaching for a very long time (as in years). I want to add a bit to your comment about “good bitrate” in which the songs should encoded in. These days many folks listen to the songs on their phones with “cheap” earphones, so a song encoded in 64 kbps will not sound bad at all, especially compared to what folks are listening to these days anyway. You also have to consider the technical aspect of it. The lower the bitrate the smaller the file size which in turn reduces the amount of bandwidth consumed per download or stream of the song. Until the cost of bandwidth hits rock bottom, bandwidth consumption will always be on a consumers radar. Another thing to consider is if someone is going to pay N80 for the digital version of an album, the low bandwidth version (64 kbps or less) is justifiable at that price point. If you are an audiophile and want the same album at 256 kbps or in lossless format then you should pay a premium for it. Nice one bruv.

      • Dikachim says:

        Thank you bro. The 100 Naira physical CDs we buy, what’s the bitrate? I haven’t done any maths yet but I think 80 Naira is a good price off the top of my head. If the albums are cheap and easy to get, we’ll see people develop a habit of paying for music. Let’s stop making excuses for people.

  • Shaf2k says:

    i think the real question is who will win out between iRoking & Spinlet. Both are trying to crack the African Music market with different models. Where one is trying to be the African itunes (Spinlet), the other is trying to offer free music while generating revenue from advertising (very Google-esque). If you asked me, nothing beats free. Spinlet has changed their business model from what it was when it first launched. They might still be trying to discover what sticks, the only problem is how much money are they spending to find that profitable model, if it exists?

  • MC says:

    Very nice article.

    I think Nigerians will buy digital music a lot more, going forward. But there has to be a new outlook to the whole business that makes it more advantageous than going to the boys on the street and getting a new album for 100 naira or collecting a song via bluetooth. It can be the showcasing of new artistes for example. Take Reverbnation as a case study, they allow an artiste post selected songs for free download or paid download. This could work for new artistes in Nigeria.

  • cliveua says:

    I think the answer to the above question is quite simple.

    NO THEY WON’T!

  • Michael Ugwu says:

    Great to see such commentary around the digital distribution opportunity in Nigeria. The challenge is a global one. Change will not come overnight but via continuos effort and education and most importantly investment. However we are going to crack it I believe the bar is being raised on a daily basis With peeps like Chika and Finbarrs creating great products which are good for sector growth. A key barrier to growth for me personally is the unfair competition between licensed and unlicensed music services. I am certain Olamide’s latest album has been downloaded way more on unscrupulous blogs than on any official licensed platform. As much as I hate to say it the public sector (Coson/NCC) have a key role to play in addressing this with regards to the law and its enforcement. Essentially at some point there has to be effective cooperation between music services and various intermediaries such as advertisers, iSP’s and search engines who potentially have the most influence on stemming copyright infringement. But like I said change will not come over night.

  • Paa Kwasi BiGx says:

    I know I’m late on this subject but the truth is music business in Africa will take a while before these spinlet and co can progress. NotJustOk, too xclusive and the other blog r giving out the music for free how can u sell something that’s free. Musicians also think that giving their songs out for free could make them popular enough for big shows, for instance Davido said he makes $50k per show, that wldnt be possible if the songs r not out there by that he gotta give it out for free! like someone said, NOTJUSTOK and co will be best people to run these or the spinlet and folks wld need serious legal team or take copyright serious!

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