Wednesday, January 16, 2013

Digital Startups, Developing Market Establishing New African Music Industry

Wizkid performing at London's Hammersmith Apollo on June 4, 2012. (Photo: Joseph Okpako/WireImage/Getty Images)

After long-term challenges with widespread piracy and a widely disparate radio and record industry, a burgeoning legitimate music scene is fast emerging on the continent of Africa.

An expanding middle class, a fast-growing population with more than 65% under 35 and digital startups helping to leapfrog infrastructure weaknesses are making major African cities emerge as not only sources of great local talent that can go global in a meaningful way, but also markets and venues for U.S. and other global artists touring and selling their music.

"Africa is the last big secret in the music world, and it's just about to blow up," says Obi Asika, CEO of Lagos, Nigeria-based media and entertainment company Storm 360. "In South Africa and the associated regions around southern Africa, [the business and music industry infrastructure] are much more structured, more like the West."
Randall Abrahams, managing director of Universal Music South Africa and sub-Saharan Africa, adds, "The African industry is an extremely exciting and vibrant music marketplace right now."

Universal, the world's largest music company, encouraged by its French media and telecoms parent Vivendi, has been keeping an eye on the fast-evolving markets in Africa and is starting to make some moves there.

All of this portends good news -- and visions of dollar signs -- for a beleaguered industry on the prowl for new revenue resources. Africa is the world's second-largest and second-most-populated continent with more than 1 billion inhabitants.

With Apple's iTunes store due to launch in Nigeria, South Africa, Kenya and Ghana in 2013, Abrahams notes that the imminent arrival of such digital platforms aligned with ongoing advances "by continental collection agencies means that the sub-Saharan territory along with other emerging markets is a major source of growth for Universal."

Other digital services already have a small presence on computers and mobile devices, including French startup Deezer, German mobile music service Simfy and local Nigerian startup Spinlet.

One online standout is, founded in 2011 as a video music management business. It counts 120,000 registered users primarily in Nigeria. The site's NollywoodLove channel is the No. 1 movie channel globally on YouTube, averaging more than 25 million views per month. The company is currently rolling out a dedicated computer and mobile platform for music downloads and streams using the tag line "Nigerian music anytime anywhere" -- representing 400 artists and containing more than 35,000 tracks in its catalog, according to CEO Michael Ugwu.

But the market is still nascent, so Universal, like it did in the United States with Vevo, is leading the launch of a local digital music service called Kleek, according to sources familiar with its plans. The service should launch next year in key African markets South Africa, Nigeria, Ghana, Kenya, Angola and Cameroon. Universal declined to comment on the service.

"It's tough to measure the African market as there aren't many territories which quantify physical sales, and digital data collection is in its infancy," Abrahams says. "One of our key focuses at Universal is to invest in capturing higher levels of consumer/music data . . . We have to continue to develop platforms and content drivers in order to generate consumer interest and engagement."

A key to developing the market will be establishing not only collection agencies and stronger copyright legislation but also radio and sales measurement systems.

Colin Gayle, a former artist manager and head of international branding for 50 Cent's G Unit, founded Beyond the Music in 2004 to grow and bridge the music industry space across Africa locally and then move it into the mainstream domestically and internationally. His company -- with offices in Nigeria and South Africa -- has morphed into Billboard Africa after licensing the Billboard brand. Billboard Africa is in the midst of launching a BDS-type platform in 16 countries in Africa to create a music chart system and provide the data needed to pay performance-right fees for local and international artists.

"The question is how to build a great ecosystem in Africa as well as a robust domestic market -- and engage the world with African music content," Gayle says. "Before, local markets were taking a lot of international content. Now in the last two years, I've watched the youth here begin to embrace their own local music and culture, wanting more of it. The opportunities are immense if we can start conversations between North America and Africa and build slowly."

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