Africa’s booming music streaming industry is being stymied by regulatory restrictions, infrastructure and access to financial services, says top executive.
The promising growth of music streaming in Africa continues to be held back by technological, regulatory and financial barriers, according to one of the continent’s top music executives.
Sipho Dlamini, who has just been promoted to CEO of Universal Music South Africa and Sub-Saharan Africa, where he promotes leading artists including Tiwa Savage and Nasty C, said that regulatory divergence between markets, the prevalence of unbanked customers and local currency fluctuations make it a challenge for global streaming services to attract customers and reach scale across multiple African markets.
“In Africa, Spotify is in only 1 of 54 countries, Apple Music are now in 33 countries in Africa, but effectively properly operating in South Africa.
“They have a presence and a small subscriber base in Nigeria that is growing, but subscription to these services often requires a credit card to activate the service. You have large parts of the population in many countries where they don’t have credit cards, there are even large populations that are unbanked…That means that adoption to these services has many layers of boundaries.”
Global record labels and streaming services are increasingly attracted to Africa’s vast and growing young population, the growth of internet and smartphones, and the popularity of homegrown genres such as Nigeria’s Afrobeats.
Streaming is increasingly popular – in South Africa, streaming should generate around $50.8m in 2022, more than three times what was generated in 2017, according to PwC. In 2018, UMG licensed its catalogue to Boomplay, Africa’s largest local streaming platform.
UMG recently appointed Dlamini to oversee all of its operations within English-speaking Africa. He says that the challenge of adapting to multiple markets with different regulatory frameworks, economic conditions and musical tastes has led the company to operate through regional headquarters.
UMG has divisions in Nigeria, Kenya, and South Africa, and a presence in French speaking Côte d’Ivoire, Senegal, Cameroon and Morocco. Territories focus on domestic A&R and talent development and coordinate marketing, promotion, recording facilities and live music promotion.
“It’s hard to have a pan-African strategy because each country will have its own laws, its own telcos, so you almost have to redo deals on a country-by-country basis…We’ll have a regional approach first. The South Africa office is the headquarters but we cover the southern African market in terms of repertoire artists, deal structures and promoting services and concerts in that region.
“We might have a very high-level pan-Africa strategy, but we’ve got to layer that simultaneously with a more regional approach as to how we grow these markets. There’s no doubt that Africa as a whole is going to come to be a very significant market in streaming numbers in years to come, but there’s a lot of groundwork that needs to be done now.”
In the meantime, the company is looking to bolster alternative revenue sources through brand partnerships, TV and movie tie-ins, and a live ecosystem fit for the post-Covid world.
“Whilst streaming in some markets is at a very early stage and cannot be the only source of income the artists can survive off, the live sector becomes important, because they can do shows, they can earn money and that money is regular in a non-Covid period.
Other areas we’ve also started to ensure we can balance out a weak streaming presence is on the brand side. We have brand teams in every office dedicated to seeing how we can connect our artists and music to brands, whether it’s Coca-Cola or Pepsi.
“We’ve also got a sync team in each office and their pure focus is how to get music into TV shows and movies.”
For the full interview with Sipho Dlamini, read the March issue of African Business Magazine, out on March 1st. To subscribe to African Business Magazine visit https://african.business/subscribe/ .
Africa’s music streaming industry ‘held back by red tape’ – African Business
