How Community and Technology Can Unlock the Sounds of the Continent

There is a palpable rhythm to life across Sub-Saharan Africa and so it is no surprise that music is interwoven into so many of the cultures. The past few decades have seen that music expand beyond being a way of life and into a prominent industry. From creation to monetisation, there are many ripe business opportunities to be uncovered in the music of the region. In this article, we will set out three business opportunities to unlock how people access music on the continent.

The Current Landscape

Sub-Saharan Africa is home to a vast and still growing consumer market. On track for a full doubling of its population by 2050, the region and its rapid population growth “will play a central role in shaping the size and distribution of the world’s population over the coming decades.”¹ As of 2016, spending by this consumer population topped $4 trillion annually and was continuing to grow.² Several of the pillars of this consumer growth — such as urbanisation, a sizable youth population, and rapid digitisation — are a natural complement to the music business.³ In addition, the mobile economy is projected to soon reach a few notable landmarks including 50 percent smartphone adoption this year and 500 million mobile subscribers next year (and 678 million in 2025).⁴

Before moving to a discussion of the opportunities, it is imperative to at least touch upon the well documented issue of piracy of intellectual property. Since enforceable intellectual property rights are a prerequisite to being able to protect the revenue potential of a musical creation, addressing this issue is both necessity and opportunity. Progress has been made in establishing basic intellectual property systems in several of Sub-Saharan Africa’s major economies. Yet, the institutions undergirding these systems remain underfunded, bureaucratic, and lacking in the cross border harmonisation needed to protect rights across such a vast region. This vacuum creates a space for nongovernmental actors to innovate on how to register, trace and enforce intellectual property rights. On the issue of registration, one interesting debate is the viability of using blockchain technology to register unregistered intellectual property rights.⁵ On the issue of tracing, the development of watermarking, webcrawling and similar technologies can tackle the network of individuals who replicate and distribute pirated content. On the issue of enforcement, the use of arbitration as a means to expedite the investigation and settlement of infringements could provide better certainty to the private sector and attract additional investment based on confidence in the public sector.

Opportunity: Creating a Mixed Use Venue for the Arts Ecosystem

There is an age old proverb that says, if you want to go fast then go alone but, if you want to go far, then go together. In this vein, a collaborative business opportunity is the creation of a mixed use venue in which live performance is just one of the uses of the space. Diversifying the uses of the space has various benefits. First, there is a finite amount of time that any particular space can be used for a live performance and the remaining time it lies dormant and unproductive. By introducing additional uses, the investor increases the utilisation of the space and, in turn, the potential for revenue generation. Additional uses may include other links within the music industry value chain such as a recording studio, a talent agency, a radio station, and/or a record store. The music industry also has a natural relationship with other forms of arts (e.g., fashion, photography, videography, graphic design) who could also increase the utilisation of the space. Second, a mixed use venue derisks the investment by allowing the business owner to pivot to different uses in response to changes in consumer interests or other circumstances. Third, a shared space means lower start-up and running costs, thereby reducing a common barrier to entry for music entrepreneurs. Fourth, a mixed use venue presents an opportunity for cross marketing and upselling which has the potential of expanding the consumer base of each individual investor. For example, someone may arrive early to a live performance and peruse the fashion retail while waiting for the show to begin. Or, a graphic designer or videographer may display their works as part of the background to a musician’s live performance. A space that encompasses the full value chain also has the potential to reduce the leakage (e.g., goods that are lost and/or stolen), inefficiencies (e.g., the high costs of physically distributing the goods) and piracy (e.g., unauthorized reseller markets) that arises from a disconnected chain.

Opportunity: Virtualising the Live Performance Experience

The 2020 Covid-19 pandemic has changed the ability and willingness with which people come together. However, the complexities of physical infrastructure in the region has long hampered the potential of live performances. The availability of viable entertainment and hospitality venues is frustrated by “expensive and inconsistent electricity [] and inadequate construction procedures.”⁶ Furthermore, movement across countries is generally “constrained by complicated and expensive visa procedures, as well as poor development of the aviation industry” while even movement within a country is “most often restricted by the quality of roads and public transit infrastructure.”⁷ Thus, it is both recent and historical challenges that are spurring a rethink of how we create spaces for live performances.

With this in mind, another business opportunity lies in virtualising the entire experience of live musical performance whether it is a festival, a dance party, or a fully virtual events space. The opportunity can be in the creation of the technology platform for staging these events or in the production of the events themselves. One’s mind may immediately jump to the Covid-19 pandemic as a reason for exploring this opportunity. However, the opportunity in virtualisation predates the pandemic. A virtual experience significantly reduces the financial costs of both the travelling to, and staging of, an in-person musical performance. It also reduces the environmental impact of these activities. In addition, the infrastructure barriers that frustrate touring within and outside of the country disappear and the musician can now engage with a far broader audience of consumers. Finally, virtualisation can leverage other technologies that open up whole new forms of engagement (e.g. virtual reality) between the musician and the fans, the musician and other musicians, and amongst the fans themselves.

Opportunity: Integrating financial technology (“fintech”) into music streaming

There is no shortage of international and locally grown audio streaming and media services platforms making inroads into the markets of Sub-Saharan Africa. The size of the region’s population is bound to catch the eye of any consumer company. More importantly, the potential of the ecosystem is beginning to come to fruition courtesy of the exponential growth in smartphone adoption and telecom operators’ investment in broadband and network infrastructure.⁸ However, a challenge faced by these subscription services is the dearth of tools for paying the subscription fees and the relatively high costs of those subscriptions. Although some services have partnered with telecom operators, there are concerns about the fairness of the revenue split demanded by these operators.⁹ A business opportunity lies in an improved integration of fintech into the music streaming industry.

The fintech scene already has had a successful run of years in the region with growth forecasted to increase from $200 million in 2018 to nearly $3 billion in 2020.¹⁰ One of the key reasons for this success has been the “embracing of local challenges, needs and boundaries” such as leveraging the high rate of mobile penetration to extend the footprint of brick and mortar financial institutions.¹¹ As such, fintech has a proven ability to help the music streaming industry adapt to the dual realities of a high percentage of unbanked persons and a low percentage of persons with disposable income. Fintech brings to the table a broad array of payment options for accessing music streaming services which means a larger serviceable obtainable market. More importantly, fintech has a library of data to generate insights on the spending habits of this market. These insights can be critical to designing viable subscription models. For example, if basic utilities such as electricity follow a pay-as-you-go model, then it stands to reason that a similar model could work for other types of expenses. Other types of subscription models that may fit well with the region are curated packages (e.g., by artist, region, and/or language), tiered pricing, earned upgrades, or per unit/user (e.g., an extended family plan). Leveraging fintech’s expertise in the how means that music streaming services can focus their efforts on the what.

Conclusion

One of the most famous musicians from Sub-Saharan Africa, Fela Anikulapo Kuti aptly described the music of the region as a “big sound: it’s the sound of a community.” Through mixed use venues, virtual spaces, and the integration of fintech and streaming, we can improve upon how the communities across the region share and partake of its unique sounds.