MTN, an emerging markets-focused telecommunications operator, is making incursions into the digital music streaming business in Nigeria.
This move, market watchers say, is an indication that Mobile Network Operators (MNOs) are working aggressively to build up alternative sources of revenue in an attempt to offset a steep decline in voice revenues, driven essentially by regulatory and competitive pressures.
Average Revenue Per User (ARPU) for voice services is expected to decline steeply by around $5 per month over the next five years, down from $6-$7 in April 2013 and $10 in 2008.
“The telecoms industry will see a wave of growth in digital content services because voice revenues are falling at a very fast pace. Mobile operators will have to respond by churning out better data services and digital content to meet the needs of subscribers,” said Dare Ogunlade, general manager, English West Africa, Cisco Systems, in a media briefing in Lagos.
In 2013, global revenues from streaming music services grew 39 percent to hit $1.4 billion, according to data released in March 2014 by the Recording Industry Association of America (RIAA).
MTN is planning to roll out a new service dubbed ‘Music+’ in coming months. Music+ is a converged music streaming and download platform, optimised for mobile and online access, and socially enabled, to accommodate cross-user activity.
Market observers say MTN’s plan is another brilliant shot in the arm, in a manner that would help to revolutionise the country’s fledging entertainment industry. It would be recalled that the telecoms operator had done the same with the mobile application ecosystem, with the likes of Afrinolly, Dobox, Karaoke Songstar, and the company’s groundbreaking MTN Callertunez gaining immense popularity.
But some market observers are worried about the viability of digital music streaming in Nigeria. According to them, incumbent music streaming outfits in the country have been struggling to eke out revenue due to the surge in digital piracy and content monetisation. Many of them seem to be in it, hoping that it would become a profitable business in the very nearest future.
“The challenge before Iroking and Spinlet, Nigeria’s two main digital music distributors – the firms adopting the Spotify/Deezer models of monetising content – is to convince a large enough number of people to agree that paying for music is worthwhile,” said Rotimi Fawole, Lagos-based Intellectual Property (IP) lawyer, in a recent note.
In a country of 167 million people, with a median age of 19, market observers are of the view that the market potential is there. But revenue generation is still a big issue, as Spotify, a US-based music streaming company, with its 24 million users (6 million of whom are paying subscribers), is yet to turn a profit in its 7th year of operation. Apples’ iTunes is claimed to be running barely above break-even, Fawole further said.
“These companies exist in countries with mature copyright enforcement systems, where music royalties have been a dependable source of livelihood since forever. This means that there already exists a culture for paying for music. In spite of this, musicians are complaining that the revenue from streaming isn’t anything to get excited about,” he said.
Perhaps MTN Nigeria may have a new business model to crack the industry wide open. Sources close to MTN told BusinessDay that the telecoms company already has existing partnership with some of Nigeria’s leading musical acts and is looking to further take advantage of these relationships.
South Africa’s MTN is the largest telecoms operator in the country by subscription numbers, with 57.2 million subscribers, according to the Nigerian Communications Commission (NCC), the industry regulator.
BusinessDay had exclusively reported that Nigeria’s telecoms market would witness a wave of growth in digital content services over the coming 12 months. The raft of digital content from operators is amplified by rising smartphone and tablet PC ownership, and as telecoms subscribers become more sophisticated in the usage of mobile (software) applications.
The number of smartphone users is expected to increase to more than 35 million in 2017, from 5.6 million at the end of 2012, according to a new study by Informa Telecoms and Media, a research firm.
“African telecoms operators are intensifying their efforts to develop their own app stores and generate local content, with smartphone shipments up more than 40 percent year-on-year (Y-o-Y) in 2013,” says Spiwe Chireka, programme manager, telecoms and media, IDC Africa.
These developments, as well as the growth in mobile data consumption through smart devices, are setting the scene for spread and use of smartphones and mobile applications in 2014, according to Chireka.
BusinessDay gathered that the MTN Music+ application is currently available for download in beta testing mode, and it is free. However, to download a song on it, mobile subscribers will have to pay a token of N50. Service users can stream directly to their mobile devices (smartphones, tablets) and enjoy offline streaming as well for zero data needed. They can manage their personal mobile music libraries as they wish, and share their taste of music and explore more via music playlist recommendation.
Music+ is a round-the-clock exciting way of music streaming, music sharing, play-listing and more, especially for Naija music. Most streaming applications run adverts which at times interrupt music play and disgruntle users, but Music+ promises a no-advert disruption during streaming. Some of its features include a mobile-first experience, ability to stream songs or subscribe to service to download songs, navigate from one song/song category to another freely, and earn loyalty points from subscription, download, and gifts.
Ben Uzor Jr