What do savings/investment-tech startups and music streaming platforms have in common? Not much. But that was probably until now.
With more than 2 million active customers and on the back of an eventful period that saw it make NGN 95 Bn (USD 249 Mn) in payouts in 2020, PiggyVest has, since launching in 2016, established itself as a popular tech-enabled savings and investments platform in Nigeria.
Then, there’s uduX; a local music streaming platform launched by Groove Platforms in April 2019, seeking to become the platform of choice for music consumption in Nigeria – well aware of the difficulties that ultimately killed a few other Nigerian companies that sought to compete in the music streaming space in the years past.
Together, both PiggVest and uduX have paired up to launch something that some might describe as “essentially untried and untested, but quite interesting.” They have announced a product called PopRev, which allows music lovers to invest in their favourite musician’s project and make profits based on the project’s digital streaming performance.
Usually, PiggyVest enables customers to save securely and invest in specific financial instruments. So, this interest in “turning music streamers into music earners” is pretty much uncharted territory.
Notwithstanding, both companies are betting on transforming fans of music artists into funders of music artists and partakers in the earnings from their musical content, ultimately.
It’s something the popular Nigerian music star, David “Davido” Adeleke, describes as “an initiative that will afford a lot of creators who, for example, struggled through the lockdown, the privilege to create without concerns of funding.” Heard of the age-long “starving artist” epithet? Maybe this changes things? Perhaps that and more.
Chidi Okeke, CEO of uduX says, “It’s about sharing. Creating meaningful experiences that people can connect with and root for. The music industry has continuously failed to innovate, and this has nothing to do with a lack of technology. The problem with innovation in this space is the lack of incentives.”
That sentiment is shared by Somto Ifezue, CEO of PiggyVest, who is driven by the belief that “this product will help shape a new business model of revenue generation and open up the market for more data-driven investment.”
“This is a music business solution that builds equity for African artists and it will be very attractive to our investors,” he adds.
As announced, through PopRev, fans can track their investment through the uduX platform which is available as both web and mobile apps.
“The apps will give real-time insights into the streaming performance of the music they invested in. Fans can also invite other people to listen to the artist’s music on uduX. Whatever revenue is made from the music is shared with the concerned investors,” reads a portion of the announcement. As the financial partner for the product, PiggyVest will be providing the rails on which the whole thing will run, starting from May 2021.
In December, Oluwatosin Oluwole Ajibade (AKA Mr Eazi) alluded to something of this very nature when he likened music artists to startups and fans/labels as venture capitalists (VCs) who can buy equity in a body of work (music, in this context).
With streaming becoming an area of increased activity, Mr. Eazi, who has something of a reputation as a “tech head,” also hinted at experimenting with future releases such that fans can “buy shares in his song, own a percentage of equity in his music, and ultimately earn based on the earnings his songs rake in from streaming.”
It does seem like a healthy, self-fulfilling arrangement – fans funding artistes and getting to earn money based on how much they backed the work of music artistes and the kind of streaming numbers done by those musicians. That’s like music to the ears and money in the pocket for everyone – a win-win, it seems. But there are certain troubling bottlenecks.
Of course, innovative initiatives like PopRev certainly get full marks for imagination. But, at the moment, there’s little to suggest that this will be a straightforward slam dunk given how the music streaming business, in its current state, barely cuts it for African musicians.
The Nigerian Grammy award-winning Afrobeats/Afro-fusion sensation, Damini Ogulu (AKA Burna Boy), reportedly earned USD 5.1 Mn on Apple Music and Spotify from a total of 435+ million streams on both platforms in 2020.
How does he compare to the most streamed artiste on Spotify last year? Well, that title belongs to a certain Puerto Rican musician, Bad Bunny, who reportedly earned USD 97 Mn on both Apple Music and Spotify from 8.3 billion streams.
For context, Burna Boy’s streams are only 5 percent of the number of streams for Bad Bunny and Bad Bunny’s streaming earnings are more than twice the USD 44 Mn revenue projected for Nigeria’s entire music industry by 2023, according to Statista.
That’s the size of the gulf-in-class that Africa’s best music artistes are facing, and it will take some doing to close that gap and make “music investment products,” like the newly-announced PopRev, somewhat worthwhile. To unlock this music equity play in these parts, music streaming itself has to be cracked.
In 2019, streaming accounted for 56.1 percent of total global recorded music revenue, of which 42 percent came from subscription audio streams and 14.1 percent ad-supported streams. But those numbers do not see much contribution from Africa.
For uduX, which calls itself “Nigeria’s first domestic subscription-based music store and streaming service,” it’s not clear how many subscribers are on its platform, nor is it known how many artists and songs are on the platform.
Nonetheless, uduX has scored a number of interesting partnerships while charging around USD 1.31 per month – noticeably cheaper than its competitors: Apple Music, Spotify, Mdundo, YouTube Music, Deezer, Tidal, and Boomplay.
In Africa, just like uduX, all these music streaming platforms are betting on the huge potential of a largely untapped market.
Data on the number of music streaming subscribers in Africa is hard to come by but Boomplay claims to have the largest base with 44 million active users.
Interestingly, Boomplay defines an “active user” as anyone who uses the app more than once after downloading or opening an account. So, it’s unclear what proportion of its users are actual subscribers. In contrast, Spotify officially boasts 345 million users and more than 155 million paying users worldwide, as of December 2020
By 2024, Africa’s music streaming revenues are expected to have hit a 12 percent annual growth rate that would see the market reach a volume of USD 822 Mn. With mobile subscribers projected to hit 483 million mobile by 2025, coupled with falling internet costs and a youthful tech-savvy population, music streaming might even see larger growth.
But to get there, there’s a lot of work to be done. Although music streaming is growing in Africa, much of the music consumed in these parts still come through illicit sources such as illegal downloads from various obscure websites.
With music streaming platforms offering their services on the basis of subscriptions charged to users, there are legitimate concerns over the actual proportion of Africans who can spare a sum to pay for internet services and then musical content, given the dire economic realities.
And then the artistes themselves are known to upload their music online for free and instead bank on shows, concerts, and brand endorsements as the preferred income route. There’s also the piracy problem. Hence, music streaming has been slow to take off in these parts.
Add those to the opaqueness around record label deals and music distribution frameworks and there’s the raft of factors that kept the likes of Spotify out of the picture for so long in Africa, until that changed recently with Spotify launching in 39 African countries in February.
In any case, there’s kind of a consensus that the music streaming games have only just begun and huge value may well be unlocked in the near future. And something at the intersection point between investment-tech and music-tech seems to side with the consensus.
Featured Image Courtesy: Freepik