Music streaming in Nigeria has a few major players, but amidst a global market with competitors such as Tidal and Apple Music, for the firms to edge ahead they must develop innovative solutions to appeal to a Nigerian market. Currently, Spinlet, Star Music and iRoking lead the pack but who will wear the crown?

For 19-year old Kolawole Aderinokan, Monday through Saturday follows almost the same routine. Just after eight o’clock in the morning, the lanky teenager alights from a bus dashes across a busy road and a few minutes later, is opening up shop for business in the rowdy Lagos shopping district that is Computer Village selling software and mobile phone chargers out of an worn-out travelling bag. Beside hi bag is a mini-laptop resting on a small table. In no time, “Exclusive from NotJustOk.com” blasts from a small boxed speaker underneath with one Nigerian pop song following after the other in true patriotic fashion.

Aderinokan and many others like him are ‘professional’ offline downloaders and bootleggers who dot the landscape of Computer Village, the biggest ICT hub in the metropolis – and as some add, Nigeria. They transfer music to the memory cards of interested customers for a small price, ranging from N100 to N500 or ($0.40-$2.50) and sometimes more.

In maintaining its lead as the top destination for digital music downloads in Nigeria, NotJustOk, which has been around since 2006, has unwittingly aided the rise of mini-empires for many in the hub. Together with others in the Nigerian cyberspace like Tooxclusive (which initiated an MP4 video download option), Jaguda and 360Nobs, it is besieged daily by a throng of people looking to keep up with the trends and enjoy local music.

“I download the latest jams from NotJustOk and all these websites that give people music for free”, says Aderinokan as he settles down to work, running his hand through his uncombed afro just before he inserts a customer’s SD Memory card into his laptop. Adrinokan provides a guaranteed way for fans to get easy access to the music singles rather than platforms that are more fickle in the Nigerian context like iTunes. The artistes themselves prefer things this way – as do their fans.

Pop culture blogger and respected music critic, Ayomide Taiwo sums it up best, “Why should I stream a song when I can download on Nigerian sites for free?”

The contestants

Understandably, there are only a few players – pardon the pun – in Nigeria’s local streaming sub-sector as compared to the foreign scene. The almighty YouTube remains king with its total number of views in the Nigerian cyberspace increasing by 78 percent from 2014. For all the buzz and its pedigree, its more popular sibling in the Nollywood niche, iRoKing has traction, but has never been able to catch up to the google monster. Samsung Nigeria has also dipped its hands into the jar that is the unique Nigerian market and spectacularly failed to come up with any cookie. The Star Music app launched in February 2013; bolstered by the release of the Chocolate City’s Choi Boy Nation album earlier this year; it has however not made much of an impact.

Then there is Gidilounge which streams African music to over 6 million people monthly, says Adetokunbo ‘TeeKay’ Adebayo, a radio jockey with 92.3 Inspiration FM, Lagos. By far the most popular Internet radio station of choice for Nigerians in Diaspora, it started out as a music blog and latches on mostly to the popularity of its uncensored talk show, No Rubber. Many terrestrial radio stations have followed its footsteps, launching live streaming channels and broadcasting music, news and more.

Almost under the radar, the Nigerian Entertainment Today (NET) magazine – one with a renowned stance against plagiarism and intellectual theft in general – launched Orin, its own streaming app that has barely gathered steam since its entry into the market was announced at the Nigerian Entertainment Conference earlier this year. Orin (Yoruba word for ‘song’) has a minimalist but well-designed user interface with no ads that allows listeners interact with each other. It also allows users create playlists that can be streamed both online and offline without downloading the files, all for $N350 ($1.75) a month.

“Orin is really cool and exciting though and I have also used Spotify before”, adds TeeKay. “The user experience and social functionality on both are not bad, but of course Spotify is more established”, she points out. For a service that promotes itself as the home of African music, there is a surprising lack of non-Nigerian music on Orin. But as Ayeni Adekunle publisher of NET and majority stakeholder in the streaming service points out, it is still in its trial stage and has not launched or embarked on any serious promotion. “Current subscribers are mostly those who caught the news at NEC, who may have come about it on NET or those we encouraged to register and give us feedback”, he says.

It is still early days but Spinlet, a company with origins in Finland, seems to be at the top, at least for now.

The iTunes of Africa

Often described as the “iTunes of Africa”, Spinlet was launched in May 2011 and immediately got to work. Nkiru Balonwu, Spinlet’s CEO, mentions in an email that the company has had around 2 million app installs since 2012, with a good percentage of those still active, streaming and downloading on a regular basis. According to her, 20-30 Nigerian singles on the average are released on the platform – which now has over 2 million tracks on it – weekly. To a large extent, the company has popularized the word ‘streaming’ in the Nigerian lexicon.

It has not been an easy road though.

Structured in a unique way, the Nigerian music industry is largely beset by the twin evils of a weak distribution infrastructure and piracy. Pirates and bootleggers have made music CDs accessible on every corner for as little as $0.4 (N100) and with a largely inefficient distribution system, it is hard to track down actual number of sales, with both artistes and marketers suffering. The Copyright Society of Nigeria (COSON), advocate for the artistes, is embroiled in wars with media houses to get royalties for even analog plays. In December 2013, the situation reached a crescendo when the Nigerian Broadcasting Commission banned the music of 90 acts (A-list acts and otherwise), during a row with COSON. This lack of structure in the industry has pushed Nigerian artistes to seek earnings from paid performances and other endorsement deals.

Ringtones have also allowed for additional revenue streams. Digitally savvy label executives have recouped some of their investment through Caller Ring Bank Tunes (CRBTs). MTN’s CallerTunez service, launched in 2008, is the undisputed leader in this arena with 17 million subscribers to the service as at October 2013.

In December 2013, the death of Nelson Mandela inspired a song of the same title by pop singer Harrysong that garnered over 2 million downloads that month alone. Despite MTN taking 50-60% of proceeds and the Value Added Services (VAS) company taking a further 20-30% as is the norm in industry deals, an ex-staff of the VAS says it still paid about N28 million to the Five Star Music Group, home of the artiste. The label has gone on to make even more from the catalog of hits by Harrysong and Kcee, the other artiste on its roster with an MTN endorsement deal. Statistics from a 2013 Punch newspaper report show that the VAS market in Nigeria is currently valued at over N78.5bn and may actually be moving towards $1bn in the next three years.

Spinlet is attempting to build a similar model, partnering with the telecom companies – like the launch of a branded app with Etisalat in 2013— to drum up a massive subscriber base and standardize the revenue shares with artistes and other content creators. Orin is on the same track too, it seems.

Globally, the fight for exclusive control of artistes on streaming platforms has been heating up. In the United States, upstarts Tidal and Apple are still trying to wrest market control from Spotify and Pandora in a war that will likely take years to play out. Some artists have chosen to avoid streaming all together.

Local streaming sites, including Spinlet and Star Music have also employed this tactic. Star Music attempted to use the landmark occasion of a reunion of the artistes on the nation’s foremost music label, Chocolate City Music, to pull performers and listeners to their platform, but the app, like the album it sought to promote, flopped.

“Spinlet is on top because they infiltrated our local industries and partnered with our industry players to push their brand adequately”, says Gbemi Ereku, an A&R executive who has worked with some of the biggest names in the Nigerian music industry. “They were also able to convince our talents to provide content for them and make it available for fans cheap. “

Rotimi Fawole, an intellectual property lawyer agrees with Ereku, stressing: “I think it’s been a benefit to the company that musicians across Africa realize it’s being run by people familiar with the local music industry and understand its issues.” He argues that Spinlet’s strength has also been in acquiring music across what he calls ‘Africa’s fragmented music terrain’, developing a network of agents across the continent to make it the go-to service for African music.

Its overall strategy to capture the Nigerian market in the long-term according to Balonwu who has a Ph.D in intellectual property law, is creating a unique user-experience for consumers and suppliers of the music as well as adding value creation in the industry by taking responsibility for standardizing absent factors.

But will it succeed?

A tall order?

In July 2015, three key things happened that point to a possible paradigm shift for music acquisition. First, Apple’s Music service launched globally, possibly giving Spinlet a run for its money, when it eventually catches on in Nigeria. With an affordable subscription model – for N1000 a month, users can stream any album ever released as many times as they want. Second, Iroko TV shut down its website, officially stating a desire to focus on its mobile app though such a move has once again fuelling rumors that the company is in trouble.. The last and perhaps the most significant, given the socio-religious context of the country, is the decision by Spinlet to begin streaming sermons. In a country where 45 percent of its citizens identify as practicing Christians and there are single congregational services with anything from 50,000 – 500, 000 people in attendance every Sunday, all the company has decided to partner with influential clergymen offering the promise of shared revenue for the church and an opportunity to galvanize their smartphone-wielding flock to heaven. That move could be a game changer and ultimately, a money-spinner for Spinlet at the expense of Apple, given the Nigerian preference for Android and Blackberry devices in Nigeria over iPhones and iPads.

Mrs. Balonwu says it is all about catering to the users. “As a digital media distribution company, we have to be aware of what our users want to listen to and the reality is that it isn’t always music. Building a sermon catalogue on our service was simply a way to cater even better to that segment of our customers.”

Even with its major wins, Spinlet yet to turn a profit, Mrs. Balonwu admits. She refuses to confirm or deny if the company has yet broken even.

Furthermore, with the arrival of Apple Music and other competitors like Spotify, indigenous streaming companies could face stiff competition ahead. It’s all for the good of the customer, protests Adekunle who says, “I can’t wait for iTunes and Spotify and others to come here full time. We’re learning a lot from them and they will have a lot to learn from us too. It will be interesting to see how it players and I think the artistes and consumers will be the biggest beneficiaries at the end of the day if such stiff competition emerges.”

The streaming companies face other challenges. Even though internet connectivity costs have reduced over the years, from as much as N5000 for monthly plans of 1 gigabyte (GB) in 2009 to as low as N500 for 500 megabytes (MB) in 2015, for Blackberry devices in a country where telephone penetration is 100% with 148,703,160 active phone lines as at August 2015 according to the Nigerian Communications Commission. However, buffering – preloading streaming content when connection speed is low – is not yet a thing of the past.

There is also a lack of industry level data. “We have such a great opportunity to be a bigger industry than telcos and FCMGs but we don’t have data”, cries Adekunle. ”How many fans does Asa have in Ikenne? How many times does Godwin get played on radio or streamed on Orin? How many records will Davido’s album move on the first 72 hours when released on August 10; can we make a forecast based on what we know of his fans?” Data from the industry could be used to tailor content and monitor sales, among other things.

Payment infrastructure is also a stumbling block. The culture of online payments is yet to fully infiltrate the Nigerian society. Banks have successfully blocked the rapid roll out of mobile money but credit and debit cards are still not widespread.  Spinlet accepts credit cards and users can also pay through SMS where the fee is deducted from the subscriber’s airtime, but sources say this is dramatically eats into the company’s margins .

“Nigerian music is yet to be fully digitized owing to the fact that we are a 3rd world country without the appropriate infrastructure, laws and structure”, explains Ereku. “A large percentage of Nigerians still can’t buy music no matter how cheap we’re selling at the moment. Technology (phones and other devices) required for the success of digital music is yet to fully penetrate the general populace.”

Taiwo is more damning in his assessment. “As we all know Nigeria isn’t structured; no payment platform. How much does the singer/producer/songwriter get and all that?” he asks. “We are still battling with radio royalties!”

Currently, YouTube is the leader in paying revenues to artistes from streaming. Rap star Ice Prince Zamani who has been signed to Tidal, may be the only Nigerian act with an established alternative streaming revenue source. Thanks to Taylor Swift’s activism, Nigerian musicians could soon receive procedes from Apple too.

Solutions

Fawole argues, “If the African market is to become as competitive as the foreign market, then the industry needs to support its domestic music streaming companies. Streaming kills piracy, and if the numbers are large enough, it will put money directly in their [artiste’s] pockets.”

For this to happen, artistes and the entire music industry would have to discourage and gradually ‘kill’ the ‘listen for free’ model while signing up with platforms where listening generates revenue. Since physical sales are on a steady decline and streaming platforms disable music sharing as well as copying, it would be almost impossible for these rogue bloggers to indulge in the misappropriation of intellectual property. It is a risk that could pay off on the long run, as e-payment solutions become more reliable and a structure eventually falls into place.

The key to winning the battle for supremacy in Nigeria may in the end rest with the better offerings for artistes. According to Fawole, “I believe the issue musicians have with streaming services, rather than IP theft, is a lack of understanding of how revenue is generated and then split between the services and the musicians. The accounting is complex because the services have different payment bands and the variables frequently change. For instance, income from the freemium/ad-supported bands will vary from month to month as it is dependent on how many ads are placed on the service.” A lasting solution to this is for major industry stakeholders to come together and agree on a standard that is fair to the musicians and the streaming services. The major determinant for consumers afterwards would then be the size of the music catalogue available on each platform.

At the moment, there can be no competing with the extensive database of Apple – or Spotify should it decide take a shot too – and the local players will have to do a lot more to leapfrog these established names. Spinlet seems to be reading the signs on the wall, with its inclusion of gospel sermons and plans to unveil a new web service this August with many new features in addition to much improved music curation and sharing functionality.

Will its dominance eventually translate into commercial success? Can the others catch up and cause Aderinokan and friends as well as Alaba distribution to close shop? It’s a story that is yet to buffer completely.

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