Streaming technology could be the Great Melodic Hope that turns piracy-ridden emerging economies into new revenue earning markets for the still struggling international music industry.
Deezer, the world’s second biggest streaming music platform after market leader Spotify, recently filed for an IPO to be listed on Euronext Paris Stock Exchange. The filing stated that the service (operating in 180 countries) has made developing countries key to its plans. Spotify itself is targeting as many markets as possible with 75 million active users in 58 markets, including several in Asia and Latin America.
Newcomer Apple Music entered 100-plus territories when it was unveiled in June. And at the start of this year, Rdio, founded by Danish Skype co-inventor Janus Friis and already in 85-plus markets, made it clear that winning over music fans in emerging markets was core to its strategy.
After being thorns in the side of the international music business thanks to rife piracy in physical CD and vinyl sales, and à la carte digital downloads, could challenging Asian, African and Latin American countries make streaming recorded music generate incremental revenues?
Internet technology, 4G and soon 5G mobile networks, apps and a young generation familiar with no other way of accessing entertainment could provide the solution there.
“The rapid advance in affordable smartphones in emerging markets is the most significant growth opportunity for the music industry since the invention of FM radio,” states Oliver Barnes (pictured below), Rdio’s UK -based Vice President of New Business. “Emerging markets already have enormous illegitimate market places for music products; more than US$2bn is spent in India alone on mobile ringback tones, less than 5% of which currently finds its way back to rights owners as royalties.”
However, the growing penetration of telecoms-delivered high-speed wireless Internet, mobile payments and middle class consumers are helping to improve the social and economic fabric. This could mean more fans in China, India, Nigeria, South Africa, Brazil and Mexico able (and willing) to pay for access to services like Rdio and reject the questionable quality of pirate services featuring unlicensed music.
These prospects have lured local start-ups and entrepreneurs to set up streaming platforms offering domestic repertoire and artists. South Africa’s Simfy Africa, Kenya-based Mdundo, Spinlet, iRoking and Vuga in Nigeria, plus Tigo in Ghana and Tanzania are nurturing a new generation of streaming music listeners.
This partly explains the recent commitment to Africa by 7digital, which offers business-to-business solutions to companies offering their own branded streaming music operations.
Stephen Somerville, Senior Vice President of Commercial at UK-headquartered international digital music service provider 7digital, concurs: “Music streaming by default provides less obvious opportunity for pirating than physical or download sales.”
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