Last week marked the end of the beginning of the streaming
music revolution. Apple announced the closing of iTunes, the 18-year-old platform
that helped shift the music industry from physical to digital. At its height,
in 2014, close to a billion people were using it.
However, the business model was still based on traditional
ownership of music. Users either converted their physical music into digital
tracks, or bought songs from iTunes. Apple founder Steve Jobs said back in
2003, when the iPod music player was launched, that consumers “don’t want to
rent their music… They don’t want subscriptions”.
History proved him spectacularly wrong, and when streaming
subscriptions services like Spotify and Pandora began taking off, even as iTunes
hit the 800-million user mark, the company launched Apple Music in a dramatic
acknowledgment that subscriptions were the future. It was also an admission
that iTunes, which had also become a download service for movies and TV shows,
had become top-heavy and frustrating to use.
Apple’s late arrival in the streaming world has cost it: In
January this year, Apple Music reached 50-million subscribers – exactly half
the number paying monthly subs to Spotify.
Spotify took South African music by storm when it launched
here in March 2018, thanks to close collaboration with local artists. It has a dedicated South African team that creates playlists for South
Africans, in genres that appeal to local audiences. It also has a local ad
sales team, and achieved early success with automotive brands like BMW and Mini
using the platform extensively.
The company does not break down user statistics by country
but, says Claudius Boller, managing director for Middle East and Africa, uptake
exceeded all expectations.
“It’s been
an amazing year,” he told Business Times. “Engagement in South Africa has
crossed the world average. Users are extremely active, lean forward, and engage
with playlists on a daily basis. We are not running many campaigns to move
people from our free service to the Premium offering, but people do it right
away.
“The metric
we look at is how often and how long people use Spotify on average per day, and
we have already seen those on premium subscriptions using Spotify much more
than Facebook per day.”
The South
African audience has another key differentiator, says Boller: “The market is
extremely loyal. We know other music services have been in the market for many
years. But when people make up their minds to try Spotify, they fall in love
with it and continue to use it. The drop-off rate of people using our service
is one of the lowest of all the markets in which Spotify operates.”
One of the
secrets of Spotify’s success is the close relationship it builds with what it
calls “the creative community” – both artists and labels.
“They are
extra engaged, because of the data they are able to get. We give them a huge
amount of data in a way that is very easy to digest. Through Spotify for Artists,
they can see in real time how many listeners they have, their demographics, where
they are listening, and where their audience is growing. If Jeremy Loops is doing
very well in Australia, he can adjust where to promote his music and how to
plan his touring schedule.
“We also
use that data to work more closely with the creative community. We bring artists,
labels and managers together for educational events so that they can get to
know how to use the data. We give them practical advice, for example that they should
release music on the same day on all platforms, including radio and streaming
services, to maximise monetisation.”
Music
entrepreneur Siya Metane agrees that audience data is one of the greatest
benefits of streaming music. Better known as Slikour, founding member of the
legendary hip hop group Skwatta Kamp, he now runs SlikourOnLife, an online
urban music site and community with well over a million regular users.
Understanding user trends has been at the heart of the growth of the platform,
and he believes Spotify and its competitors add yet another dimension.
“The analytics that the streaming platforms provide give
artists more insight of where their music is being consumed,” he says. “It is therefore
giving the artists and their managers insight on where to invest nationally or
globally. Such information has not been readily available to artists and
managers before. Historically, everything was based on the physical purchase of
a copy in a region – most of the time locally.”
But there is a downside, he says: “The cost of the streaming
sacrifice is losing a whole R100 per album to a streaming company that pays you
based on their pro rata plays on their service. Therefore only a few people can
benefit. But streaming has definitely shifted the business from music alone to
everything else music can influence.”
Both Vodacom and MTN have recognised the potential of
streaming music to add value to their services, which are becoming increasingly
commoditised. MTN late last year bought the local music streaming service Simfy
Africa, and Vodacom in April this year launched its own streaming music
service, called My Muze. The latter invites aspiring musicians to upload their
music, with the possibility of being discovered and signed to a music label.
“The music industry has changed rapidly in recent times in
that everything now lives digitally,” says Rehana Hassim, portfolio manager for
music at Vodacom. “We also hope to attract new young consumers, to whom music
remains one of the biggest passion points, providing various ways to engage
with and consume the music they love.”
