Africa, with its internationally recognised musical expertise – and rising cell phone use – is central to Swedish music streamer Spotify’s plans to increase its attain to a billion clients.
As African artists equivalent to Nigeria’s Burna Boy and South Africa’s Black Espresso are streamed the world over, the continent was seen as an apparent selection and is the house to greater than a 3rd of the corporate’s 85 new markets.
The issue is cost on a continent the place many individuals usually tend to have a cell phone than a checking account.
Meaning Spotify’s first job because it implements a plan introduced in February to nearly double its footprint is to win over the telecom corporations that usually equate to banks.
Phiona Okumu, Spotify’s head of music for Sub-Saharan Africa, advised Reuters the corporate secured “various cost strategies”, particularly M-Pesa, when it moved into Kenya in February.
Owned by Kenya’s greatest telecoms operator, Safaricom, M-Pesa is used to ship cash, save, borrow, and make funds for items and providers.
“A number of African nations are unbanked so which means they do not use bank cards and that is very true for lots of east African (nations) and in Kenya you employ M-Pesa for probably the most half,” Okumu stated. Elsewhere in Africa, Spotify is looking for different collaborators.
“We’re having conversations with the precise companions to make sure that we’re offering options to cost issues that a number of African customers face in several elements of the continent,” Okumu stated.
Chasing the cell cash
Irene Kophen, a Spotify Premium person primarily based in Kenya, stated she prefers M-Pesa fairly than financial institution playing cards as a result of she thinks cell cash has made music extra accessible.
“Most of us have entry to our telephones, however not many people have playing cards, or financial institution accounts,” the 31-year-old advised Reuters.
Prices related to opening financial institution accounts, the gap to monetary establishments and the problem in assembly “Know Your Prospects” necessities due to inadequate proof of address have added to the attraction of utilizing telephones to pay.
“The previous few years have seen an emphasis on shifting in the direction of enlargement of revolutionary banking providers by means of cell know-how to seize decrease earnings segments and the unbanked,” a spokesperson for South Africa’s Absa financial institution stated in an emailed assertion.
By 2020, sub-Saharan Africa had 548 million cell cash accounts, up 12 % from 2019 – greater than another area on the earth, cell trade physique GSMA stated.
That has offered banking entry in a continent the place about 43 % of sub-Saharan Africans over the age of 15 had a checking account in 2017, in keeping with the World Financial institution, which has not offered any more moderen information.
Win, win
Spotify’s native rivals, equivalent to Kenya-based and Danish-listed Mdundo and Nigeria headquartered Boomplay have additionally began to construct ties with cell operators.
Such partnerships are primarily based on telcom suppliers promoting music bundles that give clients entry to a streaming firm’s Premium service and exclusively-curated music mixes.
The collaboration can profit each side by boosting income and serving to to extend subscribers, however for the streaming corporations it’s all-but important.
“It’s vital that streaming corporations get this proper, in any other case they may lose out on income from customers who had been prepared, however unable, to pay them,” Charles Stuart, PwC accomplice and director of Know-how, Media and Telecommunications, stated.
For the telecom corporations, which additionally embrace Airtel Nigeria and Vodacom Tanzania, the partnership might help to attain buyer “loyalty and stickiness” by including worth, Stuart stated.
MTN, Africa’s largest cell operator with 48.9 million energetic cell cash customers, is integrating its cell cash service onto its MusicTime app to permit funds, Serigne Dioum, group chief digital and fintech officer of MTN, advised Reuters.
“We’re speaking to gamers who’re music-only gamers and likewise we’re speaking to gamers who’ve broader attain in music, video and gaming and who can place our digital providers significantly better,” MTN’s Dioum stated.
Boomplay, which has 60 million month-to-month energetic customers, has allowed customers to pay by way of cell platforms equivalent to M-Pesa and Tigo-Pesa in Kenya and Tanzania.
It goals to roll out that possibility in Francophone nations, Tosin Sorinola, Boomplay’s director of artiste and media relations, advised Reuters.
Mdundo, which had 8.7 million month-to-month energetic customers as of June, has three telecom partnerships in Nigeria and Tanzania, and expects one or two extra comparable offers earlier than the tip of this 12 months, Chief Govt Officer Martin Nielsen advised Reuters. “In terms of funds throughout Africa our key focus is bundling with telcos… as a result of telcos are those who’ve this attain and entry to individuals’s pockets,” he stated.
© Thomson Reuters 2021
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