Tiwa Savage

Tiwa Savage performs at the New Afrika Shrine in Lagos, Nigeria.  

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If you were to take the latest global recorded music data from the International Federation of Phonographic Industries (IFPI), published last week, you could be forgiven for thinking that there isn’t a whole lot going on with digital music in Africa.

It’s understandable why the highly regarded report is still conservative towards the continent; the data on the various African markets is sparse, especially when South Africa is removed from the discussion. But, in a sure sign that the music business doesn’t want perception manipulated by a lack of good data, the IFPI broke out two pages in its annual report to give an overview of how the region and some of its key markets are developing.

South Africa, the largest formal music market on the continent, saw digital music grow by 107% in 2013, representing 14% of the total market. The overall formal market was valued at $63 million by IFPI.

IFPI doesn’t provide numbers just yet for the continent's potentially larger markets like Nigeria (with a population three times that of South Africa) or other creative hotbeds like Ghana, Kenya (estimated to be worth around $50 million) and Angola, among others, but there’s every indication in IFPI’s 2014 report that Africa, which it acknowledges as having had a “huge influence” on global music culture, is about to turn the corner with digital distribution.

The key platform is -- similar to the developing story of India and China -- the mobile phone. While smartphone penetration is low today in Africa, it is expected to skyrocket with the increasing availability of affordable Android phones from makers like Samsung, who operate on all price tiers of the global market. Nokia and BlackBerry also remain important players in some of these markets.

Mobile broadband grew rapidly, from 2% penetration in 2010 to 11% in 2013, and continues to accelerate, according to ITU.

At last month’s Billboard/Beats FM Music Day at Social Media Week Lagos, Roc Nation’s director of mobile strategies Briant Briggs was as excited as most people about the market’s potential.

“I think there is huge potential in the African Market, with the price of smart phones dropping and penetration rising over the next 18 months,” said Briggs, who is leading a more comprehensive rollout of Roc Nation’s operations across the continent. “As smartphone use rises, there will be more consumption of content, including music.”

The fascinating thing is that on the ground in major cities like Lagos, Accra and Nairobi, there’s been a creative renaissance with music and film over the last decade.

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“The industry here went from not being able to play Nigerian music to pretty much playing nothing else,” said DJ Jimmy Jatt, a veteran DJ who was one of those responsible for championing the new sounds of young Lagos.

These developments are at least partly due to the Internet, enabling the teeming youth in many of these cities to share their work more easily than at any time since the collapse of the European-owned major label infrastructure in the 70s and 80s.

The new music of the last decade in cities like Lagos and Accra has evolved into a sound called Afrobeats, a EDM-friendly blend of hip-hop, R&B and various African beats with stars like Wizkid, Olamide, Sarkodie and Tiwa Savage. The music has been distributed for the most part by a mix of bootleg CDs and mobile phone sharing, as well as YouTube and other online services. Ringtones and ringback tones still dominate the formal mobile revenue streams -- there is an estimate floating around that Nigerian ringtone market alone was worth $240 million last year. But the local labels often complain of being gouged by the network carriers, who take a cut of revenue up to 80%.

Most artists earn their living from live performances, increasingly the case in the West.

However, the success of these acts internationally -- particularly with live shows and digital music -- has meant local labels have had to look at building a more formal distribution and royalty payment system particularly as digital partners like Spotify, YouTube and others try to offer more African music to the diaspora.

Chris Ubosi, who runs Megalectrics, which owns radio stations including BeatsFM, argues that building a collections infrastructure would be a key component in the holistic growth of the music business. While radio has in principle agreed to pay local rights owners to play their music, there’s still debate about what such payments are supposed to look like.

“Broadcasters and the collecting agencies need to work [towards] a resolution to the age-old royalties collection issue,” says Ubosi.

It’s a reminder of how the United States, the world’s largest music market, isn’t always on the side of the angels, from a content perspective. It is one of very few countries where rights-holders are not paid for radio play.

Yoel Kenan, former senior VP of international marketing for Sony BMG who now runs Africori, which is set up to help play a pivotal role in building digital libraries and manage rights for labels and publishers across Africa. The French-born executive said the industry is finally getting together with a real will to create a more commercially viable ecosystem. “The biggest opportunity is to grow new revenue streams -- especially digital -- in Nigeria and the rest of Africa,” says Kenan. “Nigerian music is loved in Africa and the majority of the potential revenues and growth is in Africa.”

As IFPI notes, all the main players, like iTunes and Deezer, have a presence in many of the larger markets. Spotify is working on making its entry into some of the big markets but isn’t willing to talk until it's ready. Rdio is in South Africa.

But there are also dozens of local digital music start-ups who aren’t waiting for the arrival of their well-funded Western counterparts. The best-known include Spinlet, Iroking (both in Nigeria), Mdundo (Kenya), Simfy, MTN Play (South Africa) and Kleek, the pan-African Universal Music and Samsung backed digital platform which also licenses Sony Music content. The two majors will no doubt be hoping to replicate their success in backing Vevo, but it’s still early days a year after launch.

In a sign of how the market is evolving, Spinlet’s owner Verod Capital is moving further down the supply chain with the unveiling 960 Music Group next month, an attempt to re-create the scale and breadth of the major label system for the continent by buying several local indie labels.

Others in the digital space are also thinking of developing label services to build on top of a digital distribution platform. One such is Michael Ugwu at Freeme Digital, who had previously worked with both Iroking and 960 Music. Freeme is developing artist label services, partnered with industry stakeholders, to develop a one-stop label services shop on top of his core distribution offering. It’ll provide everything from mixing and mastering to website development and merchandising.

Digital systems and distribution are all well and good, but Obi Asika, founder of Storm 360, one of the ground-breaking local labels reminds never to forget that its still about the music – and takes inspiration from the unlikeliest of figures in one-hit megastar PSY.

“Africa needs to pay attention to the way the Koreans and others have broken internationally... we always will need someone to champion the music.”