Finding a spot in the local music streaming market | Fin24

Finding a spot in the local music streaming market

Apr 03 2019 08:00
Timothy Rangongo

Two weeks before making its grand entrance onto the public markets with its IPO on the NYSE, music streaming giant Spotify went live in South Africa (in March 2018). 

Some critics saw this as a little too late to the party as Apple music, Deezer and Google Play Music had already claimed their stakes. 

But Spotify was instantly popular.

Spotify is the world’s largest global music streaming service, giving users access to over 40m songs, podcasts and other content from artists all over the world. 

Launched in 2008, the service boasts 207m monthly active users, 96m of which are paying subscribers. 

Non-paying users can use the service for free albeit with adverts in-between shuffled songs, while users who foot the R59.99/month subscription get no adverts, offline listening, unlimited skips, high-quality audio and shuffle play.

Early days 

SA was the 64th country in which Spotify launched. 

It has since grown to 79 markets globally. 

“SA has a relatively well-structured market, and that’s why we decided on it as the number-one market to rollout in a year ago,” says Claudius Boller, Spotify’s managing director for the Middle East and Africa.

Spotify was not too worried about the players already in the local music streaming space but more about South Africans’ concerns about data consumption and data charges, says Boller, who cites piracy as the service’s only competitor.

The introduction of a low data-saver feature that automatically kicks in when a user switches to mobile data by limiting consumption to roughly 11MB per hour of data helped gain favour with data-conscious locals, according to Boller.

“Other music streaming services are at about four times higher than that [11MB]. Video streaming services are 25 times higher than that, roughly. 

“Our first year in South Africa has been extremely exciting and we have been thrilled by the response from music fans. Our launch in SA – our first African market – gave us the opportunity to offer local music fans access to a world of new music and genres, as well as giving local artists the opportunity to connect with a global audience of music fans on Spotify,” says Boller.

He joined Spotify two years ago from a heavy music label background and says one of the reasons he was drawn to working for Spotify was how it “has really invented streaming. It’s changed the music industry and landscape but very much so for artists.”

Spotify makes most of the data available to artists directly with a free app called Spotify for artists, explains Boller. 

The data is also accessible via a website where artists can see where their music is being played, locally or across the world, and in real-time. 

Artists can make use of their data for promotions, marketing campaigns and compiling their touring schedules, for instance – essentially a tool to learn more about, and grow, audiences.

Although Boller is not allowed to disclose figures owing to company policy, he says Spotify’s done “very, very well” since opening shop in SA. 

He says listening and engagement in SA is already above the world average compared to the other 78 markets they’re active in. 

“To have achieved this in one year’s time is absolutely stunning,” says Boller.

The music streaming service has paid out more than €10bn in royalties to the creative community globally – including artists, producers and composers – since starting up in 2008. 

What next

“We really believe in large scale,” says Boller, adding that growth plans “are very big”.

For its second year in SA, Spotify is looking at podcasts which it says are growing globally. 

Spotify for podcasters, similar to Spotify for artists, is in beta testing in the US and will enable storytellers to also view daily stats and learn how their episodes are performing.

Spotify’s recently announced global partnership with Samsung will see the latter’s flagship phones like the Galaxy S10+, S10, or S10e coming with the app already preloaded onto the devices, including a six-month free trial of Spotify’s paid premium service.

With Samsung smartphones (android devices) already coming with Google Play Music preloaded onto them, asked on whether Google will be chuffed about this, Boller says it’s all up to consumer choice. 

Literally a day before Spotify’s one-year celebration in the country, Google launched a new music streaming service in South Africa, YouTube Music, also at R59.99/month.

Although it’s still early days, YouTube Music is coming in with the same pricing, and allows users to search for descriptions, lyrics and even use emojis to find songs. 

Smart Search will also allow the use of indigenous South African languages such as isiZulu and isiXhosa to look for songs.

The year ahead

With over 29 000 songs released on Spotify per day across the world, the music streaming service is training South African artists on how to get the most out of Spotify by, for instance, pitching their songs to be included in popular global playlists, to get the push and support.

“When we have internal meetings and presentations of what our development teams are working on, for me personally its really mind-blowing. 

They’re really creating the future of music,” says Boller on developments in machine learning technology, like the platform’s current daily mixes (automatically generated playlists of various genres curated from user data).

Spotify is gunning to increase its total monthly active users by between 18% and 28% year-on-year, from 207m to between 245m and 265m users during 2019.

This article originally appeared in the 4 April edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

music streaming  |  spotify  |  apple music  |  youtube music

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