Music streamers turn to telcos to make Africa pay
JOHANNESBURG/STOCKHOLM, Oct 12 (Reuters) – 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 corresponding to Nigeria’s Burna Boy and South Africa’s Black Espresso are streamed internationally, the continent was seen as an apparent alternative 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 process 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, informed Reuters the corporate secured “different cost strategies”, specifically M-Pesa, when it moved into Kenya in February.
Owned by Kenya’s largest 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 meaning 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 mentioned.
Elsewhere in Africa, Spotify is in search of different collaborators.
“We’re having conversations with the proper 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 mentioned.
CHASING THE MOBILE MONEY
Irene Kophen, a Spotify premium person primarily based in Kenya, mentioned 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 informed Reuters.
Prices related to opening financial institution accounts, the space to monetary establishments and the problem in assembly “Know Your Clients” necessities due to insufficient proof of have added to the attraction of utilizing telephones to pay.
“The previous few years have seen an emphasis on shifting in direction of enlargement of progressive banking providers by way of cell know-how to seize decrease earnings segments and the unbanked,” a spokesperson for South Africa’s Absa financial institution mentioned in an emailed assertion.
By 2020, sub-Saharan Africa had 548 million cell cash accounts, up 12% from 2019 – greater than some other area on this planet, cell trade physique GSMA mentioned.
That has supplied banking entry in a continent the place about 43% of sub-Saharan Africans over the age of 15 had a checking account in 2017, based on the World Financial institution, which has not supplied any more moderen information.
WIN, WIN
Spotify’s native rivals, corresponding 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 essential that streaming corporations get this proper, in any other case they’ll lose out on income from customers who have been prepared, however unable, to pay them,” Charles Stuart, PwC companion and director of Expertise, Media and Telecommunications, mentioned.
For the telecom corporations, which additionally embrace Airtel Nigeria and Vodacom Tanzania , the partnership will help to attain buyer “loyalty and stickiness” by including worth, Stuart mentioned.
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, informed 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 mentioned.
Boomplay, which has 60 million month-to-month energetic customers, has allowed customers to pay by way of cell platforms corresponding to M-Pesa and Tigo-Pesa in Kenya and Tanzania.
It goals to roll out that choice in Francophone nations, Tosin Sorinola, Boomplay’s director of artiste and media relations, informed 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 related offers earlier than the top of this yr, Chief Government Officer Martin Nielsen informed Reuters.
“On the subject 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 mentioned.
Reporting by Nqobile Dludla in Johannesburg and Supantha Mukherjee in Stockholm; enhancing by Barbara Lewis
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