5ive Music was launched in Lagos in July 2016 as a way of exploiting rights from three music labels in Nigeria: Chocolate City Music, Cabal/Storm 360 and NowMuzik. It has focused on getting right the relationships on digital content with the mobile operators. Russell Southwood spoke to 5ive Music's General Manager Aibee Abidoye about the problems with the current business model for mobile music.
The idea for 5ive Music came out of Abidoye's work at Chocolate City Music: "The biggest issue was transparency in the distribution of content and what the mobile operators were actually making from it." The discussion originally involved five of Nigeria's major record labels but eventually went ahead with three of them.
The rewards of having strength in numbers soon became apparent:"We have a strategic partnership with Etisalat and are able to negotiate deals directly with them. Instead of them taking 65%, we were able to negotiate a 50% split on the gross. And that allows us to negotiate better deals with content owners."
"We're able to give the record labels a higher percentage. For us, it's about volume, consistency and transparency. We send them tracking logs and pay on time."
5ive Music distributes artists from its three record label partners but it can also sign individual artists, take on other labels and advise on strategy for releasing music, using its team of people of promo people.
It has around 2,300 songs, the majority of which are from Nigeria. It also has a deal with Africori where it will be able to distribute its 80,000+ tracks catalogue "once they are completely ingested. As our platform partner, Etisalat was looking for catalogue strength but also diverse types of music. They wanted jazz and Africori has that."
"Imported music is appreciated with artists like Sarkodie (from Ghana) and AKA (from South Africa). It's about getting African markets to work and be open to other African content that's similar to Nigerian music".
Etisalat's music platform, Cloud Nine has 800,000 subscribers. Overall the number buying Ring Back Tones (RBT) has been falling because SMS promotions are working less well in a crowded market:"People are not responding any more and there's got to be another way to do it." There is also streaming and downloading but users are not yet paying as frequently as they should.
The main players in the mobile music space in Nigeria are MTN (with Music Plus) and Etisalat. Airtel is in the space with Mziiki but Abidoye thinks "they are not really playing in the space", are focused on other things and there have been structural changes. Glo has a music service "but the structure doesn't work. Overall with operators, there's a disconnect between artists and telcos."
So what will make the market get bigger?: "There's a need for a better way to monetize content. At the moment it can only really happen through carrier billing. The telcos are becoming like record labels. They have a lot of control and a lot of money but they've not really got the hang of marketing. We're dependent on the telcos but they don't really understand the intricacies of content and the need for flexibility. For example, I put content on Etisalat, I can't put content on MTN."
"I'd like to see the telcos create an iTunes style business where you can get the percentage you need and have exclusivity for a week and be able to spread the music everywhere." This need to be exclusive to one carrier affects how 5ive music can grow.
The current split on revenues - particularly for Ring Back Tones - is 30% to the external party and 70% to the mobile operator: "The Copyright Society of Nigeria is collecting revenues for public performers and is fighting for revenues for the songwriters. They're putting a lot of pressure on the mobile operators and it's forcing them to review and ask: do we have all the competencies? Have we got the right team to build an entertainment industry?"
Digital and physical piracy is also having an impact on the music industry's revenues:"It's both physical and online. It's mostly perpetrated by the blogs, who download a track and want to spread the music. They argue this encourages live shows but it's still not the most sustainable business model."
"We need to focus on what the Copyright Society of Nigeria is doing. It's forcing people to ask questions, have the right team and bring music publishing to the forefront. I'm excited by the future of the music industry in Nigeria but we have to find another way to collect revenues."