9 October 2018

Nigeria's Music Streaming Services Continue to Grow Despite Coson Chaos, Regulatory Barriers and Etisalat Crash

Nigeria's music steaming services have really being going through it recently: the near bankruptcy and coming ownership change at 9mobile; restrictive regulations from NCC; and chaos at rights collection agency COSON. Russell Southwood spoke to Aibee Abidoye, General Manager, 5ive Music, a women who sits at the middle of all these changes.

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. The discussion originally involved five of Nigeria's major record labels (hence the name) but eventually went ahead with three of them:"We wanted to become a digital music platform for artists". Artists include: MI (now CEO of Chocolate City), 2face, Jesse Jagz, Ice Prince, Brymor and Femi Kuti.

Along with other Nigerian music services, 5ive Music has faced a series of barriers but despite these barriers the market has continued to grow. The first of these barriers has been regulation from NCC on how ringtones are sold to crack down on services that sign up a subscriber without his or her consent. It has also capped prices for these types of services.

But one unintended consequence is that there are now restrictions on mobile marketing:" We were marketing using digital on mobile. Now that's gone we have to think of creative ways to promote the music because we can't afford to do marketing. So we're using social media like Instagram".

The second of these barriers has been the near bankruptcy of Eitisalat which has meant a change of name to 9mobile and a shift in management attitudes on its Cloud9 music platform:" The (revenue) splits were favorable to us. Etisalat understood the user and worked exclusively with us for a period. That has changed with 9mobile".

"I don't know the new management and their team. Will Cloud Nine grow or die? The exclusive agreement is over. We'll be going to Airtel and MTN's Music + and with the former, we have music going into both of their music services". Music + was launched in March 2018 and has agreements with all three of the "majors": Sony Music Entertainment, Universal Music Group and Warner Music Group.

"The tech for Cloud9 is not as up-to-date as MTN's Music + which is from Huawei (which also handles Airtel's music platform). MTN also has the resources to be able to buy the loyalty of its audiences. Cloud Nine has bugs here and there and is not able to meet the expectations. But we have the ear of 9mobile and they're listening. We're optimistic about Version 2.0. It's doing much better than Music+. We've got the most equitable revenue share with them, it's 50/50. However, the problem is that they wanted to take out a percentage to cover data. It was now 50% of net. It should be bundled".

However, despite these changes, Cloud9 subscribers have grown from 800,000 in February 2017 to 1.9 million in July 2018. The market has seen competitors come and go but the biggest competitor outside of the mobile operator platforms is probably handset vendor Tecno's Boomplay:"Other people made apps but they didn't survive. There's been a lot of capital investment in Boomplayer. You need to invest in the business for 3-5 years to get a return". Outside of Nigeria, 5ive Music relies on aggregators like Africori and OK Music.

The third big barrier is how MTN treats publishing rights and the general chaos in the collecting society. In December 2017 an impromptu meeting of COSON voted to replace Tony Okoroji as Chair with Efe Omoregbe, who is Tuface's Manager. Okoroji refused to relinquish the post and a series of legal actions followed.

At the time, Omoregbe said, "Tony Okoroji has bluntly refused to accept the vote of no confidence passed by his colleagues on the board. Tony Okoroji has instead, maintained a stranglehold on the reins at COSON and launching a legal and media war against any and every dissenting voice using the apparatus and of course, funds of right owners, whose royalties the directors are duty bound to protect".

On 5 May 2018 the Nigerian Copyright Commission suspended COSON's licence to operate. The crisis has meant that there is no effective voice and collecting society for publishing rights that MTN is maintaining should be aggregated with all other rights:"Most content aggregators don't have the rights for publishing. We think that's a bit unfair on the rest of the industry. It's the collection society's responsibility but we don't have a working publishing function in Nigeria.

"The telcos need to recognize publishing. They're not able to do that because of the way it's being done needs to be improved. There needs to be a lot more transparency. How do you set rates? How are royalties produced? This shouldn't be a one-on-one conversation with each artist. You need the content owners to buy into the vision. We need to think collectively about how these kinds of decisions will affect the industry. We all could be making a lot more. Beyond digital distribution, we need to be community leaders".

One of 5ive Music's founders Chocolate City has opened a CCX Lounge in Abuja Mall. Which offers food, drink and occasional live events. The investment was done with private equity funding from Argentil Capital and it's planning 5 more. We're also doing our own small events. MI is now CEO of the music label and it's been 12 years (since we launched) and we're (pretty much) the only one standing".

Watch Aibee Abidoye, 5ive Music on the challenges facing mobile music services in Nigeria: https://www.youtube.com/watch?v=x25BVSTQt9w

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