Ethiopia is one of Africa's larger digital markets with lots of unrealized potential. Recent political changes mean that may slowly begin to change. Russell Southwood spoke to Beakal Tekola, co-founder of Arifsoft about its ArifZefen digital music service.
It's been a long journey for Beakal Tekola and the co-founders of Arifsoft, a journey that's taken them from producing apps to help the Ethiopian diaspora in the USA to being on the brink of launching a music streaming service in Ethiopia. The story is worth telling with all the twists and turns because it illustrates the challenges Africa's talented digital generation face.
The three founders all came to the USA at a very young age and two went to MIT and one to Virginia Tech. By his own admission, Tekola says "we were somewhat detached from the community although we still had connections."
Arifsoft started very simply in 2011 with solving a very specific problem. There was an Ethiopian football (what the Americans call soccer) league in the USA and there was no comprehensive listing of the tournaments held in different cities. So the founders put together an app that listed the events called Arifquas. Arif in Amharic is great or good and quas is football.
The app got 5-7,000 downloads for the week of the tournament and this was something of a problem in terms of having a business model:"The app was for only one week in the year." There was some traction but not enough to build a business out of it.
Luckily those who had advertised in the app - Ethiopian restaurants, other event organisers and so on - wanted the app to be available for the whole year"It became the Yellow Pages for that community and was called Ariflife. We extended it to 10-15 US cities and beyond to Europe and Canada. The traction was there but it eventually competed with Google so again was not a long-term business plan.
Since the early 2000s, the co-founders all had difficulty finding Ethiopian music:"It was only available as CDs in the markets that appeared in the Ariflife app but you didn't know what was good and who the old and new artists were. There was a lot of stuff from 20 years ago. Because of this gap (in supply) people were sharing MP3s by email and sending USBs by post and going to Napster."
"The idea was to start building a central repository of Ethiopian music. One of the founders had a large connection so we said to ourselves: why not make it accessible to others?." Out of this came the AfriZefen music app, which rather appropriately was launched at an Ethiopian football event in the DC area. Within a couple of days, the app had 10,000 downloads and at the end of the week there were 200,000 downloads:"We could see the interest was there and that this was something to focus on. We abandoned the directory app." Initially it was launched on iOS but also was available on Android when they started making the service available in Ethiopia. But at this stage, they had no aspirations to make it available in Ethiopia because of high data costs and "other barriers."
At this point, they hadn't really understood what music rights were and this was the next part of their education:"Initially we had focused on the product but once we had it and started promoting it, copyright issues started coming up and this became one of the major challenges."
There were 2-3 major Ethiopian music labels that controlled most of the market so they "dictated what happened to the artists". These were record companies in Ethiopia and the diaspora, distributing physical CDs:"None of them wanted to work with us and we were hitting a wall."
To break down the wall and keep the dream alive, they started approaching artists directly and using older content:"This allowed us to build up our catalogue but it was still not a sustainable business".
"We learnt a lot through this process. There was not a content collecting rights society in Ethiopia. This was a huge challenge but also a big opportunity." The Ethiopian Government wanted to establish such a society but they found themselves waiting three years and still nothing is operational, more of which later.
"We kept moving forward with individual musicians including some big names like Teddy Afro and Aster Aweke and we began to find record labels who were willing to share their content."
In order to circumvent the copyright problem, they redesigned the product as an online radio service with categorised content:"We no longer had a copyright issue and it gave us the leeway to serve our users. We can pay radio play rights but only a handful of artists have ever contacted us." In the meantime, the Ethiopian collecting society was announced 12 months ago but there's still no operating entity yet.
The business model was to have free access supported by advertising:"At one point we had 700,000 users, 600,000 were in the diaspora and 100,000 in the country but that's now dropped to a lower number. The session count in Ethiopia was very low so we didn't focus on it."
That all changed in 2018 when they decided to do a music download service:"Artists were coming up with new CDs and were having a hard time distributing them. We wanted to offer them a pay-for download released on our service. The diaspora can get music from Google Play and iTunes. So we started working with ethio telecom who offered payment through operator billing and we could sell at 3 Birr (US10.4 cents) per track." It launched with 5 albums as a pilot that lasted two months. The telco did not give much support as it was thinking of developing its own music service as currently it only sells CBRT:"It was difficult because ethio telecom got a lot of complaints that we were selling everyone's music."
Also using carrier billing, ethio telecom was taking 45% of the 3 Birr track price. It can go to other digital payment platforms (like HelloPay and CBE's Birr app called Brio) but none of these have an extensive user base:"You'd have to have 15 links for people to choose from."
"The biggest competitor is currently YouTube with music videos. Part of the recent (political) reforms mean that data prices have gone down and ethio telecom will be privatized. We know changes are coming so we're revamping our Android app in preparation for digital sales in Ethiopia, building on our connection with ethio telecom."