Any analysis on emerging markets in the recorded-music industry usually centers on the world's two most populous countries, China and India. The most recent trade results confirmed that the two countries are starting to live up to their "emerging markets" tag, and are now seen by record companies as the source of serious future revenue growth. Plenty of other countries in Asia and Latin America are also starting to "emerge," with streaming driving sales upwards after many years of piracy-driven downturns.
One region of the world that always seems to be missing in emerging market discussions is Africa. Apart from South Africa with RISA, no country in the region has a trade association that publishes reliable sales figures. Global trade association the IFPI included a few African countries in its annual sales roundup 15 or so years ago, but has since given up. However, although no actual trade figures exist, it is safe to say that Africa has never generated more than 1% of global recorded-music trade revenue, despite being home to almost 20% of the world's population. So, why has the world's biggest record company stuck its neck out and expanded its African operations?
Universal Music Group said in July that it was opening an office in Côte d’Ivoire as part of an expansion of its operations in French-speaking parts of Africa. Then, a week later, the company confirmed it was expanding its operations in West Africa with the creation of Universal Music Nigeria and the opening of a new office in Lagos. In both announcements, Universal said it would focus on discovering and supporting local music talent with increased efforts to expand live music activity throughout the continent. But live is just one part of Universal's plans. The company also confirmed that the launches were part of "accelerating the company's focus on growing the entire African music ecosystem including recorded music, music publishing, production, live events, brand partnerships and merchandising efforts."
Currently, if it wasn't for ring-back tones (RBTs), music revenue in Africa would almost be nonexistent. That said, most of the revenue generated by RBTs is kept by mobile telecoms operators, so for rights holders, the African well is persistently dry. But, despite the many barriers facing digital music services, a growing number of homegrown offerings are trying to attract users, and several of the main international brands have also established an African presence. Furthermore, although digital infrastructure penetration lags behind the more developed markets, in actual numbers, the addressable market for digital music is not insignificant. And it is expected to grow.
Take Nigeria, for example, Universal's new West African home. The number of mobile subscribers is set to reach 155 million at the end of this year, and is forecast to rise to 198 million by the end of 2022 (see Figure 1). Similarly, the number of activated smartphones will more than double over the same period.
Figure 1. Nigeria, mobile and smartphone subscribers, 2018-22
With all the digital music services now app-based, the mobile and smartphone figures suggest Nigeria is a market worth targeting. It should be noted that multi-SIM use is high in Nigeria, so penetration is lower on a unique subscriber basis. Also, activated smartphone numbers are not a unique subscriber measure. But, even taking those factors into account, the country still has a sizable addressable market that clearly Universal believes is worth going after.
Nigeria, like so many of the often talked about emerging markets, has never had a recorded-music sector to speak of – piracy has made sure of that – so only a tiny fraction of the population have ever visited a shop selling legitimate music. But that scenario applied to both China and India just a few years ago, and those countries are now the shining lights of market emergence. Certainly, Universal believes that if China and India can do it, then so can many African markets. If the company is right, then the current recovery in recorded-music fortunes could extend well into the next decade and beyond.
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