• Saturday, May 18, 2024
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BusinessDay

Why Nigeria continues to lag South Africa in music revenues

How music publishers make money for songwriters

In 2023, South Africa accounted for 77.0 percent of the total music revenue from the Sub-Saharan African (SSA) region, according to the International Federation of the Phonographic Industry (IFPI).

While this might surprise music lovers on the continent, it did not shock music experts who spoke to BusinessDay. Nigerian sound (Afrobeats) has gone beyond the shores of the continent in recent years, and its top artists, like Burna Boy, Wizkid, Davido, Rema, Ckay, Asake, and most recently, ODUMODUBLCK, have sold out shows and broken digital sales record abroad.

These successes have allowed Nigeria to become Africa’s second-biggest music market, behind South Africa. According to the IFPI, streaming contributed 67.3 percent more to global recorded music revenue in 2023 than any other form of distribution.

Streaming revenue is the lifeblood of the Sub-Saharan music market, accounting for a significant 24.5 percent of the region’s revenue growth. This underscored the economic realities that shaped the market, with experts pointing out that economic factors largely determined the ability to pay for streaming.

According to reports, many Nigerians spend their money on food and transportation, leaving little cash for entertainment. A 2023 report by Picodi Research revealed that Nigerians spend an average of $62 (N48,186) monthly for food expenses, placing it in the top spot in Africa for the highest food expenditure.

This ensures that only a small portion of the population can pay for music and movie streaming platform subscriptions, influencing how much these platforms can charge. For instance, Nigeria has a lower subscription cost of N900 per month (US$0.57) compared to South Africa at ZAR 64.99 (US$3.46).

Ogaga ‘Ogagus’ Sakpaide, a music executive and artiste manager, stated that the average Nigerian can only afford to spend a small portion of their income on streaming.

“The average person can only afford to pay a small amount for music streaming. Most Nigerians consume music from bootleg websites and free streaming platforms, such as Audiomack, Boomplay, and the accessible versions of Spotify, YouTube Music, and Deezer. Many will jump to the free and bootleg ship if these charges rise,” he said.

Speaking on possible solutions to boosting the value of the Nigerian music market, Sakpaide said, “The issue is more of an economic problem than a music problem. If consumers’ purchasing power rises, they can dispose of more cash for music streaming and might not even pay more to enjoy these services.”

Sakpaide also suggested that educating people about the benefits of streaming and finding ways to collaborate with payment platforms and banks will be crucial. The music executive noted that this collaboration could make subscription to streaming services easier for Nigerians.

Bizzle Osikoya, a Nigerian music executive, explained that streams from countries that pay higher subscription rates translate to a higher revenue rate in those countries, unlike in countries like Nigeria, which pay a lower subscription rate.

Osikoya stated that this is why Nigerian artists and labels sign output deals with international music majors to get more streaming and show revenue from Western countries. In recent years, top-tier artists and their parent labels have penned output deals with majors like Universal, Sony, and Warner Music.

This strategy aims to expand the Afrobeats artists’ listener base to countries like the US, Canada, Mexico, the UK, Australia, and other top music markets.

Osikoya argued that stronger copyright laws and enforcement may boost artist revenues. He stated that if the Nigerian government ensured artists received royalties whenever their music was played on the radio, in nightclubs, or other public venues (like Angola does), artists wouldn’t rely solely on concerts and streaming success for income.

Osikoya emphasised the need for the government to take a more active role in revising copyright laws and ensuring artist compensation through Collective Management Organisations.

Despite South Africa being the superior market, streaming in Nigeria has recently been on the rise. As of April 3, 2024, Spotify Stat on X ranked Nigeria at number 27 globally, with over 4.6 million total daily streams in its top 50 countries. South Africa was ranked 39, with over 2.9 million total daily streams.

Like music, the movie scene is no different, as South Africa is prioritised by entertainment companies like Netflix and other streaming platforms because of its revenue-making potential. Between 2016 and 2022, Netflix invested $125 million in South Africa and $23.6 million in Nigeria, despite the latter being the most populous nation on the continent, having more titles (286) than South Africa (186).