“Where words fail, music speaks.”
-Hans Christian Anderson.
Spotify is a Swedish audio streaming service that launched in 2008. It enables its users to discover, manage and share over 70 million tracks, including more than 2.2 million podcast titles, for free, or upgrade to Spotify Premium to access exclusive features for music including improved sound quality and an on-demand, offline, and ad-free listening experience.
Spotify is undeniably the world’s most popular audio streaming subscription service. The platform offers music and podcasts with algorithmic recommendations personalized to suit each listener’s preferences. According to Spotify, the company currently has 345 million active users worldwide including 155 million subscribers, across 178 markets. The company is listed on the New York Stock Exchange.
Unlike other popular web-based services such as Google, the service has a geographical restriction whereby consumers can only access its services where the Swedish company has set up. This is partly because the company licenses content producers and artists which requires physical presence.
On 23rd February 2021, spotify officially launched their streaming services in Kenya. The audio streaming service is also now available in Ghana, Nigeria, Tanzania and Uganda. Previously, spotify was only available in a few African countries namely South Africa, Morocco, Egypt, Algeria and Tunisia where it launched in 2018. Other users in the continent could only access the streaming service using Virtual Private Network (VPN) that bypasses geographical restrictions.
According to Mike Strano, founder of PHAT! Music and Entertainment, there is an opportunity for artistes and content creators to generate revenue from streams in new markets and to build fan bases, which in the long term will lead to opportunities to perform and engage with a wider audience.
Spotify joins other streaming apps in the market including Apple Music, BoomPlay and Deezer. In Kenya, the big players include Boomplay boasting of 75 million users and 47 million songs, and Mdundo, a download service, boasting 7 million users and 1.5 million songs. However, Mike Strano states that these streaming services have merely made a dent in the one billion strong audiences in Africa, so the cake is big enough for everyone.
Strano also noted that the biggest competition facing this industry is from piracy and not from other music streaming services. To deal with this challenge, Kenyan laws have been strengthened under Section 35 of the Copyright Amendment Act which outlines an internet service provider’s liability to block a customer’s access to sites that are responsible for piracy.
According to Business Daily Africa,
(https://www.businessdailyafrica.com/bd/lifestyle/music/musicians-eye-steady-cash-in-spotify-deals-3319820), Spotify’s business model is based on revenue generated from subscriptions and adverts, and therefore more revenue translates into higher payouts to artists.
According to Investopedia,
(https://www.investopedia.com/articles/investing/120314/spotify-makes-internet-music-make-money.asp) spotify monetizes its streaming services through two main business segments, premium service and Ad-supported service. The biggest share of Spotify’s revenues come from its premium service which provides online and offline ad-free music and podcast streaming to paying subscribers. Alternatively, members who do not pay for a premium subscription are able to access Spotify’s Ad-supported service.
According to DJ and producer Blinky Bill, the arrival of Spotify is an opportunity to generate revenue, and to make brands available on the biggest digital space in the world. Through Spotify for Artists, musicians are able to view real time statistics on how their content is faring in different geographical locations.
For all the benefits that Spotify accords listeners, they aren’t tremendously generous when it comes to paying artists. Despite the company’s popularity, Spotify has faced criticism over streaming royalties that are considered inadequate by many musicians. Royalties are the payments that an artist earns from streams. Spotify royalties are specifically distributed from the net revenue collected from ads and premium subscription fees. Royalty payments heavily depend on the geographical location of streams. In addition, the company isn’t transparent about how much artists should expect to make per stream.
All in all, the entry of Spotify into the Kenyan market has brought about a range of new opportunities and tools for artists in Kenya. Artist’s work can now be shared over the platform to millions of listeners globally exposing their work to a vast audience.
The artists are also able to monitor how their music is performing by reviewing data and statistics made available to them via spotify. This information can prove to be vital for artists in determining their strategies. In the same breath, the streaming service still has some limitations. The lack of transparency in payment of royalties to artists and inadequacy of the royalties still poses a great challenge in the industry.
Content writer at Cue Africa. Email: email@example.com LinkedIn: Selina Liyengwa.