An Uber mo­ment has come for SA mu­sic in­dus­try

Cape Times - - OPINION & ANALYSIS - Wes­ley Diphoko

THE South African mu­sic in­dus­try is about to be dis­rupted by Spo­tify, a Euro­pean-based tech­nol­ogy com­pany and the world’s largest global mu­sic-stream­ing sub­scrip­tion ser­vice with a com­mu­nity of al­most 160 mil­lion users, in­clud­ing 71 mil­lion pay­ing pre­mium sub­scribers.

The com­pany is a mu­sic, pod­cast and video-stream­ing ser­vice that was of­fi­cially launched on Oc­to­ber 7, 2008.

It was de­vel­oped by start-up Spo­tify in Stock­holm, Swe­den, and pro­vides DRM-pro­tected con­tent from record la­bels and me­dia com­pa­nies. Spo­tify is a freemium ser­vice. Its ba­sic fea­tures are free with ad­ver­tise­ments or lim­i­ta­tions, while ad­di­tional fea­tures such as im­proved stream­ing qual­ity and mu­sic down­loads are of­fered via paid sub­scrip­tions.

Spo­tify is cur­rently avail­able in most of Europe, most of the Amer­i­cas, Aus­tralia, New Zealand, and parts of Asia and soon Africa.

It can be ac­cessed via most mod­ern de­vices, in­clud­ing Win­dows, MacOS, and Linux com­put­ers, as well as iOS, Win­dows Phone and An­droid smart­phones and tablets.

Mu­sic can be browsed through or searched for by pa­ram­e­ters such as artist, al­bum, genre, playlist or record la­bel.

Users can create, edit, and share playlists and tracks on so­cial me­dia, and make playlists with other users.

Spo­tify pro­vides ac­cess to more than 30 mil­lion songs.

As of June 2017, it had more than 140 mil­lion monthly ac­tive users and more than 70 mil­lion pay­ing sub­scribers as of Jan­uary 4, 2018.

Spo­tify pays roy­al­ties based on the num­ber of artists’ streams as a pro­por­tion of to­tal songs streamed on the ser­vice, un­like phys­i­cal or down­load sales, which pay artists a fixed price per song or al­bum sold.

It dis­trib­utes 70 per­cent of to­tal rev­enue to rights hold­ers, who then pay artists based on their in­di­vid­ual agree­ments.

Spo­tify has faced crit­i­cism from artists and pro­duc­ers in­clud­ing Tay­lor Swift and Thom Yorke of Ra­dio­head, who ar­gued that it does not fairly com­pen­sate mu­si­cians.

Uber mo­ment

The ar­rival of Spo­tify in South Africa is an Uber mo­ment for the mu­sic in­dus­try. In the same way that Uber dis­rupted the trans­port in­dus­try (specif­i­cally me­tered taxis) in South Africa, Spo­tify will do the same for mu­sic.

What will the ar­rival of Spo­tify mean for mu­sic con­sumers, artists, re­tail­ers and leg­is­la­tors?

Al­though sim­i­lar ser­vice is not new as Ap­ple, Google and other mu­sic plat­forms of­fer sim­i­lar mu­sic-stream­ing ser­vices, Spo­tify will make a dent in the South African mu­sic in­dus­try.

Spo­tify was de­signed specif­i­cally for the mu­sic in­dus­try as op­posed to other ser­vice providers, who are mainly hard­ware and soft­ware providers who hap­pen to have a mu­sic stream­ing ser­vice.

Spo­tify is se­ri­ous about mu­sic and as a re­sult its en­tire value chain is de­signed to ad­dress the mu­sic in­dus­try. It is for this rea­son that the South African mu­sic in­dus­try should pay more than the usual at­ten­tion to Spo­tify. The ar­rival of Spo­tify in South Africa will have its ad­van­tages and dis­ad­van­tages.

For con­sumers of mu­sic it will mean more ben­e­fits as ac­cess to Spo­tify will mean ac­cess to more mu­sic than is cur­rently the case with other providers.

In the near fu­ture, con­sumers will have ac­cess to Spo­tify via their cars through con­nected mu­sic sys­tem for cars. At this point in time there’s no rea­son to be­lieve that con­sumers will suf­fer by sub­scrib­ing to Spo­tify. It is the mu­sic en­trepreneurs and artists that will have a dou­ble-edged sword as they make use of South Africa’s ver­sion of Spo­tify.

On one hand Spo­tify for mu­sic en­trepreneurs and artists will en­able ac­cess to mar­kets within and be­yond South African bor­ders.

On the other hand, it might not al­ways yield the kind of re­turns the in­dus­try would ex­pect. Over time, Spo­tify could dom­i­nate the in­dus­try to an ex­tent that its dom­i­nance may be abused by chang­ing rules of the game, as we’ve seen with other plat­form com­pa­nies that dis­rupt tra­di­tional in­dus­tries.

The trend with plat­form com­pa­nies such as Uber, Ama­zon and Net­flix has been to start by ap­pear­ing as if they sup­port the in­dus­try, only to turn around and be­come the pro­ducer of con­tent them­selves.

Net­flix, al­though it was started as a plat­form for dis­tribut­ing con­tent, now pro­duces its own con­tent. Ama­zon has also adopted the same ap­proach with pub­lish­ers.

Mu­sic en­trepreneurs will have to be more vig­i­lant as they sign deals to use the Spo­tify plat­form.

In the short term the mu­sic in­dus­try in South Africa will have to unite to en­sure that they get a fair deal from Spo­tify.

In the long run, the South African mu­sic in­dus­try needs to con­sider cre­at­ing its own plat­form for the ben­e­fit of the lo­cal in­dus­try.

Leg­is­la­tors will also need to play a role to avoid what is hap­pen­ing in the trans­port in­dus­try with the war be­tween Uber driv­ers and me­tered taxi driv­ers.

Al­though it’s al­ready too late now, the leg­is­la­tors need to work out an in­no­va­tive leg­isla­tive frame­work to pro­tect indige­nous mu­sic and the South African mu­sic in­dus­try from ex­ploita­tion.

While the en­try of Spo­tify to South Africa should be wel­comed with open arms and vig­i­lant eyes, the rest of the African con­ti­nent should watch this move and pre­pare them­selves for the en­try of Spo­tify to their coun­tries and make sure that when they come there’s a win-win sit­u­a­tion for the lo­cal mu­sic in­dus­try and Spo­tify.

Spo­tify is a freemium ser­vice. Im­proved stream­ing qual­ity and mu­sic down­loads are of­fered via paid sub­scrip­tion.

Wes­ley Diphoko is chief in­no­va­tion of­fi­cer at Sa­gar­matha Tech­nolo­gies and the founder of Kaya Labs. He spends his time de­vel­op­ing build­ing blocks for Sil­i­con Africa and think­ing about the Fourth In­dus­trial Rev­o­lu­tion in Africa.

PHOTO: BLOOMBERG

Spo­tify is bring­ing its pop­u­lar sub­scrip­tion ser­vice to South Africa, where the lo­cal mu­sic in­dus­try should pay more than the usual at­ten­tion to it.

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