Nigeria's Answer to Spotify Lures Investors From MTN to Jay-Z

Yinka Ibukun and Dulue Mbachu*

• MTN Group has become largest music distributor in Nigeria
• Revenue for artists worth more than $150 million a year

  [caption id="attachment_21719" align="alignleft" width="586"] D’banj poses at his home in Lagos Photographer: Paul Odijie/Bloomberg[/caption] The mansion, the pool, the Bentley, the life-size portrait and the gold medallions are the spoils of a revolution in Nigeria and music superstar D’banj is enjoying them. The 35-year-old used to have to bargain with street-market traders to sell his CDs because there were no formal distribution outlets. Today, MTN Group Ltd., Africa’s biggest mobile-phone operator, and Emirates Telecommunications Corp. sell songs by D’banj and other stars like Davido and 2Face as ringtones and downloads. Now Tidal music streaming service owned by U.S. rapper Jay-Z is interested in the Nigerian market. “Our consumers can’t get enough of it; you only need to give them a way to get the music,” 35-year-old D’banj, whose real name is Oladapo Daniel Oyebanjo, said at his home in the up-market Lekki neighborhood of Lagos, dressed in a shiny fuchsia shirt. “The telecommunications companies are bridging the gap and they’re raking in billions and billions of naira every year, just from content.” Thanks to Nigeria’s answer to Spotify and Apple Music, the music industry has seen sales triple in the past five years as mobile downloads surged despite rampant piracy. With at least 550 albums each year, revenue to artists from sales is now worth more than $150 million annually, according to Sam Onyemelukwe, chief executive officer of Lagos-based Entertainment Management Co., partner of Paris-based Trace TV.

Enough for a Ferrari

Outside of his revenue from Apple Inc.’s iTunes, D’banj said that in the past 18 months he’s earned more than $200,000 from sales in Nigeria. “It’s close to buying me a Ferrari,” he said by the pool at his home, where he has his own recording studio. More than two-thirds of MTN’s almost 63 million subscribers in Nigeria are using its ringtones service, for as little as 50 naira (25 cents) a song, with downloads on its Music Plus platform growing about 25 percent a year, said Richard Iweanoge, MTN Nigeria’s general manager for consumer marketing. “We have become the largest distributor of music in Nigeria,” Iweanoge said. “It turned out that Nigerians actually wanted to buy music, they just didn’t have a legal way to acquire it.” The boom has drawn the attention of Jay-Z, the rapper whose real name is Shawn Carter. “My cousin just moved to Nigeria to discover new talent,” he said April 26 on his Twitter account. It was part of his move to make his Tidal music-streaming business “a global company,” he said. Boosted by satellite television outlets such as Trace TV and MTV Base Africa, a unit of Viacom Inc., many Nigerian musicians have won international acclaim. “Trace and MTV Base have played a very good part in bringing the artists to the rest of the world,” Onyemelukwe said. “We pay royalties and it brings the viewers to whom we can advertise to gain revenue.”

Awards Sweep

At the 2015 MTV Base Africa Awards held in South Africa in July, Nigerian musicians swept the most prestigious awards, with Davido winning best male artist and Yemi Alade best female artist. D’banj, ambassador for brands from Apple’s Beats Music to Diageo’s Ciroc Vodka, clinched an award for popularizing African music. “We’re operating in a music industry that doesn’t really have clearcut structure,” D’banj said. “It’s a global thing. Everyone is trying to come up with new formulas.” In the 1960s and 1970s Nigeria had a robust music industry, with EMI Group Ltd., Philips Records and Polydor Ltd. publishing the works of musicians including the late Fela Anikulapo-Kuti, King Sunny Ade and Osita Osadebe who went on to achieve global appeal. Most of the companies pulled out in the 1980s as an economic crisis led to currency devaluations and lower disposable income.

Mobile-Phone Revolution

“When the big recording companies left Nigeria and the local ones took over, things went south,” said Tola Ogunsola, co-founder of Nigerian music-download website MyMusic. “There was no formal distribution in Nigeria anymore.” That left musicians resorting to selling their rights to distributors for a one-time fee, or heading over to the open-air Alaba market in Lagos to get traders to distribute their recordings. Then, in 2001, MTN led the introduction of mobile phones in Nigeria, and today there are almost 149 million lines. That’s given local artists an unparalleled avenue to distribute their songs. “In the last five years, the market was ready to buy, the market was ready to consume, consuming more of our own content,” D’banj said. “I believe it is just the beginning; it has not even reached the threshold yet.” *Source Bloomberg]]>