Press Clipping
11/04/2018
Article
Universal targets Africa for growth in music streaming

Universal Music Group has struck a licensing deal to push into Africa, as the world’s largest music company searches the globe to tap into riches from digital streaming.

Through the agreement UMG — home to acts including Lady Gaga, Kendrick Lamar and Elton John — will license its catalogue to Boomplay, a fast-growing African music streaming service, as well as trying to build a stronger global audience for African acts.

The move comes as owner Vivendi is looking to sell up to half of the shares of Universal Music, which analysts say is now worth more than $40bn thanks to a nascent recovery in the music business. 

UMG’s global acts such as Drake and local artists like Nigerian singer Tekno will be available to the 36m listeners on Boomplay’s streaming platform in Nigeria, Ghana, Kenya, Tanzania, Rwanda, Uganda and Zambia. Boomplay’s service currently offers 2m songs, spanning genres like Afrobeat, Afropop and hip-hop. 

As distribution has evolved from CDs followed by digital downloads, industry executives say that regions latching on to smartphones and previously ravaged by music piracy are now ripe for streaming. Latin America, for example, has been a standout success for the music industry in the past few years as Spotify became popular in the region.

With growth of services like Spotify set to slow in mature western markets by 2019, “the streaming market will need to look towards emerging markets for growth”, said Mark Mulligan, analyst at Midia Research.

The major record companies see potential in Africa, where a rapidly growing and young population appears receptive to streaming. Across sub-Saharan Africa, 60 per cent of the population is under 25 years old, according to UN data. More than 400m people have mobile phone subscriptions in sub-Saharan Africa and this is expected to grow to 690m by 2025, according to the GSMA mobile economy report.

While UMG has long had a presence in South Africa, this will be its first major expansion to the rest of the continent. It opened a Nigerian division with a new office in Lagos earlier this year. The company said it is looking to “grow the entire African music ecosystem”. 

Mr Mulligan at Midia warned that in sub-Saharan Africa, “weak infrastructure and patchy rights frameworks, coupled with low consumer spending power, have long acted as brakes” on music revenues. Sub-Saharan Africa represents 15 per cent of the global population, but just 1 per cent of the global recorded music market, Midia calculates, with its streaming market “in its infancy”. 

Boomplay is owned by Transsion Holdings, a Chinese manufacturer that overtook Samsung this year to become the number one smartphone company by sales in Africa.