The controversy surrounding Spotify’s royalty payment model provides fertile ground for Africa-based startups looking to challenge the streaming giant’s dominance.
Hart The Band, one of Kenya’s pre-eminent music groups, has become the latest band to start selling their music directly to fans through local startup, HustleSasa Inc, as independent artists across Africa seek to move on. from the nearly ubiquitous Spotify music platform to local digital markets. . They hope for a significant increase in their income.
Many African musicians, especially those who have not broken into the global charts, decry the meager earnings from platforms such as Spotify and Apple Music.
Swedish music streaming giant Spotify, for example, offers artists per-stream payments of between US$0.003 and US$0.005, while Apple pays one US cent.
Conversely, musicians keep approximately 95% of the retail price of each track purchased on HustleSasa Inc, a direct-to-fan marketing platform.
As such, a musician is able to both build a direct relationship with their fans and keep the lion’s share of their craft. Peng Chen, general manager of Hustle Sasa Inc, said creators should get the most out of their content.
“It’s more important than ever for artists and creatives to maintain full control of their music distribution and product bundles that we’re excited to help with,” he said.
The move comes at a critical time when musicians’ incomes have shrunk due to the Covid-19 pandemic which has prevented live performances.
Low royalty rates per stream are also causing musicians to seek out other streaming platforms such as China-owned Boomplay and Kenya’s Mdundo.
However, it is not only in Africa that musicians have decried the low prices. In October 2020, the US-based Union of Musicians launched “Justice at Spotify” as part of a campaign to force Spotify to pay artists a minimum of US$0.1 per stream.
To put that into perspective, South African Master KG’s hit song Jerusalema has taken the world by storm with over 100 million streams. However, it only earned US$0.004 per stream on Spotify.
According to analysts, this type of streaming model has exacerbated the gap between superstars like Beyonce or Cardi B and up-and-coming musicians.
Spotify currently operates a pro-rata royalty model (one big pot), whereby most of the monies paid by subscribers are pooled together and then paid out based on the market share each artist/label claims across all streams.
The downside, however, is that the more music people listen to, the less each song is worth because it cuts the cake into smaller and smaller slices, especially for musicians with a hit song like Jerusalema. For musicians who aren’t well known and whose content isn’t on curated playlists, it’s hard to get traction.
Spotify pays a large portion of its sales to the record labels, and it’s then up to those labels to distribute the money to the musicians. This process is generally far from transparent.
While Spotify has expanded to more than 40 African countries since 2018, giving the predominantly young African population an additional option for streaming music, African platforms are beginning to take hold in this territory.
Mdundo and Boomplay are two platforms that have seen impressive growth over the past two years. Mdundo shares ad revenue generated by songs through a 50% split with artists signed up to the platform – a model which, according to Quartz Africa saw the platform recruit 80,000 African artists with a collective catalog of 1.5 million songs.
In 2019, the platform garnered US$300,000 in ad revenue, before the pandemic hit in 2020.
In a bid to expand beyond Africa, Mdundo went public on Nasdaq’s First Northern Growth Market, raising US$6.4 million.
Also in 2019, Boomplay, Africa’s fastest growing music streaming and downloading service, raised US$20 million in a funding round to continue its rapid expansion on the continent.
Total Boomplay revenue paid out to artists increased 74.3%, year-over-year, in 2019.
This success is due to the pre-installation of the music app on the TECNO Boom J7 music phone, from 2015. The phone was very popular in Africa.