Last month, my wife and I had dinner in Lagos with one of the most successful record label executives in Nigeria. Although we speak whenever we see each other and both have a massive mutual respect for each others’ efforts, we have never been able to actually agree on any commercial deals to bring his labels music to iROKING.
During the meal, he mentioned one of his biggest artist’s tracks was blowing up everywhere. I am usually late to new releases. I’m old after all.
In real time I opened Deezer (I am a subscriber - more on that below), found the track and synced [downloaded] it for offline playing later. All this took roughly 10s. It dawned on me there and then taht:
The opportunity was lost. iROKING had lost the war.
![iROKING Google Analytics](http://media.tumblr.com/e959f3f5b1e69b36765bf35f7529eee6/tumblr_inline_n997xdzKa41ra2evx.png)
Above is the H1 2014 data for
m.iroking.com. From January to June 2014 we have seen average monthly unique users of 1,096,351.
In June for audio and video downloads stood at 2.1 million downloads.
iroking.com we are currently seeing monthly uniques of 29,511.
In the last 2 years we have had 18.5 million downloads and 25 million track plays. In terms of iROKING the platform, we are stable at approximately 1.1 million uniques per month.
When I think platform today, looking at the numbers, we have something of a product success with
iroking.com is there for nostalgic reasons.
![iROKING Google Analytics](http://media.tumblr.com/7bf5e61e889f6aa9bc853607558f738b/tumblr_inline_n997wtUSkp1ra2evx.png)
Music Downloads as a Business
Launched in 1998, eMusic has survived the rise of iTunes (it started selling downloads 4 years before they launched), Pandora, Spotify and Deezer. It has remained remarkably close to its origins too. With the tag discover and download music, eMusic has focused primarily on building a subscription community and business around the music download. Whereas this feels quaint in the world full of all-you-can-eat 30m track streaming libraries,
a fair amount of people still prefer to download music.
This is a US-based business, the epicentre of the global music market. Yet somehow it still remains relevant. Oh and it still generates around $100m in revenue, albeit significantly smaller than the leaders but a nice little business nonetheless.
In Nigeria and Africa at large, the downloading music is the preferred mode of consumption. We are nowhere near the ubiquity of streaming quite yet.
We calculated early this year that the download market for Nigerian content globally is at least 100m per month. That’s on feature phones, and as we know, that still makes up the majority.
Losing the War
I’m being nice.
To be frank we were never really in the game. We just never knew it.
Local players have largely failed against the 30 million track libraries of the big two, i.e. Deezer and Spotify. We were somewhat responsible for that.
We started third party distribution of Nigerian music artists on both Spotify and Deezer late in 2012. At the time it was to maximise revenue for the artist. Today it doesn't really make much sense.
Spotify has 10 million subscribers - founded 8-years ago and raised $540m.
Deezer has approximately 6 to 7m subscribers - founded 8-years ago has raised $149.3m.
My Original Inspiration
Meet Saavn, my original inspiration.
In October 2011 I met the founders of Saavn. They were building an Indian music startup out of New York.
At the time, we hadn’t even launched iROKOtv.com yet but I was just funded with $3m and had visibility into the appeal of music and movies with my third party distribution business on YouTube.
They too were VC-backed by Tiger Global and were having some early success streaming music in India and the diaspora. We met a few more times, I downloaded their apps and realised there may be an opportunity to build something similar in Nigeria.
This was October 2011 so the grand digitisation of Nigeria music hadn’t really started yet. So we hastily launched iROKING. The first set of web and smart phone apps were super buggy and not really any good.
Then it was ignored for a few months whilst I rolled out iROKOtv.com and then our subscription service PLUS.
Giddy with a we're going to change the industry mantra and fuelled with millions of dollars (along with others) we invested / moved a few million dollars over 2011-2013 into acquiring music licenses.
The problem was we massively overvalued those licenses (in movies the market over time has corrected itself as revenue caught up with license fees and other parties too bid and other platforms like PayTV adjusted their prices upward - today a good movie is priced $5 - 20,000 just for a license).
Saavn had competition. VC-backed competition. But the moment they were unable to meet their license requirements, even with $8.3 million in VC funding and 9 million free users? They shut down.
Yet with 9.3 million active users of which half are in Indian. Saavn still thrives.
In the article above in the Wall Street Journal, Bhat said:
We offer purely South Asian content today. We have English music for this [India] market only and other South Asian countries. We are not going to be where Spotify is, or Pandora is, or those kinds of services. They are already sort of addressing these non-South Asian markets doing a great job.
We have added a bunch more labels which accounts for 900 record labels with which we work with out of India, and the total market is well over a 1,000 record labels. It is across 22 languages and 35 dialects.
We have 11 languages that are live including in this market [India], with about 1.1 million music tracks.
From my knowledge, Deezer or Spotify don’t have Indian or South Asian content on their platforms and definitely not in those local languages. with Bollywood or South Asian tracks not primarily in English. Saavn has a massive advantage vs the global players and they are addressing a 500m per market opportunity.
It’s telling. They are blowing off doors.
The Guardian recently projected that India will surpass the United States this year to become the second largest country for smartphone use in the world, adding 400 million new users.
Surge of Free
Spotify, Deezer and Saavn were able to thrive over time because at core, the structural nature of their content licenses enabled them to. It protected them and their investors.
If you want to build a streaming music service with Beyonce & Co, no problem. But you have to pay. Big time. If you don’t, the industry will sue you to oblivion. Grooveshark was sued by all four majors for $17 billion and within 9 months the founder was talking about how broken he was.
iROKING or the other legal music streaming startups were never afforded that level of protection for our expensively acquired licenses. The Nigerian music industry is modelled to where the money is. Currently it’s not in digital and I don’t blame them.
I wouldn’t have bothered with us either. Being super distributed [free] and popular is the only important thing. There are always shows, weddings, endorsements, RBT millions to fall back on.
So with the music industry’s fundamental structural makeup stacked against you, coupled with our own lacklustre smart phone app building history, we lost the smart streaming opportunity. But we built something the market does understand.
m.iroking.com. We have never spent a single dollar on marketing and have done the minimum in product development yet we have a arguably a strong product for Africa. 1.1 million uniques per month strong.
![iROKING Google Analytics](http://media.tumblr.com/dcf717d4469ddcfc99738971f659ae88/tumblr_inline_n99c10liAj1ra2evx.png)
Of our top 10, 7 / 8 are African countries as detailed below.
![iROKING Google Analytics](http://media.tumblr.com/3dd22547b1e73c671eaf93c831183349/tumblr_inline_n99c21ApIv1ra2evx.png)
This year iROKING has been about product development. It is about trying to improve the performance and tools of the site. It’s been about me, alongside Ifeatu and the team, steadying the ship and exiting some of those crazy lose 97% per licensing type deals I so enthusiastically entered in 2011/12.
It’s about getting back the basics of a service which delights our users and serves a fundamental utility. Ifeatu and the team will continue in that vein. The success of m.iroking has influenced significantly our thinking at a group level about services which can work in Africa. These experiences are institutionalised and form the foundation for a more agile and smarter company. At least I hope.
iROKING’s only future is about building the right product set to grow from 1.1m uniques to 10m and after which figuring out a way to monetize that community.
Cover Image Credit: Simon Q