Business

Music Business: iROKING – Africa’s “Spotify” Hits 100,000 Registered Users, But is it Losing Money Like Spotify and Pandora?

I received the release below from IROKO about their subsidiary  “Iroking.” What caught my attention was the comparison to the digital music company Spotify. The boast about being Africa’s “Spotify,” to me, indirectly marketed to the public that they were making substantial profit, especially given their impressive amount of registered users in such short span of time. However, if the article below that  reports substantial loss in revenue for Spotify and Pandora is anything to go by, having a 100,000 users does not necessarily translate to making a return on investment. IROKING may be operating at a loss now and in future? The same holds for many looking to get into the same spot as IROKOING.

Nevertheless, I do, however, think the Nigerian music market is clearly different. COSON is still trying to get companies/organizations to pay royalties and I don’t believe that includes IROKO. Further, the industry and country as a whole is still trying to set up basic legal infrastructure and enforcement, specific to copyright infringement. So it might be a long time before IROKOING experiences what Spotify and Pandora are currently going through. Let’s see what the future holds here. . .

Pandora and Spotify Rake in the Money and Then Send It Off in Royalties

“If you have read anything about digital music recently, you have probably encountered two names over and over: Spotify and Pandora. Both offer an abundance of free listening on easy-to-use interfaces, and music fans have embraced them. At least 33 million people have tried Spotify, more than 150 million have registered for Pandora.

Those are extraordinary numbers for any online service. But even at their level of scale and hype — and despite having very different business models — Spotify and Pandora exemplify the business challenges for digital-music companies. Both are losing money, and for largely the same reason: the cost of music royalties.

Pandora, which went public last summer, has never had a profitable year, and in its most recently reported quarter lost $20 million on $81 million in revenue. (Its next earnings announcement is Wednesday.) Spotify’s accounts for the last year, recently filed in Luxembourg, show that it lost $57 million in 2011, despite a big increase in revenue, to $236 million.

The companies license music differently, but both wind up paying a majority of their revenue to music companies. Pandora does not negotiate with record labels to use their songs. Instead, it operates under the compulsory licensing provision of federal copyright law, which allows it to use any song — with some restrictions — and sets royalty rates by federal statute.

For its revenue, Pandora, which has free and paid tiers, relies almost entirely on advertising. Yet it has been unable to sell enough advertising to offset its royalty costs. Last year, Pandora paid $149 million, or 54 percent of its revenue, for “content acquisition,” otherwise known as royalties. No wonder the company has been active in Washington lately to try to push for lower rates.

Spotify, on the other hand, made 83 percent of its revenue from subscriptions, according to the filings in Luxembourg, where its parent company, Spotify Technology, is incorporated. Now available in 15 countries, Spotify had a total of 32.8 million registered users by the end of last year. Recently it reported that 15 million people log on at least once a month, and four million pay the subscription rate of about $5 to $10 a month.

Spotify negotiates with record companies and music publishers directly, a process that can be arduous and costly — discussions with labels delayed its arrival in the United States by nearly two years. That means that its royalty rates vary from label to label, and are private: Spotify has never said how much it pays labels for its streams, although the Internet is full of people who have done back-of-the-envelope calculations based on stray royalty statements.

Spotify’s chief executive, Daniel Ek, has said that the company had paid in its history about 70 percent of its income “back to the industry.” But a closer look at its recent financial statements shows that the ratio may be even higher. Last year its “cost of sales,” which includes licensing fees and distribution expenses, was $229 million, or 97 percent of revenue. .  .” New York Times.

IROKO PRESS  RELEASE

iROKING – Africa’s “Spotify” – hits 100,000 registered users!!!

iROKING, the largest, legal distributor of Nigerian music, announces that it has 100,000 subscribers in just seven months.  iROKING is Africa’s number one music platform and allows free, easy and legal access to lovers of Nigerian and Ghanaian music.

Launched in January 2012, iROKING was developed by the owners of online Nollywood-sensation iROKOtv, as a means of showcasing the very best of African music. iROKING is the only African music platform that is accessible anywhere in the world and on a number of devices, including the iOS, Android, Windows and Symbian (Nokia) mobile handsets. The application allows access to thousands of the latest Nigerian tracks and streams songs over Wifi or 3G. iROKING also manages over 80 YouTube artists pages for Nigerian stars that have seen over 100,000,000 views in the past 12 months, averaging 15 million hits each month.

Michael Ugwu, CEO of iROKING says: “iROKING is all about helping African artists and their fans connect with each other. iROKING came onto the scene to improve the channels for Nigerian artists to reach their fans, generating additional revenue for them and therefore helping to fuel the musical ecosystem. This is a revolutionary approach to streaming Nigerian music, hopefully one that will grow. We are also bridging the global publishing & distribution gap directly to platforms such as iTunes and Amazon, as we are a local partner who can publish work on behalf of the artists.

“The raw musical talent in Nigeria is out there. For us, we just wanted to build a simple, beautiful platform that showcases the artists and their work. What we’ve done with iROKING is bring awesome Nigerian music to the rest of the world; whether it’s on a computer, tablet or smart phone, iROKING is Nigerian music anytime, anywhere.”

Since its launch iROKING now boasts over 200 recording artists and 35,000 tracks in its catalogue. iROKING’s biggest stars include Bez2faceBracketFlavourOmawumiTimayaDjineeDuncan Mighty – more are signing up every day. Bez, who was the first African artists to premier a music video on BET says: “iROKING is changing the entire landscape of Nigeria’s music scene – giving power to the artists and also giving music lovers what they want – easy access to the incredible music that’s being produced right here in Nigeria. I’m loving what iROKING is doing for the industry and look forward to the first million registered users, which I’m sure can’t be far away.”

iROKING users can create their own exclusive playlists,  tag their favourite tracks, search by genre/artist and even click through to iROKING-managed YouTube channels to see the latest music videos.

iROKING is part of iROKO Partners, Africa’s largest legal online source of Nigerian film and musical entertainment and YouTube’s largest African partner. “

-Uduak
@uduaklaw

Africa Music Law™

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Credited for several firsts in the fashion and entertainment industry, Uduak Oduok (Ms. Uduak) is a fashion and entertainment lawyer, speaker, visionary, gamechanger, trailblazer, and recognized thought leader, for her work on Africa’s emerging global fashion and entertainment markets, and the niche practice of fashion law in the United States. She is also the founder of ‘Africa Music Law,’ an industry go-to music business and law blog and podcast show empowering African artists. Her work in the creative and legal industries has earned her numerous awards and recognitions, including an award from the American University Washington College of Law for her “legal impact in the field of intellectual property in Africa." She has also taught as an Adjunct Professor at several institutions in the United States. For more information, visit her at https://msuduak.com.

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