Vodacom takes on Spotify, Apple Music
Local mobile operators have carved a space for themselves in a market thought to be dominated by global players
In a music streaming market dominated by international players like Apple, Spotify and the recently launched YouTube Music, Vodacom may seem a little out of place.
But its My Muze streaming app has been downloaded more than a million times on Google’s Play Store since its launch in April. And its service was the music partner for the SA Music Awards.
SA’s mobile operators have chosen to leverage their sizeable subscriber bases to launch local streaming services.
With high mobile penetration in SA, they are looking for ways to provide more services to diversify their revenue streams, says Ndzalo Mpangana, analyst at iAfrikan Digital. In part, this is driven by the decline in revenue from voice calls.
Take Discovery, says Mpangana, which recently launched a digital bank. "It started with medical aid, then went into life cover and now has banking services. The telecom companies are following the same model."
SA’s two largest mobile operators have more than 70-million subscribers between them. MTN had 30-million by the end of March, and Vodacom leads with about 44-million.
MTN says its own streaming service, MusicTime!, has more than 240,000 downloads both on Android and iOS. It launched MusicTime! in December.
The service has more users on Android than any other platform and the app is available in some of the countries where MTN operates, the company says.
Vodacom’s My Muze app is only available for Android users. Customers using Apple devices can use the service by accessing it using a web browser.
Their streaming services won’t appeal to everyone. Mpangana says middle-and upper-middle-class South Africans seem comfortable with Apple Music or Spotify, but the majority of South Africans are still sharing or listening to music using illegal means. This means music files are shared on chat platforms such as WhatsApp or downloaded via cloud services such as Data File Host.
High data prices have hampered mass adoption of music streaming. Both MTN and Vodacom hope to fill this gap.
MTN says MusicTime! users have two options which let them buy time instead of data. They can listen to music for 120 minutes, which will come at a cost of R5, or listen for 300 minutes for R10. Both options are valid for seven days from purchase. Prepaid customers can purchase music time using airtime. And new users receive 60 free minutes, also valid for seven days. These charges include the cost of listening to music as well as the data needed to stream the songs.
Vodacom has structured its payment plans differently. It offers dedicated data bundles for My Muze users. For example, users can purchase 850MB worth of data for R49 that is valid for a month, or an 80MB bundle for R3 that is valid for just one hour.
In comparison, the average price of a subscription with Apple Music, Spotify, WeChat-run Joox or the Jay-Z-owned Tidal service is about R60 a month. And these subscriptions exclude the cost of the data needed to stream the music.
"Telecoms companies see this as an opportunity. But are they going to be big players like Deezer, Apple or Spotify? I don’t think so," says Mpangana.
They target a specific type of subscriber: people who don’t have access to free or cheap Wi-Fi to download or stream their music.
Neither MTN nor Vodacom was willing to disclose how much revenue has been generated from their streaming services to date.
But it does appear as if it’s not entirely about the money — for now. MTN says music streaming is an opportunity to grow subscribers. And it isn’t stopping at music streaming.
"We are also extending our strategy to build MTN into a digital operator with a major focus on the fintech, digital, enterprise and wholesale business areas," it says.
Mobile operators have also ventured into video streaming. Cell C has black, a video streaming service competing with Netflix and Showmax for local eyeballs and subscriptions. Both Vodacom and Telkom have also launched competing video streaming services.
But Mpangana says mobile operators are likely to gain more ground in music streaming (rather than video) as it uses less data, which makes it cheaper for local consumers.
Others have also spotted a gap in the market — including the artists whose content is sold by streaming services.
Mpangana says his organisation is building an analytics platform for podcasts and music artists called Maroo.africa, in partnership with the Music Development Foundation, run by SA hip-hop artist Tumi "Stogie T" Molekane.
Molekane believes local artists, new and established, struggle with contracts and other business knowledge outside of making music.
Many artists also don’t own their digital identity. They don’t own websites. Their online presence is usually restricted to social media platforms.
"The benefit of having your own website as an artist is that people can download music directly from your site. You can also sell merchandise, you can sell tickets, you can know who and where people coming to your site are from," Mpangana says.