For the coming year, here are my predictions it is a combination of positives and negatives. Nothing outlandish as we are predicting only one year out.
Payments solved: Nigerian tech companies will have their payment problems solved (most likely NOT by a Nigerian company). i.e stored card data will enable reoccurring billing which is the lifeblood of software startups. Paypal will arrive. Finally.
Major exit: There will be a massive exit for a Nigerian startup (not Rocket). Massive meaning over $80million. I have no idea of the space.
Major casualty: Likewise, there will be a massive failure of a funded company. A bankrupt startup or a founder kicked out of his/her company. Lots of media startups will close their doors.
Tech will go mainstream: Tech founders will get the recognition that has been missing. Red carpets and magazine covers for our sector will become commonplace.
International companies will come: Facebook, Twitter et al will set up proper shop in Nigeria. Google will go beyond their sales cubicle. Hello Deezer!
Cash will flow in: There will be a lot of inbound money invested in the technology space. $100million at least will come in. The low amount is because of the uncertainty of the Nigerian elections coming up
Rocket will Exit Africa: They are done with here. But they’ll be dusted as they sell off everything they have and move on to other things.
Corporate venturing will take off: MTN has shown the way. We love to copy. Do not shut down that your streaming app just yet, the buyers are looking out.
Incubator time: Many commercial play incubators will begin to sprout. There will be at least one foreign one that will be for Nigerian startups (as against the Rocket model)
Tech + Politics: Technology and social media will dominate the political landscape. This is fairly obvious but it will be on another level far beyond SMS broadcasts
Global Nigerian Startups: We’ll have our Representatives in Y Combinator, TechStars and 500 Startups. Of course we will start appearing on TechCrunch, Pando, Re/Code. #Primetime.
Broadband: Everything will change with the sale of 2.3MHz spectrum.
Live streaming: The plummeting of broadband costs will mean a lot of live casting will take off this year. Video will be big.
Education: This is the next ecommerce for Nigeria. Everyone will do an education startup this year. At least two will have the same name 😉
Swift – Visafone: There will be an acquisition and/or merger involving these two.
Nigerian Sex tapes: They will go mainstream. Tonto Dike mainstream 😉
What are your predictions for the Nigerian tech space in 2014?
PS: Please forgive the typos. I did not predict I wilt be typo free.
I have always wanted to publish my ‘thesis’ on music (file) startups especially as it concerns Nigeria. I still do not have the time to do something comprehensive. However, as someone that spent quite a few years in this industry, anytime I hear another iTunes for Nigeria launching and relaunching, I get distracted mentally.
I am hoping by writing this long rambling thesis, that distraction will go away.
Please note that this was written in one go this morning. No time for edits or ‘cohesive writing’. I have Fonenode business pulling my ear. Sorry
Doing a pure download/file startup (ala itunes) is a mistake.
Creating a successful Nigerian streaming startup is kinda late now.
The only opportunity is focusing on discovery and ancillary unpiratable business models.
With all politeness, Nigerian music startups in general have added practically zero value to Nigerian music therefore it is going to be extremely hard to capture value where you have not created it.
A model that depends on extracting money from from an artist after (s)he has become popular is quite wishful thinking.
The central revenue model of most music file startups is selling downloads (If you have no transactional revenue plan, and hope on advertizing to make it big, LoL). Asides the fact that the approach to selling (by Nigerian startups) the music adds no value, it is anti to the success of the artist.
He is giving actively giving away his latest hit track. Begging people to take it for FREE. Is that what you hope to sell? You may think is is mad and leaving money on the table. But my simple chart below explains why he is doing it.
SOURCE : Pulled out of me ass.
In the first chart, the artist makes a higher percentage of revenue from the sale of his tracks. However, because of the friction caused by focusing on selling music, the artist did not get popular. But did some shows though. Big share of small pie.
In the second chart, the artist did a Don Jazzy, pushed his music for free but still offered it for sale to those who want to buy via iTunes and other channels. As a result the artist got popular did lots of shows, performed at weddings and most importantly got paid to perform at the birthday party of the wives of the governors. How can I forget the endorsement revenue. (Small share but mighty pie)
“But we will sell albums!” I hear you cry.
Yup! You will sell albums. How many non singles from albums have made it big?
Nigeria is the only market where an artist re releases a track from a published album as a single)
What the chart means is that a few hits drive most of the sales/interaction/traffic. In the case of Nigerian music startups, very few songs will make all the money and these are the very songs that are given away for free! *sigh*.
We have seen instances where artists were paid quite a boatload of to distribute the songs via a particular channel (iRoking and Spinlet come to mind). It was good for the artist though in the short term. Not so sure about the distribution platform.
For Spinlet, it can be argued that the money paid was a marketing cost in trying to get people to download their app. For EME though, it was also kind of a win as they put together a bunch of songs which may never have been released and got good money from it. Of course they still released it in the open market. I’m not sure how many career defining hits came out of that album.
As for purchasing music and hoping to profit from the distribution like they do in Alaba, that is a really bad idea. iRoking did that and stopped. There are no guesses why.
(Supplier power for music in Nigeria is so low so they cannot go after hulkshare and co even if they wanted to. how much is the value of music you are going to court for anyway. And the artist will still give it away for free. I think iRoking tried the legal method at a time)
Now, let us assume you want to go the streaming/ subscription route for the library of music. How do you undercut Deezer, Spotify, MOG, Grooveshark who can give you the latest Olamide and Eminem on the same platform. In Grooveshark’s case, it is free albeit a bit backward compared to Spotify and Deezer.
The awesomeness of those platforms is the tail end asides the terrific experience of having access everywhere.Having everything is what gives them the most value and without 100 million in the bank, you cannot even begin thinking of playing that game. Grooveshark began and got big before the labels tried to take them down.
Besides all the space for that model has already been taken. Even Rdio (backed by men who sold Skype 3 times!!) are finding it insane to crack.
So if you cannot exclusively distribute music, how do you want to make any serious money from it?
Re: creating value:
To know if a Nigerian music file startup gives value, which one would die today and have a dent on listening or revenue for artist?
But some people create value. The bloggers, especially NotJustOk have added the most value to Nigerian artists. Without them, there is absolutely no way any Nigerian artist would attempt to tour UK/US/Malaysia etc. Unfortunately, they have not been able to capture the value they have created.
So how can money be made at all by the music startups?
Any music startup that wants to succeed, has to be at scale, and create something that has to do with network effect. For instance, if your startup has the best way to efficiently reach all the reggae lovers in Lagos, then you can tap into that because you would make it possible to have a successful reggae concert. Without you, it would have been impossible.
Can you make an artist get endorsement? Sell tickets, merchandise? Then you can tap into the value you create.
There are other unpiratable business models like caller back tunes which gave Inyaya 5 digits in dollars monthly for many months. Unfortunately, all the value of CBT is created and consumed by the telcos. If Kukere was sold exclusively there will be no Iyanya. Period.
But one thing is certain, you cannot pay for most of the music if you are to make any money. In theory, COSON would try to convince artists otherwise. I will take them a bit more seriously when I see any currently successful artists endorsing their shakedowns. They will not and they know it. They need radios and blogs to spread the music far and wide. The day Wizkid (who is insanely massive) decides to cramp down on the playing of their music in hotels, radio, public places, you will see enough people replacing them overnight.
This is because there is no short supply of great music. With a laptop you can create what can become a hit song in Nigeria.
For those monetizing via say YouTube, the artist will go with you until he becomes big enough. Olamide is now on Vevo and you cannot match Vevo. Why? adding an Olamide increases overall value of their assets on a higher magnitude than yours. So you cannot match their offer. It is a global game.
You too yarn. What was the plan for GBEDU.FM?
Those who interacted with me 4 years ago know that I had a time frame for GBEDU.FM before it would become too late. I know if I was not already BIG by last year, it was over to go through the streaming route. The time has passed.
Of course I had (have?) other ideas on how it could still work and I will give away just a little. Any Nigerian music startup that wants to make it somewhat big (> $2million.year revenue) cannot buy music first of all. Secondly, they MUST align with a brand that will carry most of the operating cost in exchange for marketing exposure (meaning you must be big). Then focusing on creating value and sharing with the artists AFTER the value has been created. Alternatively, align with an organization who you will add value to even if independently, you cannot be profitable. e.g Like Spinlet is with Etisalat.
I heard Michael Ugwu has focused on adding value in another way by making music distribution more efficient with Freeme Digital (I love the name!). I like seeing cashflow positive stuff. There is also DistroKid (affiliate link. Feel free to go straight) and another launching soon in that space.
I do not know how big that opportunity is but is a great way to be in the music business. Michael’s relationships with the artists gives him a head start and competitive advantage. Especially with back catalouges
Don’t enter the space now. It is too late. Except you are neck deep already or you have a completely different angle. Your effort will be rewarded better elsewhere.
I love this quote on music startups so I will end with it again
“Music startup” is a misnomer, most music startups are actually music file startups. If you want to actually create a music startup you have to combine cultural understanding of music + identification of new acts/trends that haven’t been picked up by existing labels & media, with a deep understanding of new media technologies. Basically, think of the Web 2.0 equivalent of a Suge Knight. Nobody has ACTUALLY started a music startup yet — probably because it is hard to have both cultural and technical sophistication.
If someone creates a really authentic new digital space with authentic new artists, and uses the new digital medium to deliver the close personal relationship today’s music fans / etc want out of their bands and personalities, they are likely to make a fortune. Redistribution of existing content owned/controlled by labels and (equally evil) rights agencies is an epic failure of a business model, and does very little to address the massive thirst in the marketplace for new, interesting, authentic culture
When two cousins of mine were about 5 and 2 years of age, the one that was 2 was crying and their mother (my aunt) was trying to console him. The one that was 5 came around and inquired, “What’s happening mummy? Why is baby crying?”. The mum responded “Baby does not want to relax”. The 5 year old looked at the little baby with concern, then began to shake him violently “RELAX! RELAX!! RELAX!!!” he commanded.
Larry, that is what you are doing to us with Google Plus. “HAVE FUN HERE!!! HAVE FUN HERE!!” You are commanding. You are integrating the plus button everywhere, from the browser to every search result. I am afraid, it is not going to work that way. There are some activities that just cannot be forced. Having fun is one of them.
Google Plus had it’s chance though but did not take it. While you were forcing us to have fun, you were not listening. The baby could not speak, but we can, we did, but you did not listen. For instance, here is a little thing that might have made a lot of difference. You know that annoying red notification thing on the right? It prevented me from properly curating my circles. I just got into the habit of ignoring all. Friends and foes alike.
However, all is not lost. You will now see why AirTime is mentioned in the title of this post. Larry, Google Hangout is a KILLER feature or product of G+. EVERYONE says it. Why don’t you guys pivot and center Google Plus around instant and synchronous communication (Chat + Video). I argued this with the Googlers I met in Nigeria and from my interaction, I got the message “No negotiations. Larry wants it this way, and this way it shall be”.
Anyway, Sean Parker’s AirTime is launching soon and I am sure it will be centered around what I have been saying to you. You have it, but do not recognise it. It is interesting that even the big boys prefer the thing of others. So before you attempt buying AirTime, maybe you could just give Google Plus a chance. If I were to give you one guiding advice, it would be this let it flow.
Yes, I read Ms Ikeji’s blog. And yes, I am very ashamed of myself. Can we discuss that later?
Yesterday, Linda wrote a rather normal post about a previous post, in which people commenting on the post were too hard on the person the post was about. So she sent a private tweet to the person the post was about apologizing about the comments in the post, the person now posted the…… I can yard dust and beat around bush sha (no, not that bush). But you get the gist.
Well, this post is not about the contents in the post but the fact that it ganared 800+ COMMENTS!!!! Nope, this is not a picture of a cat being shared on facebook. Or a front page item on reddit. This is a sub domain on blogger that has a rather ugly commenting system that requires a login. And it still got 750 COMMENTS!
I had always known her blog is popular. But I thought it was Nigerian standard popular. 800 comments is on a worldwide big deal level. There is a massive potential for her to be undisputedly number 1 in Africa digitalmedia wise, and worldwide relevant when it comes to entertainment and gossip (TMZ and Perez Hilton level). She can also go Huffington. Arriana started blogging personally about left wing politics; 5 years and $200 million later, we know every.
However, her reaching those heights will require Messianic and not Mikelist sized ambitions (As at 2005, Mikel and Messi used to be mentioned in the same sentence. While Messi had his sight set on being the greatest ever, the 60k/week from Chelsea no let Obi see road he thought he had arrived ).
Whatever the road she decides to take, I have to say, I hail. She is a true testament of how the internet and blogging tools have democratized publishing. I mean, anyone, can start from anywhere and rise to the top.