February 13, 2017:Anghami, the Spotify of the Middle East, has 33m listeners

It would be crass to call it “the biggest music-streaming service you’ve never heard of”, but Anghami is comfortably dominating in the Middle East – with no plans to expand outside of the region just yet – and pointing out new ways that freemium can go.

The service currently has 33 million users across the region, but as co-founder and CEO Eddy Maroun tells Music Ally, with a total population of 400 million to aim for, it is only just starting to take off.

The origins of Anghami date back to 2010 when Maroun figured out piracy was the only option being “offered” to music consumers in the region, as no legitimate services seemed prepared to launch in any of the markets there. And even if they did, they would lack the local knowledge needed to tailor a music service to the specifics of each country.

“Here in the Middle East we didn’t have any decent streaming experiences,” he says. “There was not legitimate places to get music digitally.”

He and his partner Elie Habib decided – Field Of Dreams-style – to build it themselves, initially bankrolling it with their own money before seeking external investment.

“We had the idea that there is a need, a future and a demand [for it],” he said of what became Anghami, which blends a free ad-supported tier with a premium subscription tier that is similar, but also very different, to Spotify. “We had to go first to find out if the labels would give us the music or not – or if there was someone else doing it or not.”

Anghami had to do due diligence in the market to gauge what, if any, demand there would be for it. “When you are an entrepreneur, you are a bit over-driven by your ideas and your passion around what you are doing,” he says.

Its founders began by focusing on the local, signing up – on an exclusive basis – the Rotana label. “We started first with the largest local label in Middle East,” says Maroun of why Rotana was top of their licensing list. “It has the largest Arabic catalogue.”

From there, they started to seek external funding to scale the operation up. “This is when the serious work started. That was a bit challenging.”

There was always a belief that Anghami could offer a full international catalogue, albeit focusing on Arabic audiences primarily; but there was a realisation its team would have to learn to walk before they could run.

“Personally, I wanted to launch with everything,” says Maroun, of wanting to get the major labels on board as early as possible. “But the first wave of funding wasn’t enough for us to bring in everyone on board. The direction we had with our first investor was to start with Arabic music and then when we got more funding we could go after international repertoire.”

Sony Music was the first major to get on board – and that set in place a domino effect. “They said it was a good deal and they could not say no, then EMI [when still a standalone label] and Warner jumped on board as they liked what we were doing,” he says.

“When we launched, we did so with a big chunk of all the Arabic catalogue as well as Sony, Warner and EMI. Two weeks after, Universal came on board.”

Several funding rounds – including one at $1m – followed and the product went live in early 2012.

“That gave us the attention of the largest media company in the region – MBC Group,” says Maroun. “We did a deal whereby they gave us media and background support with an option to convert this contribution into equity in the company.”

Of the business model, Maroun feels Anghami is not under the same pressure as Spotify to convert (costly) free users into paying subscribers – primarily because of the ad economics in the region and the role mobile carriers are playing in getting the service in front of a large userbase.

“We weren’t pressing too much on conversation as the ad model was doing pretty well,” he says. “Today we are working on having more and more telco partnerships.”

Such telco partnerships are key, he feels, as there are important and culturally specific adoption barriers in the region. In short, consumers there are not as used to paying for content and services online with credit cards as they are in the West, so rolling Anghami into a monthly mobile bill is a more direct route to hitting scale.

People on the free tier not only are served ads. They have a limited number of track skips each month and [as on most western services] cannot cache music on their handsets for offline play. In the Middle East, this is a hugely important part of the upsell strategy.

“Most of the people who upgrade to premium do it because data is expensive in the region and they are concerned about how much they consume,” Maroun says. “Offline matters a lot. Caching songs is something that matters a lot and is the primary driver for them to convert to pay.”

On top of this, subscribers can access extra functionality like a lyrics offering but also get windowed big albums in a unique way. Rather than get an album on an exclusive basis by insisting on it being kept off rival services for a set period, Anghami’s approach is to offer its users an exclusive before the “official” release. This is typically a week before it goes on other platforms.

“That pre-release period is what we give to those privileged users who are paying a subscription,” says Maroun. “When the album is out, it is available to everyone.”

He adds, “When people are paying, you need to give them something extra, right? They need to feel special. What we are doing is not preventing everyone from listening to a certain album. When the album is released everywhere, it goes on the free tier – so it is not just for the paying users.”

Even so, Anghami is fully aware it faces a challenge persuading people to subscribe. “Getting into the habit of paying for music is still pretty new in the region,” he suggests. “Consumers are used to accessing music for free and the lack of payment methods are [the main barriers].”

While international brands like Apple Music and Deezer are live in the region, Anghami is easily the market leader for now. That, Maroun feels, is down to being able to lean on local knowledge and expertise in a way these big brands cannot.

“You need to focus very strongly on the local aspects,” he says. “We are much more competitive when it comes to content – especially local content.”

Anghami is also focusing on content and functionality that go far beyond the 30m+ tracks that every major service has. It is putting on and recording its own concerts and sessions, for example, to ratchet up the unique content that it has.

Anghami Expressions

It has also developed Expressions, a service not dissimilar to Musical.ly, but built into one of the tabs on the Anghami mobile app, where people can create their own videos on top of music from the app. “Music should remain the main driver,” says Maroun, but accepts that Expressions are an important way of holding people within the app.

Will the company look to expand outside of the Middle East to take on Apple Music, Spotify, Deezer and others in their own home markets? No. Or, rather, not yet.

“Maybe in the future when we are much more established and we have a clear path,” says Maroun. “But now we are focused on growing in the region and maintaining our market lead.”

Even with more than 30m users, there is still plenty of room for growth, with the company reminding itself it is not even in front of 10% of the total audience in the Middle East.

“There is huge untapped potential and there is huge demand for entertainment and music in the region,” he says. “We haven’t even scratched the surface.”

Eamonn Forde
READ MORE: Analysis News
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