Analysis

Digital music trends from Russia, China, Africa and Latin America


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The music industry is getting even more excited about emerging markets in 2017, from Latin America to Russia, China and India. A panel at the NY:LON Connect conference we organised with the Music Business Association in London this week explored some of the challenges and opportunities outside the west.

The panel included Olga Moldavskaya, client and marketing manager for Russia and Eastern Europe at The Orchard; Ed Peto, MD at Outdustry; Virginie Berger, CEO of Armonia; and Alfonso Perez-Soto, SVP of business development for emerging markets and Latam at Warner Music. The moderator was LyricFind’s VP of international publishing Robert Singerman.

The panel talked about some of the strategies that are working in the markets they operate in. Moldavskaya said that Russia still has “a lot of piracy” but suggested that Apple’s entry into the market with iTunes and now Apple Music “has brought people to understand that this is something else different, and maybe an easier way to consume digital music”.

She noted that Russian social network vKontakte – “something between Facebook and Pirate Bay” in its original form for music, has now struck licensing deals with music rightsholders to legalise its service. “It’s great news, and we will see in the very near future how it’s going to work,” said Moldavskaya.

Russia, geopolitically and economically is between west and east, and it’s always choosing which way to go,” she added. “There are good trends that we can see in the market.” Meanwhile, in eastern Europe, Moldavskaya said it’s western models of streaming that are growing.

Peto expanded on his earlier speech on China, noting that it is very difficult for western independent artists and labels to do direct deals with Chinese streaming services.

But he also talked about an “explosion” in music festivals in China. He warned that they are “ranging from passable to absolutely catastrophic organisation”, but suggested that western artists can reach out to these events and string together a series of festivals if they have the appetite to build their audience in China.

Berger talked about Africa, which she warned should be looked at as 55 individual countries rather than just a single continent. “First, you need to understand where you want to go in Africa. In English-speaking countries, in French-speaking countries?” she said.

Usually you want to apply the same rules as we have in western countries, in terms of rights, copyright, piracy, monetisation. But it doesn’t work in Africa. You have to forget everything about how it works [in the west]… You really need to know what you want to do,” she said.

Berger said that low internet penetration is a barrier in many of the French-speaking countries in Africa, which is why more music firms focus on the English-speaking countries with better, more popular access – particularly through mobile devices.

“In Africa you have more than 100 legal digital platforms, from downloads to streaming,” said Berger. Big western services like Deezer and YouTube are present, but as she noted the latter isn’t yet monetising videos in Africa. “It’s just too complicated,” she said. For other music services, partnerships with telcos loom large in their strategy across the continent.

Perez-Soto talked about Latin America. “Two years in a row with the IFPI, we have been the region that grew the most,” he said. “It exploded in a very unexpected way… The vast majority of paying subscribers are standalone.” As opposed to on telco bundles, which labels had expected to be the prime driver of growth in streaming subscriptions.

Services like Spotify, Apple Music, Deezer, Napster, they came with really good brands, so it was aspirational to subscribe to those services. However, we need to grow the base for the next step,” he continued.

“In order to go to that next step, we really basically have to first work on alternative methods of payment… we have to adjust and localise our business. We have to cooperate with carriers as much as we can, obviously if we can get a fair deal in the share. But also explore other methods of payment.”

Perez-Soto added that partnerships with media companies will also play a big role. “They need to build their transition from traditional to digital. Some of them, radio and TV, don’t have the technology, or at this point the capital to develop their own services. So there is a lot of room for companies like 7digital, or B2B companies that provide white-label services to support the transition of these companies.”

He also said that Latin American artists are starting to break through on services like Spotify, cracking its global Top 50 chart due to the sheer number of streams in Latin markets alone.

The panel talked about the key domestic players in their markets, as well as the global players coming in.

Perez-Soto talked about the move into music by Mexican entrepreneur Carlos Slim, who launched Claro Musica as a subscription service, and the potential to offer music-streaming trials to the large number of mobile users who are buying and using ringback tones in Latin America.

Berger talked about the activities of Orange in French-speaking African countries, but also Spinlet in Nigeria, Samsung and Universal Music’s offering in South Africa, and other local players.

Peto noted that many international digital-music brands are “locked out” of China, which he said has allowed the pool of local products to develop “in complete isolation… it creates almost an experimental area”. He said that Apple Music is now in China “to a degree” but was pessimistic about the prospects for the other big global streaming brands being allowed in to the market.

Moldavskaya highlighted the growth of Yandex.Music in Russia, which has just announced it ended 2016 with 250,000 paying subscribers. She said that some eastern European countries have their own local services, but that in general, the global platforms are also there.

The NY:LON Connect conference was co-organised by Music Ally and the Music Business Association, in association with Armonia.

Stuart Dredge

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