We Can’t Risk Having You Online 🙅‍♂️

Mdundo, the Kenyan music startup gradually stepping up in the African market, Ethnic feud in Ethiopia puts online businesses at risk

Hello there,

It’s been quite a week. While many eyes are on the 2020 US Elections, In Africa there's a post-election crisis in Cote d'Ivoire, Guinea & Tanzania, a possible civil war in Ethiopia; and the Nigerian government is still working on covering up the Lekki Massacre.

We were supposed to show up in your inbox on Wednesday with the next episode of In Africa but sadly End SARS protests issues and difficulty in scheduling a session with the next entrepreneur meant we couldn’t. We'd be back in the first week of December.


It’s like the Spotify of Africa

Huh, Who?

Mdundo. The Kenyan music platform/startup that started out since, recently announced an increase in its users from 5 million to 6.4 million (27%) between June and September this year. The company listed its shares on the Nasdaq Exchange in Denmark last month raising $6.4 million, following a famously oversubscribed pre-sale period. In 2017, it signed a major deal with Warner Music and it is available in 15 countries in Sub-Saharan Africa.

Humble beginnings

The streaming platform started off as an alternative to illegal platforms by allowing Africans to find and download songs to their mobile devices for free. 

To differentiate itself, Mdundo signed up musicians to list their songs legally on its platform and generated revenues by selling ads. Ad revenues generated from songs are shared through a 50% split with artists signed up to the platform. It has since used a hybrid download/streaming service, with both ad-supported and paid streaming tiers.

Growth

It has focused on the East, West and Southern African market.The company recently closed its first significant direct advertisement deal outside East Africa, with the Nigerian telecommunication company 9mobile. In Kenya, it has completed advertising deals with global and pan-African brands like Safaricom, Standard Chartered, Nivea, Oxfam and Serengeti.

Its product arrives amid growing interest in the music of Africa with artists like Burna Boy, WizKid and Davido gaining popularity in the U.S.

Competition

Besides Mdundo, platforms like Boomplay, Spinlet, Smubu and Udux are among the other Africa-focused players. Boomplay, the music streaming service owned by Transsion (Africa’s top phone maker) is the shark of the market with about 75 million users. International players are also active on the continent like Spotify, which is available in only five African countries (Algeria, Egypt, Morocco, South Africa, Tunisia) and Apple Music which recently expanded to 30 African countries.

Mdundo services a small amount of the potential market in Africa and faces strong competition from other players on the continent.

Looking ahead

Music industries in markets like India, Africa and China have struggled with piracy and technological issues in the past, but more recently, there’s some element of organization  in these industries. However, there is still the problem of the high cost of the internet coupled with slow speeds in Africa.

Mdundo have managed to attune its services to low-income communities/users who might be unable to afford the subscription models offered by the international platforms such as Spotify and Apple. More growth in the future could see the startup offer more digital services to its large user base.

In relatable news, South African Broadcasting Services (SABC), South Africa's TV regulator is launching a video streaming service to compete with international platforms.


We Can’t Risk Having You Online

The Ethiopian government has restricted internet access in the country and this is not their first time doing that. 

Get this gist

Weeks of unrest in Ethiopia were sparked by a tribal feud between a powerful region of the country, Tigray, and the federal government. Following this development, mobile networks, fixed-line internet and landline telephones are currently on cut in Tigray, Ethiopia. This is after the government ordered a military intervention in the on-going tribal crisis.

Dejavu?

Absolutely. This is definitely something that has happened before. In July, Ethiopia shut down the internet for about a month after deadly protests that followed the assassination of activist and popular musician Hachalu Hundessa. Also in 2019, there was an information blackout following a coup attempt to unseat the regional government in the north of capital Addis Ababa. The shutdown had a total impact for over 100 hours and left the country largely offline for ten days.

Why shut down the internet though?

Apparently shutting down the internet is a common tactic the government uses to prevent the spread of violence nationwide. Interestingly, Ethiopia has also used internet restriction to curb cheating in school exams. Authorities also say that internet use drives ethnic unrest, largely aiding the circulation of misinformation.  Lol, in the middle of chaos, what is the worst that can happen if we all go offline and don’t have access to the rest of the world? 

Effects of this shutdown

The impact of internet disruption goes beyond gross breach of fundamental human rights, which has frustrated citizens who rely on online services for information and business. According to reports,  each day the internet remains shut-in Ethiopia runs up a bill in excess of $4.5 million USD in terms of economic impact to GDP. 

Bottom line

In 2016, Ethiopia also imposed restrictions on movement and internet usage, which cost the country about $500,000 every day in lost GDP. Fast Forward to 2020, the government is being accused of forcing the people of Tigray into submission, against their basic constitutional rights. 

Unfortunately

Ethiopian government approaches to societal development often involve limitations to citizen’s right to expression. This, however, is also rooted in other parts of Africa as seen in the past few days with the social media bill in Nigeria, where the government plans to restrict social interaction by internet users. What does this say about democracy and citizen’s right to interaction and ease of doing business? 


Worth reading 📚

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Quote 💭

Courage doesn’t always roar. Sometimes courage is the quiet voice at the end of the day saying, “I will try again tomorrow.”

— Mary Anne Radmacher

Thank you for reading this week’s edition. Seriously, leave it till Monday.