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Sony Eyes This African Country to Grow Music Streaming Business

January 20, 2017, 3:03 PM UTC

On the street

Streetside in the Ikeja Computer Village, Lagos, Nigeria.
Photo: Grant Martin

Sony Music Entertainment sees big growth prospects for music streaming in Nigeria, thanks to falling Internet data costs and a large, growing population, a senior executive told Reuters.

Music streaming could help the company generate revenue beyond its dominant position in the country in ringback tones—the sound or music heard by a caller when phoning someone.

Michael Ugwu, general manager for West Africa, said Sony Music had set up partnership deals in Nigeria with telecoms companies MTN, Airtel and Etisalat since opening an office in commercial capital Lagos in February 2016.

With Internet connectivity improving, Ugwu said streaming subscriptions were a top growth area. “That’s where the business focus is,” he added, without giving any figures.

Ugwu said there were around 3.5 million subscribers to MTN Music Plus, with users paying from as little as 50 naira ($0.16) up to 800 naira a month to stream music.

“MTN has about (a) 60 million subscriber base, which shows that penetration is still at the early stages,” said Ugwu. He did not provide details of subscriber numbers for the other telecoms partners.

A report by auditing firm Pricewaterhouse Coopers (PwC) in 2015 said revenue from music sales in Nigeria, Africa’s most populous country, was $56 million that year, and predicted it would grow to $88 million in 2019.

PwC also said Nigeria’s entertainment and media industry had an estimated total revenue of $4.8 billion in 2015 and was likely to grow to $8.1 billion in 2019, making it “the fastest-expanding major market globally.”

Ugwu said Nigeria’s population of 180 million, which the UN predicts will rise to 400 million in 2050 to make it the world’s third most populous nation after China and India, and a large proportion of young people made the country attractive.

Streaming music giant Spotify is currently unavailable to users registered in Nigeria, though Apple Music and French music streaming service Deezer are available.

Ringback caller tones currently generate at least a third more revenue for Sony Music than streaming in Nigeria, and Ugwe said company’s decision to open an office in Lagos was largely influenced by the size of the ringback market.

“We saw the market being worth over $100 million a year in terms of sales, purely on caller ringback tones,” he said, adding this was based on Nigerian music being played to callers.