Martin Nielsen: Africa is still a million-dollar download market [Inside By Pulse]
Martin Nielsen is the Founder and CEO of Mdundo, a digital music download and streaming company that made $300,000 in 2019.
Since then, he has immersed himself into the African culture and founded Mdundo, a publicly traded digital music download platform that made $300,000 in 2019. He jokes, “They make fun of me now, back home [laughs]. They say I have an accent, but the truth is that I don’t even know [laughs].”
He continued, “I’ve managed to be in Kenya since then without wives or kids or anything, so I’m still surviving [laughs].”
Africa: A download market
At that time, he came with an investment fund called 88 Mass Power or 88Mph [known in Nigeria as 440]. The aim was to invest in tech startups. Then in 2013, he had an epiphany after conversing with his musician friends, seeing the power of music in Afric and the growing power of music blogs/music download sites on African music in direction, content and consumption.
ALSO READ: Here is what music blogs need to become
This was shortly after the late 2000s surge of African music blogs, which changed the direction of African music via accessibility and consumer behaviour. But then, there was one problem; African music blogs were running a model that wasn’t going to be sustainable.
Aside from the inevitable entrance of digital streaming platforms, blogs were getting music illegally and they were not remitting anything back to artists.
In that same 2013, Martin Nielsen, Francis Amisi, Jura Sidorenko and Kresten Buch founded Mdundo. The idea for the company was to provide a bridge between the music streaming platforms and music blogs by creating a product that suits the market while offering the legality that music blogs lack.
“The idea was inspired by how I would go anywhere in Kenya and the rest of Africa and always hear music - offices, buses, bars… everywhere,” he says. “Yet, my musician friends would complain that they made so little from royalties. We wanted to create something that helps the user find the music with ease - not flash disks or anything - and pays the artists with ease.”
What Mdundo does is simple; they would get the music legally from the artists/labels, insert ads into the opening 5-10 seconds of each of those songs and split the revenue with artists 50/50. Music blogs make money from ads, but give nothing to artists.
For companies who need ad placement, the incentive is also that all those songs will carry the ads in perpetuity. Mdundo also offers other services to advertisers including sponsored playlists, mixes, display banners and others.
“Feedback hasn’t been bad. Of course, we have the continued rise of streaming to contend with, but it’s been fine - I think [laughs],” Nielsen says. “My favourite testimony is that when YouTube increased their ads, people complained but still used YouTube. I think people like things that are easy and free - especially when the ads don’t suddenly disrupt user experience. It also helps that artists are getting paid.”
On how Mdundo decides which ads go where, Nielsen says, “It’s all automatic, we don’t decide that.”
Why is Africa still a download market?
While Audiomack, YouTube and Boomplay operate slightly similar models, which helps them grant freemium services to listeners and they’ve succeeded at it, Mdundo has an edge because Africa largely remains a download market.
Currently, the platform has 3.5 million active monthly users on its music platform from Kenya, Tanzania, Uganda, Nigeria and Ghana. Across Africa, Nielsen says that more than 5 million people use its music service per month.
“We think the African [download] market is potentially up to 150 million people who should be using our service,” he says. “When we looked at the music market in Sub-Saharan Africa, we have discovered that there are over 150 million people who still download mp3 files from illegal websites every month.”
He continues, “We believe that we can make the music African music industry much bigger by moving them from illegal sites to sites like Mdundo. Even though we have a streaming feature on our app, we are majorly a download platform - our business is download.
A lot of Africans live below $1-a-day. So, most people can’t afford to spend money to purchase data and then spend money again to stream. It’s an expensive venture for the average African when you consider that streaming consumes a lot of data. For these reasons, Africa is still largely a download market where music blogs have a lot of leverage.
Nielsen clarifies, “For most people, data is really expensive and streaming consumes way more data than downloads. With downloads, you only have to use your data once.”
While Mdundo has been around for seven years, it seems its popularity only started soaring about two years ago. Nielsen says, “We didn’t have a vibrant marketing strategy in the past.”
“I think it also depends on which countries you’re in. We are currently in 15 [countries],” he says. “I think Nigeria is obviously a very big market… We started here in East Africa and we have a foothold here in East Africa.”
“Our biggest markets are Kenya, Uganda, Tanzania and our brand is quite big there,” he continued. “Around three years ago, we started looking outside East Africa and we’ve seen Ghana, Nigeria, Zimbabwe, Zambia and a few other countries join the conversation.”
He then added that the company's marketing strategy was always to grow their own numbers and business in East Africa first.
Why did Mdundo go public?
In September 2020, Mdundo raised $6.4 million in an Initial Public Offering from over 3,000 investors across Africa. Earlier that month, the company had been listed on the Danish Stock Exchange, Nasdaq First North Growth Market.
“I think much of our current visibility is about our IPO. When you do an IPO, you are obligated to trade business more publicly and that aligns with our culture of transparency in conducting business,” Nielsen says. “I think the forced transparency is also a good thing in this music industry.”
Nielsen feels the music industry is excessively riddled with fake numbers and promises. He says, “Trust is very important in the music industry. The publicity helps us to be more transparent in relationships with artists, advertisers and users. Now, they can believe our numbers because it’s public information.”
According to Crunchbase, Mdundo raised an undisclosed amount from angel investors in 2018. The company also raised $300,000 also from angel investors in 2015. Before then, Mdundo raised a total of $225,000 via a funding round and angel investment in 2013. It also raised an additional $150,000 in 2014.
‘Artists are tired of being cheated’
In 2017, Mdundo signed a licensing deal with Warner Music Group. According to Nielsen, the platform generated $0.3 million in ad sales last year and has successfully signed up 80,000 African artists.
“It was not really hard to get artists on board. Artists just want visibility for and revenue from their music as well as transparency,” Nielsen enthused. “On Mdundo, for example, artists have a dashboard and they can see their downloads there. Your right is your right and you can leave our platform if you want to leave.”
“I think artists are tired of being cheated and of broken promises. For us, it was very important to say, ‘I can’t promise you anything, but you can try our platform,” He continues. “If it makes sense, continue and if it doesn’t, then stop and leave.’ Another example, many Nigerian artists find us and others have their distributors linked to us in some way.”
Currently, there are between 5,000-10,000 bits of Nigerian content on Mdundo. It’s also easy for artists to sign up directly and manage their accounts directly. Nielsen says, “This is because we think it’s important that the artist controls his own fate.”
Is the future of streaming not the inevitable death of the download market?
Currently, Mdundo’s key focus is in Kenya, Ghana, Nigeria, Uganda and Tanzania. Nielsen isn’t sure of what the future holds, but he postulates, “We understand that streaming could really make more sense and be more affordable for people in the future and that’s why we have an Android app where people can also stream.”
He continues, “We also understand that artists make more money from some of these streaming apps. However, it’s also about user diversification. If I was an artist, I would know that I have some fans who want to stream while the larger base wants to download. Nothing stops me from monetizing all of them.”
In the present, the market is mostly controlled by downloads and Nielsen feels that’s a million-dollar opportunity that helps everybody and is too good to pass up.
Currently, the key focus is to increase revenue.
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