'Apple effect' to boost SA music streaming

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 03 Jul 2015
Music streaming is nothing new in SA, but Apple's entry makes it 'cool'.
Music streaming is nothing new in SA, but Apple's entry makes it 'cool'.

While Apple's latest salvo - music on demand services for the South African market - may not prove to be a game-changer in itself, existing players and the market at large could be in for a boom.

This is according to industry experts, on the back of consumer tech giant Apple's entry this week into the local music streaming market - a move that may also prove to be in certain mobile operators' favour.

Currently available for iPhone users, Apple Music will be offered on Android later this year.

Music streaming is not new to SA, although as a value-added service (VAS) from mobile operators, it is still relatively fledgling. MTN piloted the music streaming as a mobile VAS move in June last year, through a partnership with Simfy, and Vodacom followed about four months later, with an offering through Deezer.

Apple effect

Swift Consulting CEO and tech blogger Liron Segev says Apple Music could prove to do for music streaming in SA what it did for mobile payments abroad.

"Apple's entry makes [music streaming] officially sexy and cool. This is the element the company brings to the game. We've had music streaming in SA for a while, but now Apple is doing it, so it will be seen as 'wow' - almost like it is now more legit.

"It's not a game changer for Apple, but it will draw attention to music streaming. The same happened when the company introduced Apple Pay - [which caused] other players' market share to increase. That is the Apple effect."

As it was in SA, says Segev, music streaming services were decent and the people who have used them, love them, but a mindshift needs to happen for the digital service to see more take-up. "The service is good but the education needs to be there - and that is where Apple will come in."

Vodacom spokesperson Richard Boorman echoes this, saying the key challenges with driving take-up of streaming services are education and changing people's habits. "We've seen in other markets that it takes some time for people to accept the idea of streaming as opposed to owning music, but once that mindshift takes place, people don't tend to look back."

The operator declined to provide subscription or revenue numbers relating to its music on demand offering, but says Deezer "has been popular and generated a lot of interest".

Mass market appeal

Going forward, say analysts, and despite SA's known bandwidth quality dearth and high prices, music streaming is likely to gain pace.

World Wide Worx MD Arthur Goldstuck says - for a future when cost of data is low and quality is high - music streaming has great potential. He notes, however, it is not for the local mass market, as it stands.

BMI-TechKnowledge (BMI-T) analyst Brian Neilson says, if users can afford the mobile data, or use free WiFi zones, music streaming could become more mass market.

BMI-T's recently completed Digital Lifestyle Predictor consumer survey reveals 15% to 20% of South African consumers across a wide range of household income groups could subscribe to a streaming music service in future, although those that pay for the premium option will drop off towards the lower income brackets.

At the end of the day, says ICT expert Adrian Schofield, the global trend is to deliver popular music to the device on demand - and SA will be no different. "What might be needed to spur the market is for local/regional musicians to grab the opportunity to sell their music through a local platform."

Earlier this year, MTN marketing head Larry Annetts said the "next big thing" in the operator's digital journey was a streaming service for music, featuring African and South African artists - an offering that had been introduced in Nigeria, with what he said was significant success.

SA's mobile operators have been looking to digital services as a means of making up for lost revenue as traditional voice and SMS services are abandoned in favour of data-based alternatives.

In March, MTN SA CEO Ahmad Faroukh said the company was putting huge emphasis on digital services in a bid to drive data consumption and, in turn, revenue.