Can Working Smart & Local Compete With Global Giants Burning Investor Money – Part 1: Anghami vs Spotify

Snubbing regional and local innovation is a one of the many curses that emerging market startups deal with atop of the challenges of building in low-penetration-name-all-challenges-markets. 

But regional startups are not underdogs, and we should be rooting for them because they are good not just because they are local

There are two key “vs” playing out this week: 
Anghami vs Spotify (and maybe Deezer)  – below
Uber vs Careem
– next blog

…and if you follow my Technology in MENA telegram channel you’ll notice that there more and more global startups from Asia and Europe (raising money from MENA investors and) expanding regionally, across healthcare to crypto-investment.

But lets talk about the elephants in the room:

Anghami vs Spotify (and maybe Deezer)

Spotify launched last week in 13 markets across MENA, which some have dubbed a killer to Anghami (the regional spotify) 

Spotify is publicly traded company with demanding quarterly reporting and dire need for growing “DAU”s and “MAU”, especially as their share price has not been performing. With competitive and close to saturation markets like the US and EU mostly covered it makes perfect sense to look elsewhere for growth. 

They seemed to have launched on the right foot by introducing friendly pricing (~$5) as opposed to their global pricing (~$10), as well as partnering with ConnectAds to source advertising deals. 

There are two main factors to consider here: Consumer and IP Rights 

The majority of regional consumers (a reality check reminder) are Arabic speaking, badly banked (less than 50% for countries like Jordan and Egypt), and culturally sensitive. Crack that. 

In regards to IP Rights; the Arab World lived through peak cultural / art days in the 60s and 70s, and before the establishment (and monopolization) of record labels rights were held by artists and passed down through the families. Understanding the “golden era” artists from around the region and doing the leg-work on streaming rights seems like an unlikely endeavor for a global player. 

Anghami has adapted their platform for seasonal content (Ramadan is a sensitive time for many), provides endless subscription options via gift cards, operator billing, modular payments in packages, bundled in bank accounts and more (you might actually be eligible to a premium account without knowing), as well as continuous performance updates (like the latest in-app Shazam like feature). As well as a phenomenal antique and diverse Arabic music library that ranges from independent artists, to modern pop and all the way back to Mostafa Sid Ahmed, a Sudanese signer in the 70s.

Spotify is perfect for the international music aficionado, niche music genres (although soundcloud is good for that as well), and international top charts, but, can is that what the mass common denominator in emerging markets looking for. 

Mid-Year 2018 Streaming Market Shares

The global trend today is decentralized, localized and (financially) inclusive.

While Spotify can burn plenty of investor money to compete with Anghami, can it do so and still show up nice and dandy for Q4 investor reporting? 

Anghami in numbers (from last week’s BoostMENA event):
1.5B+ streams per month
13.5M+ monthly active users
2M+ artists 
Self-service platform for independent artists with over 50,000 tracks uploaded

Finally, Deezer, yes I’m snubbing this as a waste of time and here’s why: I hosted Deezer’s team at a conference in Beirut back in 2013 when they first started talking about regional growth plans, the company has been through multiple internal shuffles and revivals and has no major market dominance outside it’s home country: France. 

While Prince Al Waleed did buy $266.7M “newly issued shares” in the company this summer as a way to salvage Rotana Music’s lack of digital growth (bare in mind that Anghami is backed by MBC, a rival to Rotana Group) I doubt that that would be enough to save them both. My personal opinion, but I could be wrong. 

Finally in all this, how does Apple Music, Google Play (aggressively growing it’s media offering regionally) and the of course Amazon Music play into the equation.

P.S. I have been a paid user of Anghami for a few years now, and it would be very difficult for me to let go of the preferences legacy that I have on the platform, especially that I love listening to old Arabic music. 


Opinions on the topic:
Wamda’s Fares Ghandour: Does Spotify’s entry into the market really matter?


Update:

Three points kept arising after sharing this blogpost and remain to be explored:

1- Can improved services to independent regional artists give Anghami an extra edge? Maybe yes, maybe no, in my opinion, that really depends on the potential market opportunity, which is tough to define given the lack of market data. But also knowing the web complications in arts in MENA from political influence, freedom of speech and social prohibitions. 

2- Why I didn’t include Soundcloud in the piece. Well, because even though it is a strong contender in the region and abroad, it has yet to figure out it’s revenue model (many attempts later), and it’s a platform highly dependent on covers, non-copyrighted and non-commercial music. They are not exactly competing for a market share in the same domain. Another company that I have excluded is Mideast Tunes, which focuses on independent Arab artists across genres, but the platform is donation based and too niche to contend as well. But do check it out if you’re interested to discover a whole new world of underground music.
I’m not saying that Soundcloud or Mideast Tunes are bad, but adding them to the comparison would not do them justice as they are quite different from Anghami and Spotify

3- Quality of files streamed. Even at a global level (let alone emerging markets) the audience for lossless files is quite niche and specialized. But there are multiple quality options available in most streaming music services always. However good luck getting better quality recording of any of Sheikh Imam’s masterpieces to start with