Smiling faces have returned in a music industry that has blossomed again in the Arab World: one of the biggest global labels, Warner, has reopened an office in the region in 2018, soon followed by streaming providers Spotify and Deezer. For the first time, Anghami, until then the sole local streaming platform, created in 2012, was faced with competition. Why this return and why then? Mainly because of two recent developments: first there is the high penetration rate of smartphones. The most popular medium for music streaming has developed at an extraordinary pace these past years in the Arab World. In Egypt, between 2017 and 2019, the number of smartphone users has jumped by more than 20% (57 to 80% of the population), getting close to the Gulf countries’ 95%.
Another exciting incentive for these new actors is the youth of the population. The median age in the region is 23, precisely the age up to which people are listening to music the most. To put it another way, it is the perfect match between a preferred medium and a core market target. For Chris Ancliff, until recently the head of Warner in the region, “Add all that together and this really feels like absolutely the right time to be doing something ourselves in this region.”
Disappointed hopes of the music industry
This bundle of exciting prospects had overshadowed another statistic, the only one that mattered for years, bleak and disqualifying, that of pirating. Though no reliable figures are available, the phenomenon is still estimated at hundreds of millions of dollars in the Arab World alone. Yet this cannot compare with the situation 15 years ago, when 75% of the sales (CD sales or downloads?) in Lebanon and almost a 100% in Morocco were considered piracy related. However, the issue today is no longer about assessing industry losses in the region, but rather about looking forward to a near future when earnings will reach new record highs. “In 2019 we expected to reach $21 billion, and we were expecting $27 billion by 2022” according to Ghassan Chartouni, head of Watary, one of the few Arabic pop labels that has been active on the market for years. “Now real things are starting to emerge. 2020–2022, we will experience a great change. The dream has become stronger.”
The 2020 Pandemic is far from having dashed all hopes, especially because streaming is still very much alive in this industry, contrary to live music. Still, “everyone is cautious, everyone is watching and waiting. It’s too soon to adapt or reinvent ourselves” as stressed by Eddy Maroun, cofounder of Anghami.
Yet, why did this market still not experience the promised big bang before the pandemic? The reality did not come up to expectations: no global Arab star or hit tune has emerged, for the music industry has had difficulties adapting to this new market. In the last 18 months, all the actors have faced the chastening discovery of the region’s actual economic and social patterns, with its local and fractured markets.
A mixed kick-off
In the autumn of 2018, Spotify and Deezer had just announced the launching of their platforms in the region, prompting expectations of a major turning point. In the case of Deezer, the launching went along with a massive contract with the biggest regional label, Rotana. For many, this move was expected to destroy the competition, especially Anghami. Yet such was not the case.
In the first place, these global actors had not prepared their operation thoroughly, they entered the market hastily, with a narrowly business approach and under pressure from investors: although Spotify is n° 1 in the streaming market, it has been very slow to turn a profit; Deezer, for its part, reached a curious agreement with Rotana where acquisition of the latter’s catalogue was coupled with the injection of 185 million dollars … from the investment fund of the Saudi prince who owns Rotana. An operation which borders on creative bookkeeping.
What is at stake here is not to move into the Arab world specifically and to prepare this move with finesse. Rather, it is to conquer all emerging markets as quickly as possible, a race to shift the bulk of their efforts away from North America and Europe, where streaming is a well-established culture. And yet, though the MENA market (Middle East and North Africa) might seem important on paper, it is a secondary matter for these actors. In 2018, Spotify launched its service on other markets deemed more profitable: Africa and India with its 400 million smartphone users. The “global turn” for streaming, although it does involve the Arab World, does not take it as a core target.
Moreover, on a practical level, this challenge is met by small teams, responsible simultaneously for the Arab World and for nothing less than … the whole of Africa! YouTube, a massive and leading actor in the music field, in the Arab World and on a global scale, actually has only a small team dedicated to this matter in Dubai. Itunes has only one person. At Deezer, Spotify or Warner, team composition has been very unstable, with blatant casting errors.
Indeed, it is difficult to cast in a region where specialists and infrastructure have been notoriously lacking for years. An executive who is familiar with this market made fun of these erratic recruitments: “In one of those structures after they had recruited someone, they figured out that this person was not an Arabic speaker. Can you imagine the problems when you have to manage contents on a daily basis? ”
Cultural misunderstandings and local go-betweens
These wobbly launching are no secret. “Deezer and Spotify, their entrance was not very successful […] they had too general a vision of the region,” as an executive recently stated at a professional expo. They both tripped over naive projections. During Deezer’s launching event in Beirut, autumn 2018, one of its top executives publicly shared his hopes that Rotana’s catalogue would help the company reach out to the Arab community in France. Yet, this catalogue, mostly composed of Middle Eastern music, is barely listened to in the Maghreb or by people of North-African origin in France. Thus, they discover important cultural differences between the sub-regions—Maghreb, Middle East and the Gulf—as they go along!
Sub-regions aside, the industry actors have also discovered that the Arab World is made up of around twenty countries, organised very differently. Habib Achour works for the French authors and composers’ royalty management society collective right management society (SACEM). He is in charge of the development of societies of authors in the Arab World and awareness-raising on copyright matters. He tells Orient XXI: “By way of comparison, Brazil is a useful example, A country with 300 million inhabitants, one country but with 7 authors societies and a strong network of professionals. In the Arab World, you have 450 million inhabitants, 19 countries with as many different legislations, and only five such societies”.
A complex picture which led the two streaming actors to take a humbler stance as regards “the understanding of local markets.” Tarek Mounir, in charge of the MENA market for Deezer, explains it as follows: “When looking at different countries we can see that many have their own distinct listening habits that are driven by hyper-local trends […] This is why we have a unique hyperlocal approach to playlisting and curating music which we implement through our team of local professionals playlist editors. We have a dedicated editor in the Emirates for the Gulf countries, another for Morocco, a third for Egypt and so on.”
By contrast, one actor avails himself of such an awareness: Anghami, the first streaming service in the region. “Before Anghami, no streaming platform was available in the region, and up until now we are the streaming service. The one to which people are coming spontaneously, and the one they did not quit for Deezer or Spotify. We are localised in our experience, our content, and our partnerships. We have one foot in every city in the region.”
The company claims more than 1 million paying subscribers and an almost anthropological and long-term knowledge of the region, offering specific services like for example a “special Ramadan filter”: “During Ramadan there is a new filter, in addition to the usual ‘international’ and ‘arabic’ options, you can have an experience focused on Ramadan.”
A market in its infancy
Anghami does not intend to stop there, especially as Spotify and Deezer are starting to make adjustments. Eddy Maroun states in this regard, “I don’t think the market has reached saturation. Clearly, as first off the starting post, we have the advantage. In Lebanon for instance, we don’t cover more than 11% of the market. There is huge room for improvement”.
Until now, the number of paying subscribers has remained low, and often shrouded in mystery. Anghami didn’t release any subscriber stats for years, Deezer “is a private company and does not disclose [its] subscriber figures,” whereas Spotify is known for the tight control it keeps over any information. And with good reason, “you can quickly celebrate the million subscribers when you propose free discovery offers for a few months, but what comes after that? [among the new entrants] there were no more than 15,000 paying subscribers who remained after the end of the offer, for example”, as was underlined by a source who wishes to remain anonymous.
Aside from the numbers issue, subscribers are not to be recruited just anywhere, either. Media Use in the Middle East 2019 is a study conducted by the University of Northwestern in Qatar, which provides valuable information on the very narrow social and geographic base of Anghami and Spotify subscribers: they are mainly users with a higher education and are concentrated in a few countries (the richest: Lebanon and the Gulf countries, followed by Tunisia).
“The GCC countries and the Levant are more worthwhile in terms of monetisation [users’ capacity to pay for services and commercial revenues] and so is Egypt in terms of population,” says Eddy Maroun. But this audience has very specific tastes. Among other examples, after one year of presence in the Emirates, no Arab figures in any of the three categories of Deezer’s yearly top 5 (artists, songs and albums). Yet the region is known to have a pronounced taste for local music.
Which means that streaming provides a distorted picture of common cultural habits in the Arab World. First of all, the data gathered shows what kind of global hits the Arab World consumes. Tarek Mounir tells us that, “one surprising trend we have noticed this year is the huge demand for K-Pop in Saudi Arabia. South Korean artists such as BTS [Bangtan Boys] enjoy a massive fan base, and our K-Pop Playlist is one of our most popular in the Kingdom.” A further aspect that emerges from this data is the kind of Arab Music that is listened to by audiences abroad, outside the Arab World, mostly by the diasporas in Europe and North America. “There are 130 million potential consumers in the Arab World,” says Ghassan Chartouni. “But you must add 55 million Arabs in the diaspora. Until now, we have earned more from people listening to Arabic songs in European countries and the United States, because advertising is much better paid there. Twenty percent of the streams account for 80% of our revenue”.
The next step will be to move beyond these middle- and upper-class profiles in the richest countries, and rely more on local music and audiences. Especially since the Arab world, though it shares with the rest of the world a preference for local repertoires, this is even more pronounced (from 70 to more than 80% according to different sources). But there are technical and financial problems involved in offering suitable products at affordable prices. Apps that use less bandwidth (Spotify launched a “Lite” version of its app); prices acceptable in each country (estimated at some 4/5 $ per month in the region); subscriptions coupled with telephone operators (Telco); alternative means to the bank card (very rare in the region); possibilities to pay in local currency rather than dollars, etc. Everyone is testing the ground.
In coping with this brain-teaser as well, Anghami can boast years of experience. “That’s one of the things we do as a local platform, we have 35 telco partnerships in the region, with monthly, weekly, or daily payment plans. It’s the best way to attract paying subscribers.’ But these partnerships are not without their problems too. As another actor who wishes to remain anonymous puts it: “These Telco partners take a huge margin, and it means that there are two go-betweens, the streaming service and the phone operator, who each take a share of the music revenues. It’s just that muxh less for the artists.” In his view, it is time to imagine new models.
Towards a new world of Arab music?
Behind all these commercial challenges—attracting this or that audience, this or that market—lies a broader challenge, that of actively changing the landscape and the players in the region. The solution is more complex than simply accumulating the number of plays and collecting income. On the contrary the challenge is, to resort to a specifically market vocabulary, to invest, and this is perhaps one of the crucial differences from other geographical areas where the offer is already there.
Ghassan Chartouni is straightforward in his analysis. “The market is here, but there are no players and no labels. There are 3 labels for the whole region, there should be 3000. The question today is to invest in production, to have a five-year plan for artists, not just turn out a single hit. The finale of The Voice represents 120 million viewers in the region, it’s huge. But what comes next? Where is the money to support the artists’ careers? They quickly drop out of sight.”
Eddy Maroun shares the same view. “There is a gap. There is nothing like a music ecosystem in the region. Only bits and pieces. A music industry per se doesn’t exist.” Faced with artists with little or no support, streaming players are tempted to fill the gap, even if it means doing everything at once. Producers, labels, bookers, all these professionals in the music industry who are rare in the Arab world are potential partners but also competitors for streaming. And streaming services tend to present themselves as a means for artists to get rid of all these intermediaries.
Indeed streaming isn’t just about providing a listening platform for fans, it’s also potentially a way for artists to get their music online quickly. An alternative way to manage their careers. In this respect, Deezer Backstage, Spotify for Artists, etc., present themselves as an opportunity to manage a career using feedback from listening logs. “Artists can get real-time stats”, Spotify’s managing director for MEA Claudius Boller recently explained on Cairo Scene, “If they find they have, for example, lots of fans or listeners in Luxor, then they can decide to go and perform there. If they have fans in the US, maybe they can find an American agent to book one or two concerts there.”
Such a possibility seems to offer an illusory independence and promises everyone the unlikely possibility of being a statistical exception. Above all, this kind of “opportunity” has existed for a long time in the Arab world, where the problem for artists is already having to do everything. For years, they have worked as performing artists, but have also been their own bookers, managers and producers, on top of which they had to take jobs alongside a musical career that didn’t keep body and soul together. The results have been dramatic, countless projects abandoned or delayed; albums that have never been completed, or released far too late; one-time hits left without a follow-up. Not to mention the frustrated and cruel careers for artists claimed for twenty years to represent a “new promising scene” without ever taking off.
In other words, part of the streaming model is anachronistic, because the role of the artist businessman has already been the lot of Arab artists for 30 years. Enough time to have seen its limitations and learn that it leaves no choice: either become a superstar or remain a struggling artist. In this sense, Spotify, with its Amr Diab campaign in Time Square last November, quintessence of this type of superstar artist and “biggest Arab seller of all times,” did not really understand what he represents today. Someone who precisely has no heir, self-managing a career that has shown no evolution for years. He is practical proof that this digital revolution is already running out of steam, as is the music which underpins it. Which leads ultimately to the most important and still unanswered question, beyond that of the industry model and actors: what music is available and will be available in the region?