Recreating Spotify in Africa 🎧

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Last week we hosted an impromptu Happy Hour with HoaQ. It was a blast - check out a few of the pictures here.

London was a lot of fun (maybe too much fun..) and was the last stop on the Tech Safari tour.

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Alright, let’s get into the edition.

Today’s edition is brought to you by.. Mdundo

In today’s edition we go deep into Mdundo: An Africa first music platform.

Mdundo has one of Africa’s biggest, most diverse catalogues of music.

Dive into the local charts of African countries - from Senegal to Sudan - on Mdundo below👇️ 

In the West, Spotify and Apple Music dominate music streaming. But in Africa, this company is giving them a run for their money.

Meet Mdundo.com - Africa's alternative to Spotify. Here is the story behind Africa’s music platform of choice.

The Download Days

Martin Nielsen was living in Kenya in 2012 and noticed a problem. African music was popping, but African artists weren't getting paid.

Nielsen recalls:

‘I would go anywhere in Kenya and always hear music - offices, buses, bars. But 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.’

I laughed a bit after reading Nielsen's quote on flash disks - but that helps us set the scene. This was before streaming took centre stage.

Remember the MP3 phase from the late 2000s and early 2010s?

You had to go download your songs online, then upload them to your MP3 player.

This was that era.

And while sites like Napster and Limewire were the best place to download the latest Flo Rida track, in Africa the best way to find local artists was on local music blogs.

These blogs monetised with ads on them, but artists would never see those funds.

So, Nielsen teamed up with his friend, Francis Amisi (AKA Frasha - a rapper from Kenyan group, P-Unit) to build a music platform for the artists.

Mdundo’s big idea was simple:

1. Get the music legally from the artist or label.

2. Insert ads in the opening 5-10 seconds of those songs.

3. Split ad revenue with the artists 50/50.

I downloaded a song by Rema from Mdundo. You can listen to it here:

You’ll notice a few things. First, I just put you onto a great song and artist (Rema)

Second, there’s a 10-second Captain Morgan ad at the start.

The revenue from that ad gets split 50/50 between Rema and Mdundo. Not bad, right?

And third - you will notice that the audio quality is notably low. This important for later.

Growth was slow at first. By 2017, Mdundo had reached 1.5 million active users.

At the same time, Spotify and Youtube were on the rise - growing rapidly as consumers stopped downloading songs and started streaming them.

You would think that would make it harder for Mdundo - a platform for downloading music - to grow and gain popularity.

But the opposite happened. Mdundo shot up to seven million users in 2020.

And in February this year, Mdundo reported 24 million monthly users.

While streaming is growing, Mdundo is still here and showing no signs of slowing down.

Let’s dive into Mdundo’s secret sauce.

Recreating Spotify for Africa

Over the last 10 years, Mdundo honed in on serving the artist and focusing on what the market wanted.

Mdundo’s winning formula boils down to two reasons.

1) Download-First

Mdundo is a ‘download-first’ platform.

While being download-first might seem very 2010s and MP3 player, it actually supports consumer behaviour in Africa.

A lot of Africans live below $1 a day, and can't afford to spend money to purchase data, and then spend again to stream.

As Nielsen found while building Mdundo, ‘data is really expensive and streaming consumes way more data than downloads. With downloads, you only have to use your data once.’

Once you download a song, you can listen to it anytime - online or offline.

Remember that low-quality Rema song I put you on?

Well, it turns out that the low quality is a feature - not a bug.

Lower quality means a lower file size, so you can download your favourite songs without eating too much data.

2) Africa-First

Mdundo started with African musicians in mind and built a platform that’s tailored to them.

And by building out an Africa-first catalogue, they have music coverage you can't find anywhere else.

Spotify is great, but can you find the top Ugandan Gospel Hits on there?

They have a variety that’s built for the average African who wants to listen to their local music. And that music is most popular on the platform.

In the Kenyan charts, I couldn't find any non-African songs in the top 100.

On the Tanzanian charts, the first non-African song I could find was Gods Plan by Drake - all the way down at number 41.

Mdundo honed in on building a product for the average African. And they were rewarded massively in subscriber growth.

Building Africa’s Spotify

You might not have guessed it, but Mdundo is a public company - going public in September 2020 on the Nasdaq First North Growth Market in Denmark.

Today, its market cap is $70 million.

While a Venture Capitalist would call this a ‘small’ outcome, it seems to be working for Mdundo.

And a benefit of going public is transparency.

Another app had a big news week. IRL, a social media app for Gen Z’s shutdown.

IRL raised $200 million from Softbank to become a Unicorn ($1 billion dollar company). Similar to Mdundo, they also reached 20 million users.

Except that last part wasn’t true. It turns out 95% of those users were fake.

It’s hard to know what’s really going on inside the hyper growth companies we hear about.

But as a public company, Mdundo needs to report on what’s happening at the company and be open about progress.

While it’s not fraud-proof (see Tingo Group), it is a stronger filter of transparency.

And it can keep CEOs focused and realistic. You can see that here:

In a world where millions are raised and spent with no care for investors, employees or customers, that transparency is refreshing.

Mdundo was diligent, took time to understand their market, skipped the crazy mega-rounds and went public. And that’s paid off.

Their goal by 2025 is to hit 50 million and become profitable.

I think they’ll get there - and on the way, become Africa’s music platform of choice.

What do you think of Africa’s own Spotify? Let me know here.

And that's a wrap for this week!

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Catch you soon!

👋🏾 Caleb