Why the Music Industry can't ignore the Middle East in 2019

The International Federation of the Phonographic Industry(IFPI) is a non-profit organization which governs over the recording industry worldwide. The organization was founded in Italy in 1933.

In April 2018, the IFPI released its 2018 Global Music Report, a region was utterly absent from its pages: the Middle East. The music industry has completely neglected the Middle East and North Africa (MENA) for a way back because the higher percentage of people listening to songs in this particular region prefer listening to tunes at no cost; either through physical or online piracy or through legal ad-supported channels. According to reports, piracy still fees the full MENA entertainment industry $500 million per year.



Nevertheless, 2018 was the year predominant labels and streaming platforms invested more capital into the region than ever done before. In February 2018, Warner Music Group launched off Warner Music Middle East, a recorded-music subsidiary based in Lebanon. Also by October French streaming service Deezer then officially expanded into MENA. Spotify introduced its MENA providing, which included a new Arab hub of localized playlists. Industry experts expect more labels, streaming platform, and music services to launch in the vicinity in subsequent years ahead.

This cascade of investment is turning MENA into a unique, fast-growing source of revenue and consumer data for artists and rights holders around the globe. Ironically, Middle East investors have been merely assisting a number of the world biggest song and amusement companies for years.

However, Spotify and Deezer are not without their competition, from both neighborhood and global players. Apple Music and YouTube have both been energetic in MENA markets for a long time. Meanwhile, local service provider, Anghami is considered king for pure-play music streaming, with almost a hundred million registered users. As a local company, Anghami takes the lead ahead of Spotify and Deezer when considering high-quality localized content.


The economics of building a streaming platform in MENA countries is a different task from what the music industry sees in other markets notably the Western markets. Credit-card use in MENA populations is relatively down, according to the World Bank. Though among the MENA population with no bank account, 86 percent of men, and 75 percent of women own a mobile phone which the World Bank suggests could be an avenue for expanding financial inclusion.

In the context of songs, excessive mobile penetration plus low economic inclusion approach that the massive majority of song streaming transactions manifest through telco bundles with mobile subscription plans. Consequently, Anghami is the cutting-edge market leader, has partnered with over 20 telcos in the region. Apple Music announced a subsidized bundle with local telco Etisalat in June 2018, while Deezer and Spotify are still looking forward to potential business partners.


However, telcos can assist decrease customer acquisition fees for streaming companies by as much as 60 percent. Streaming companies are also competing for head-to-head on unique or special Arabic song content, and notice themselves playing a crucial position in strengthening MENA's especially weak artist-improvement infrastructure, mainly on the equal level. Shortly before Deezers MENA launch, Deezer introduced of a kind content material agreement with local label Rotana Records, which claims to own the vicinity most treasured catalog.

Notably, East Asian companies like Tencent, Rakuten, and Huawei are also funding MENA tech and media with ample capital, and have even considered acquiring local streaming platform rather than launching their rig from scratch. The government in MENA are putting structures in place to propagate their music industry. Back in September 2017, a whopping amount of $2.7billion was budgeted by the Saudi Arabian government for the entertainment sector.

One hoovering question, given MENA's previous record with piracy, is whether the region's local royalty collection infrastructure can keep up for this great influx of streaming activity. Back in 2011, Apple iTunes delayed the establishment in the middle east by a year due to lack of a local music right society, effectively making it impossible for the company to work a way to pay royalties to the correct rights holders.

The MENA music industry tends to look like a jigsaw puzzle of stakeholders; neighborhood and global tech companies, MENA government, record labels and the extensive list of artists of Arab origin. They are all attempting to work out the way to diminish piracy, increase attention to paid streaming, improve royalty payment systems and outline better paths to sustainability for the neighborhood music community.



However, a music industry serious concerning economic process will not dismiss the sheer quantity of capital, talent and consumer demand flowing in and out of the region, and the wealth of chance it'll produce for all of those stakeholders in 2019.


/ Popnable Media