Spotify is rumoured to be in talks with Vodacom Group Ltd. on a partnership that would mark the music-streaming service’s first foray into the African continent.
According to a report from Bloomberg, Vodacom plans to offer its wireless customers subscriptions that include a limited amount of free data to access Spotify’s music library. An agreement with the Johannesburg-based carrier would let Spotify enter Africa after starting in more than 56 countries since it was founded in Sweden in 2006.
African race among carriers
This potential deal highlights the race among African carriers to link up with content partners as music and movie downloads over the Internet and smartphones surge. MTN, Africa’s biggest wireless operator, is in discussions with an Asia-based TV-content provider, people familiar with the talks said in April. Fixed-line carrier Telkom SA SOC Ltd. (TKG) has held talks with media companies including Netflix Inc. and Comcast Corp. about using its network to deliver content.
Subscribers not always willing to pay
Vodacom has 31.5 million customers in South Africa. Spotify, the world’s biggest music-subscription service, has 10 million paying users while a further 30 million listen for free through ad-supported services on computers. However “It doesn’t mean that 30 million people in South Africa are going to be willing to pay a monthly subscription for a service like Spotify, but entering the market through this kind of partnership exposes the service to that many more people,” said Paul Verna, an anlayst at digital researcher EMarketer Inc.
In a market with below-average broadband speeds, South Africans spent 90 million rand ($8.4 million) on digital music in 2012, about 7.3 percent of the country’s recorded-music market, according to a report by PricewaterhouseCoopers. While the figure is set to rise to 132 million rand by 2017, or 14 percent of the market, that’s still a fraction of what Americans and western Europeans pay to download songs.