South Africa’s Changing Landscape

By Lloyd Gedye  Music Week  08/19/11

A little later than the rest of the world, the South African music industry is facing up to the challenges of a booming digital market – while at the same time, homegrown artists are beginning to flourish on the global stage

The South African music industry is in a state of transition. For many years it was protected by low broadband penetration due to exorbitant pricing, which stalled the development of the digital market.

But thanks to regulatory interventions dealing with key bottlenecks that had kept internet pricing artificially high, South African businesses and consumers have seen cheaper products and thus more uptake.

Many of the SA music industry professionals who Music Week spoke to agreed that the industry would no longer be protected by the low broadband penetration and they expected things to shift in a massive way over the next few years.

Arthur Goldstuck of technology research company World Wide Worx says that only 11% of South Africa’s 53 million population had internet access in 2009 and the result was 89% of South African consumers had a massive barrier to entry regarding the digital download market.

However, Goldstuck points out that this figure has grown to 14% currently – or 6.8 million consumers – and is expected to grow to 16% by the end of the year.

“We have seen the fastest internet growth in this country ever over the last two years,” he adds.

He says that while the music industry may have been protected over the last few years, this protection is vanishing rapidly.

“The industry has know about this for a long time, but they tend to focus on the market as it is right now and not what it will look like in five years.”

Smartphone penetration in South Africa is much higher than broadband which explains why up to 85% of all digital sales in South Africa are via mobile phones rather than more traditional online platforms.

Goldstuck argues that the reasons for this are twofold. He says South Africa’s record labels have not had the vision to develop a viable download market and also that the ringtone market in the country is a very mature industry.

As this digital market grows, South Africa’s labels will have to move quickly to minimise the impact on their businesses.

“Certainly the SA industry has mirrored the global decline in physical sales, particularly on international product,” says Universal Music South Africa’s Benjy Mudie.

Sheer Sound’s Richard Woodin agrees, stating it is becoming increasingly difficult to shift physical products.

“The digital domain – although growing – is not making up for the hole that is left,” says Woodin. “Hence the industry, again like the world, is moving to more 360°-type arrangements where companies take a piece of master rights/ publishing/events/merchandising – that way they can invest more knowing there are more streams to claw back from.”

However, Andre Le Roux, the chairperson of Moshito, South Africa’s annual music industry conference, and a senior manager at the South African Music Rights Organisation, says that artists are starting to see 360° deals as exploitation.

“The survival for the record companies, they believe, is the 360° deal, but artists often see them as 360° of exploitation and are starting to wake up by managing their own products, online and through social networking,” he says.

“The next few years will be crucial to see how the South African industry transitions into the digital world and whether it can support the many talented musicians emerging in SA.”

Mudie says that with advances in recording technology and the marketing opportunities that social media bring, it is easier for artists to record and distribute their music to their respective fanbases, thereby in many instances sidestepping the traditional record company structure.

“On the whole I would say SA has a healthy industry,” says Woodin. “Certainly it is radically changing, but it is not dying and will always exist.”

Promoter Leon Retief from Southern Pulse sees things differently. “As a whole industry, I am amazed we make a living from this chaos,” says Retief. “There are of course a few individuals that make a difference, but overall the recording industry needs to relook at itself and reinvent itself.

“Some labels are taking these steps, others are blinded by change. South African bandwidth is terrible, but this is starting to change and most people in SA will enjoy super-fast, constant access to information and content as in other developed countries.

“If the local industry is not providing the same service as our international counterparts, I think we will have a tough time to have our industry garner a viable platform.”

Sony South Africa’s head of A&R Lance McCormack believes the industry has been hit by the sluggish economic times. “But there are still key growth areas such as digital, artist management, branded entertainment and, of course, the live circuit,” he says.

While South Africa’s digital market may not be in rude health, on the actual music front, South Africa is doing very well.

There are more and more South African musicians making inroads overseas. Artists like Tumi and the Volume, Freshlyground, The Parlotones, BLK JKS, Goldfish, Lira, Locnville, Dear Reader, Die Antwoord, Tidal Waves, Simphiwe Dana and Thandiswa Mazwai are developing fanbases in Europe and the US.

Woodin says South Africa has never had opportunities like it does presently in terms of accessing the world’s ears and minds. “There’s no question we’ve always had world-class talent, but I also think the overall standard has improved hugely as the professional recording industry grew strongly over the past decade or so,” says McCormack. “The key fact is we are now plugged into the global village and this makes it possible for breakthroughs to happen a lot quicker.

“Goldfish are cracking the huge global dance scene, after years of working their butts off on that circuit; Vusi Mahlasela is about to go on a big US tour with 2011 Grammy winner Ray LaMontagne; and Freshlyground will be playing in China before the year is out – and the interest in them continues to grow.”

Add to that the fact that Tumi and the Volume are making inroads in Europe, the BLK JKS have recently toured China and South America and that Lira has just completed a run of international shows and it is clear there are many South African success stories.

“One has to respect the likes of The Parlotones and Goldfish who are grinding away, making inroads internationally through constant touring and hopefully they’ll both crack it,” says Anderson. “From our side, Locnville have made steady inroads internationally over the past 12 months and there is genuine interest in GoodLuck and Shadowclub on both sides of the Atlantic.”

The general consensus is that there is a lot of talent in South Africa and it is just a matter of getting the lucky breaks, which will only come if that talent is coupled with hard work.

However, the music industry in South Africa is also in transition, slowly catching up with the international music markets in terms of the effects of digital downloads.

The next few years will be crucial to see how the South African industry transitions into the digital world and whether it can support the many talented musicians emerging in SA.

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