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Global music streaming provider Spotify has herald its entry into the African music scene with the launch of its services in South Africa, where there is rapid uptake of smartphones and improving telecommunications infrastructure. The Swedish company, launched in 2008 and available in more than 60 countries, is the biggest music streaming company in the world and counts services from Apple Inc, Amazon.com Inc and Alphabet Inc’s Google Play as its main rivals.

The South Africa launch comes as Spotify prepares for a direct listing for its shares on the New York Stock Exchange, which will let investors and employees sell shares without the company raising new capital or hiring Wall Street banks to underwrite the issue.

 

Africa is “the home continent of music historically,” Spotify MD of Europe, Middle East and Africa (EMEA) Michael Krause said as the world’s largest streaming service launched in South Africa.

 

“This is our first African country, our first step onto this continent. It’s really great to be here,” he said during the launch in Johannesburg.

 

“It’s very important to have local playlists and local music available,” he told me, explaining why it has taken time to launch in Africa. There are plans for other countries in Africa, but no specific plans have been announced yet.

 

The premium service will cost $5 which Krause says is well-positioned for affordability and was set after discussions with the music labels.

 

“Africa is exciting for us and we want to be in more countries but we have to look at which,” he says. Part of the process includes curating local music and playlists. “We want locally relevant stuff so that people feel at home. If you just launch an international product, It is not something that we want to do.”

 

Spotify has 159-million users worldwide, of which 71-million pay for the premium service. It has 35-million songs and 2-billion playlists.

 

Spotify grew its premium users by 46% in 2017, according to its filing with the US Securities and Exchange Commission when it announced its plans for an initial public offering on the New York Stock exchange last month. This will value the Swedish firm at $23-billion.

 

It says it controls 42% of the global music streaming market, which is double that of its closest rival Apple Music. Spotify grew its revenue to $4.99-billion last year, an increase from $3.6-billion in 2016. However, its operating losses grew from $426-million in 2016 to $461-million last year.

 

Claudius Boller, Spotify’s MD of the MENA region who looks after day-to-day operation and strategy for Africa, says the free service will play three minutes of advertising in an hour of listening.

 

“This free tier allows people to listen to music, and allows them to move into the premium,” when they are ready or want to save music offline, which is a premium feature.

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