Mdundo rides on mass market for growth – Business Daily
Mdundo CEO and co-founder Martin Moeller Nielsen, with Chief Operating Officer Njiru Njagi (L). PHOTO | DIANA NGILA | NMG
From selling music like airtime vouchers 10 years ago to allowing customers free access to its online music service platform, Mdundo is riding on mass market as its top growth strategy in the next phase.
The company started in 2012, selling music at Sh100 for five vouchers. However, a year later it changed the business model to offer music for free.
“We used to have vouchers in kiosks and smaller stores where you could scratch and get a pin, similar to what we have when you load airtime. You input the pin and download the songs,” says Mdundo’s chief executive Martin Nielsen.
“But we quickly realised that there was a lot of interest from advertisers to write an advertising-driven business.”
The company is now a mass market audience-targeted platform, pulling both local and multinational brand advertisers, which has seen it improve its royalty payouts for musicians.
The pan-African service based in Nairobi has over 20.3 million monthly active users across Africa.
Mdundo says over 50 percent of users across the platform and in Kenya are on feature phones, setting it apart from other players in the music industry.
“We have been focused on mass market in terms of income as well. About 48 percent of our customers earn less than Sh25,000 a month. Their average data consumption is just below 200 megabytes (MBs) on their devices,” adds Mr Nielsen.
‘’When we sit here in Nairobi, we assume everybody has a smartphone and everyone is on Instagram. But if you look at the actual mass market we still have a lot of customers- people who are not on social media as often. Maybe they can afford it once a week and those are the ones that use our services. That’s where we saw the demand.”
The number of feature phones connected to mobile networks as at March 2022 stood at 33.6 million, ahead of smartphones which were 26.5 million, according to data by the Communication Authority of Kenya.
This represents a penetration rate of the total population at 69.2 percent and 54.6 percent respectively.
“The reason we are commercially successful is these people are difficult for advertisers to reach. We are giving them something that they won’t be able to get from other places,” Mr Nielsen says.
“The mass market does not have many options. Most of the services and apps are focused on the same customers with good smartphones, fast internet and unlimited Wi-Fi. But Kenya consists of a good number of people who don’t have this access, whom we call the ‘skiza market’.”
Amid increased competition, it offers a free service in Kenya, where one is exposed to advertisements.
It offers a premium service in Tanzania, Ghana, and Nigeria in partnership with telco providers, where customers subscribe to a bundle and get access to DJ mixes.
However, the advertising business remains the major revenue earner for the company.
The firm’s growth has also been driven by focus on local content from music genres such as gospel, which has emerged as the primary music files downloaded, Bongo, native language music from across all the markets, rap, Kaswida in Tanzania, and Amapiano.
About 80 percent of content listened and downloaded is from Africa.
Of the 20.3 million monthly active users across the continent, Nigeria holds the biggest market at 22 percent, Tanzania (13 percent), Kenya (11 Percent), and Ghana (eight percent).
The platform has grown from 50 artists to more than 100,000 musicians across the continent. Kenya alone is roughly around 20,000 artists.
Artists access a dashboard where they sign up, upload and manage music catalogue directly from their devices, and also withdraw royalties directly through mobile money services.
The focus on mass market and local content has seen the firm pay about Sh100 million over the last 10 years and plans to pay a similar amount in the year to June 2023.
All revenue from advertisers and premium products is shared 50-50 percent between the artists and the company.
“We have been more aggressive with our expansion. We have seen that the trend in the market is exactly the same- there is more and more users who starts using our service and an increased interest from advertisers on our service.”
The company was in September 2020 listed on the Nasdaq First North stock exchange in Copenhagen and is aiming to get 50 million monthly active users.
Nielsen says the company did not consider the Nairobi Securities Exchange (NSE) despite being headquartered in Nairobi to low liquidity tied to the bourse.
“The company we are listed on is growth exchange for growth and smaller companies. I am also donnish and it’s easier to communicate with the market. There have not also been too many listings at NSE recently and so liquidity and activity has been quite limited and that, of course, affect us as well.”