The Business of Music
KIZITO OKECHUKWU | APRIL 2, 2019
For musicians, agents, managers, marketers and record labels, it’s an industry that employs millions of people and is worth over US$17.3 billion globally.
However, in the entrepreneurial space, it’s an industry that has not gained much traction. Many people do not see musicians as entrepreneurs, but they are! I doubt there are entrepreneurship programmes or initiatives that focus on incubating and mentoring young musicians, polishing their talents and promoting their talent. Sure, TV shows like Idols and The Voice have proved hugely popular and advanced quite a few musical careers, but in a broader context, their contribution is fairly minimal. I might be ignorant, but I think organisations like Sony do have some programmes for attracting music talents. The truth is that the entrepreneurship ecosystem has greatly ignored this industry and I’m not sure that the venture capitalists and developmental financial institutions in the entrepreneurship space even consider budding musicians investment-worthy.
So what about the monetizing power of music? I believe that young, upcoming musicians should be regarded as entrepreneurs – even as start-ups. Simply put, they’ve got a product to sell, yet need support and investment to maximize their market presence. Let’s crunch a few numbers.
Just last week alone, South Africa hosted Ed Sheeran for two shows in both Johannesburg and Cape Town. I think the Johannesburg show had over 70 000 in attendance each day with an average ticket price of R900. That, over two days, equates to R126 million, excluding drinks and snacks sold. Cape Town had over 50 000 fans each day, raking in some R90 million. Both venues (including drinks/snacks) together should have brought in almost R300 million for the organisers.
With ticket prices of R1300, the Jazz Festival generated some R26 million over two days, which excludes sales of merchandise, drinks and snacks sales. With corporate sponsors in play, I reckon the festival could have generated close to R100 million. This is great for South Africa’s economy and I think we must exploit young musical talents and grow them to become global and local brands.
The monetizing muscle of the music industry will never wane. Now we must find avenues to empower more ‘musical start-ups’ to get their piece of the pie and be sustainable. In addition to TV talent shows, we need to incubate, mentor and accelerate their growth, much as we do
with other sectors – or any other start-ups. Venture capitalists and developmental financial institutions should consider them as a viable business model that needs to be supported and formalized, much like what’s been done in the US. I guess big names in South Africa like AKA, Cassper Nyovest, and Shekhinah are already formalised and are doing good stuff. The focus must also be in growing young talents.
I could close with a musical analogy, but there are just too many to choose from!
We are excited to announce that one of our Fintech startups, Maxicash App, is amongst the 5 African countries to have been selected to pitch at the Migration Challenge Startup Competition in Ecuador. The International Organisation of Employers (IOE) and Seedstars competition is targeted at the most promising HR, Fintech, Civitech and EdTech startups with solution-orientated products to improve migration systems that respond to the labour market.
Under the auspices of South Korea’s Ministry of Foreign Affairs, I was invited to visit the East Asian country last week by the Korea-Africa foundation to discuss and engage on sustainable ways to build a stronger Korea-Africa relationship, which was established last year.
This past weekend, the annual Geekulcha hackathon (GKHack19) took place at 22 on Sloane startup campus. Led by Mixo Ngoveni, it focuses on boosting and sustaining a strong geek culture in South Africa.