The recently announced deal between Chocolate City and Warner Music is another important step for the Nigerian music industry. The deal advents the final validation of the three largest music companies in the world that Nigerian music is firmly on the global radar.

This latest deal is arguably the “safest” of the moves into the Nigerian terrain by the majors. It is reported to be a label-partnership arrangement that will see Warner provide backing to Chocolate City with respect to the latter’s artist development activities as well as handling the Nigerian label’s international distribution. It’s unclear how much of said “backing” is financial.

Sony and Universal went a step further to each set-up shop in Nigeria, with both alo signing artists directly, and Universal additionally making plays in the live sector. Throw into the mix the recent investment in Mavin Records by private equity/VC firms Kupanda Capital and TPG Growth, and all these developments indicate that global market is beginning to see the commercial opportunities of Nigerian music content.

One should, however, also consider what the core objectives of these arrangements are and whether said objectives will have the net effect of growing the market for local music domestically as well as internationally.

It is logical to assume that these deals are primarily (at least in the short term) aimed expanding the reach and penetration of Nigerian music globally — and cash-in on the growing international appetite for African culture particularly in the Western markets.

With the backing of the majors, Nigerian acts are (theoretically) better positioned to secure stronger collaborations with international superstars as well as higher visibility marketing and promotional benefits amongst others. An expanding population of diaspora-Nigerians, that are having an increasing influence on popular culture around the world, are the driving force behind the growing opportunities for Nigerian music outside the continent.

Despite the foregoing there is still the worry that these deals, albeit positive in the short term, may not have any significant impact on the domestic market nor, more importantly, its revenue growth in the long run.

Regardless of the earlier-mentioned impact that the Nigerian diaspora is having on the rising demand for locally-inspired music abroad, the number of Nigerians in foreign climes obviously pales in comparison to the home-based population. And, therein lies the real rub.

If the major local and international labels understand that whilst there may be some quick wins to be scored in advanced territories — by acquiring and pushing content from these shores in those markets (especially in an era of increasingly dominant diversity culture in those societies) — those markets are very close to reaching (if they have not already reached) an era of peak consumption. Emerging markets are the future, and Nigeria, with its market size (by population), is a big part of where the next wave of global revenue growth will come from.

It’s true that Nigeria (and Sub-Saharan Africa in general) has much lower average/annual revenues per user (~$3.80) when compared to the advanced markets (US — $35; EU — $13). This is due primarily to the region’s (weak currencies and) lower GDP/capita which stands at ~$1,800, many times lower than the average of ~$35,000 in advanced markets. It’s expected that these figures will gradually increase over time as more economic development, particularly in relation to telecommunications, takes place across Africa. Growth of the telecoms sector will continue to have a direct impact on the growth of the local music sector, as with other sectors of the Nigerian entertainment industry.

The increasing maturity of the telecoms sector, and in particular the broadband service provider segment, will lead to lower costs of internet access for the population, and these cost-savings will naturally flow towards the consumption of entertainment products, music subscriptions included. When one considers that almost N2Trillion was spent on data access by Nigerians last year, just a 1% decrease in data costs could liberate up to N20b for Nigerian internet subscribers, that can then be spent — through the same sales channels — on music, video and other entertainment. For context, this amount is double the current size of all Nigerian recorded music revenues.

Additionally, as more and more of the Nigerian population come online and begin to be captured in viewing and streaming metrics, the sheer size of the population can and will begin to propel local stars into global stardom much as the Latin American population is doing with their own local/regional stars. “Ozuna”, a Puerto Rican reggaeton/trap artist has the most videos, (8 videos in which he is either lead or feature artist), to have crossed 1b views on YouTube,. These views are predominantly driven by fans from his home territories.

With the level of regional support that top tier Nigerian artists enjoy, the more of that local/regional fanbase that consumes their music through recognised channels (as opposed to the unrecognised channels they currently utilise) the more of an influence they will begin to have on global engagement metrics. More importantly, this will also lead to growth in recorded music revenues for the entire industry — along with the positive knock-on effects that will have on the entire value chain.

When properly harnessed, Nigerian music fans will not only be able to generate significant revenues for local artists, labels, composers and publishers but they will also begin to have an increasing influence over the global success of homegrown acts and music.

It is indeed exciting times for Nigerian music and the local industry, however let’s just hope in the chase for international acclaim, we do not forget our home turf and the significant potential value that growing this market can create over the medium to long term. The increasing influence Nigerian artists and labels are having on the major international music companies should not only be used to try and gain more fans in new territories, but to also grow — and increasingly monetize — the fanbase at home.

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