Africa's Digital Commerce, B2B & Music Royalties - Tabbing Takes 01
Music royalties as alternative assets, digital commerce in Africa and African monuments.
I am constantly curating items for myself so I thought I’d do something productive and turn it into a weekly thing for Tabbing.
Right now these will consist of some sort of takes on trends in the African market, some curated articles, some tools, startups or items to explore, and an image of the week.
Digital Commerce in Africa is stepping up
The African e-commerce market is expected to double in size to USD75 billion by 2025 thanks to the continued growth of mobile payments and the pandemic's role in increasing online shopping. Funding for this sector in Africa is moving from consumer-focused e-commerce marketplaces (etc Jumia, Takealot) to more niche commerce solutions for businesses and retailers like Capiter, Tradedepot, Rabawa , OurPass (one-click checkout), B2B e-commerce platforms like SkyGarden, MarketForce, Omnibiz, Paypecker, Suplias, Bumpa and Sabi. African fintechs like Paystack and Flutterwave have also dipped their toes into B2B tools as well. Ecommerce in Africa presents tremendous opportunities especially when the number of women selling online in Africa can achieve parity with men. This could lead to the market benefiting around $14.5 billion
B2B is Thriving in Africa
Business-to-business opportunities in Africa are thriving. The growing increase in the number and size of African businesses means that the African B2B market represents an even larger opportunity. Mckinsey expects the Africa B2B market to reach $3.5tr by 2025. B2B models allow you to sell or execute easier, without having to build a massive sales force and B2B companies typically have a higher margin than consumer companies (B2C). B2B models might be a better path for African startups than B2C as the cost of acquiring customers in Africa is a lot higher than in, say, more mature markets like the US and Europe. B2C needs to be done on a much larger scale; is more competitive and tends to take much longer to get to a sustainable place. While B2B business can quickly reach sustainability since having one or two big clients can do the trick. In B2C your scale point is much higher. Digital e-commerce isn't the only place the B2B model is thriving. You can find B2B Agrictech startups like Twigafoods and Releaf. B2B fintechs like Prospa, Brass, Float and even Mono.
Music Royalties as an Asset Class: The Timaya Case Summary
Streaming isn't the only thing that has changed in the music landscape. The way music is sold and valued is changing as well. ownership of music rights is not new. It is why record labels exist in the first place. Record labels are the original music rights investors. They are like investment banks, but instead of giving money to the artist directly, they do nearly all of the heavy lifting. In a nutshell, they pay for everything except touring. In return, labels typically get 80% of album revenue, with 20% going back to the artist. But times are changing as There are new ways for artists, record labels, and outside investors to make money from music. Music royalties are divided into six categories; Mechanical license, Sync license, performance license, Master license, Print license and Theatrical license. Each delivering different levels of royalties to the artists/rights holders However When thinking about making money off music rights ownership, what you need to consider is the type of sale. Which are lifetime rights, fixed return rights, and fractional rights. The rights you can purchase will typically depend on the entity or exchange you’re purchasing from. Nigerian Artist Timaya put up for auction, the fixed return right his catalogue: ‘Afro Soca Music’ by Timaya. Investors could bid on the opportunity to buy the Fixed Return of $73,333. This means that the investor would hold the rights until royalty payments totaled at least $73,333. The "Afro Soca Music" catalog sold for $61,500, implying the investor will receive a monthly royalty distribution, up to a total profit of ~$11,833, when payments hit the $73,333 mark. If it takes 1 year, that's a 19% return. Great! But if it takes 5 years, that's a far less impressive 3.8% annualized return.With music royalties, you dont just get an asset class that appreciates over time but one that delivers consistent revenue. Awesome
Interesting Snippets
Africa Is 3rd Fastest growing Crypto Economy.
Kenyan churches are using a fintech startup to receive donations
How businesses can thrive off subcultures like the BBnaija Fandom
Reeddi capsule is providing clean energy to Nigerians on the go.
The least affordable places in the world for starting a business are in Africa.
A look at 17 African monuments from 9 countries that reveal African societies' architectural interpretation of power and religion, its interaction with nature and with the foreign and its depiction of symbol and its functionality.
Africa Art: The first form of cubism
Image of Week
Enjoy and do have an awesome week!