Ideas from an eclectic mind; Artistes starved by economics

Mid last week, I happened to be flipping TV channels when I landed on Rwanda Television’s increasingly popular programme “Debate 411” hosted by Eugene Anangwe. The topic being discussed was the Rwandan music industry and it perceived stunted growth. As I listened to the arguments made by the four guests who included artists and promoters, I remembered a similar discussion that had transpired a few weeks back in the company of a few friends. A local TV channel was running a countdown of the top 20 Rwandan music YouTube hits of 2015 when one of us noted with amusement that no less than 8 out of the top 20 songs featured at least one of 3 Rwandan artists based in the Diaspora, namely; The Ben, Meddie and Kitoko. In my opinion, it was damning evidence of how much the home-based artists still have to do to win over Rwandan music fans. The only exceptions seemed to be King James and Knowless Butera who were going ‘toe to toe’ with their comrades in the Diaspora in terms of popularity. The questions that my friends and I had about the Rwandan music industry back then were being echoed by the debate 411 discussion and could be summed up thus; why is it almost impossible to make a decent living off music in Rwanda? So I took it upon myself to do a little homework to try and understand the key features of the Rwandan music industry from a business sense, its limitations and what needs to happen for talented individuals to achieve gainful employment within the local music industry. By observing the key market features, I was able to deduce that the industry operates in a market structure that economists call “monopolistic competition”. This simply means that players in the market (artists) have products (music) that slightly differ from each other hence they can easily be substituted for one another. The costs associated with differentiating an artist’s music from his or her competitors cannot be met by the small profits in the industry due to the presence of many artists with similar music. This dilemma is caused by another feature of monopolistic competition; ease of entry and exit of the market place. To demonstrate, I will share a personal story. In early 2012, I hired a shamba boy to maintain my compound. He came in twice a week to trim the hedges, cut the grass and weed the flowerbeds. Being a devout Christian and a choir member, he dedicated two weekdays to choir practice and Sunday to attending church. That still left him with two days to maintain the compound at another home. After about three months of work, the young man resigned! I was taken off guard, so I asked why he was leaving so abruptly. The reason both surprised and amused me in equal measure. He went on to explain that he had just completed recording an album and he needed time to promote it and distribute it! I was incredulous! When had he done this? How could he afford to record an album on top of surviving off the Rwf30,000 (equivalent of less than $50) I paid him per month? I was shocked but happy for him nonetheless. I wished him well and we parted ways. It’s been 4 years and I am still patiently waiting for his chart topping hits. Moral of the story; there seem to be no barriers, financial or otherwise for anyone to get into the Rwandan music industry. Where financially successful music industries exist, the market structure is distinctly different. A few powerful players seem to dominate in a market structure that economists call Oligopoly. Think of OPEC, the oil cartel that influences oil prices across the world. Some of the world’s largest oil producers meet regularly under this umbrella body to agree on policies that significantly impact global oil markets. Oligopoly gives the producers the necessary power to determine prices, levels of production and control entry and exit from the market. In the lucrative global music industry, three major firms control the recording and distribution of music across the major markets; US-based Warner Music Group in North America, the French owned Universal Music Group in Europe and Japan based Sony Music Entertainment in Asia. A major revenue stream for international artists is live concerts and tours which are also controlled by one major global player; the US based Live Nation. In Africa, the South African and more recently the Nigerian music industries are the dominant markets. The internal market structures within those two local markets are no different from the global Oligopolistic superstructure. South Africa is dominated by Gallo Record Company which owns 75% of all music ever recorded in the country. Nigeria which is gifted by an abundance of musical talent has faced “disintermediation” with major labels breaking up and smaller independent labels owned by individual artists emerging. Mavin Records founded by Don Jazzy in 2012 has emerged as the dominant force among these new labels. Perhaps the best example for Rwanda is within the region. The Uganda music industry has blossomed in last 15 years with some artists emerging to win continental and global accolades on top of achieving significant financial success. Notable among these are Dr. Jose Chameleon, Bebe Cool, Bobi Wine and more recently Eddy Kenzo. These are genuine stars that are recognizable across Africa and many other parts of the world. The oligopolistic market structure in the successful music industries is hinged on the presence of three pre-requisite requirements that I refer to as the 3 Ps; the Prevalence of talent (input), Production expertise (quality control) and Professional marketing (brand promotion). Using the Ugandan example, the four biggest artists like their Nigerian contemporaries have invested heavily in their record labels namely; Leon Island (Chameleon), Gagamel (Bebe Cool), Fire Base (Bobi Wine) and Big Talent (Eddy Kenzo). These record labels facilitate upcoming artists by availing production expertise and creating a pathway for them by utilizing the stars’ professional marketing channels. Rwanda may be blessed with a prevalence of musical talent but in the absence of the production expertise and professional marketing, artists will continue to struggle in their efforts to build distinct artistic brands and command respectable fees for their music. It’s clear that only economics stands in the way of the Rwandan artist’s financial success. Market forces dictate that buyers are only willing to pay a premium for a product that is distinctly different from that offered by the competition; especially so when there is an abundance of options. The author is a consultant specializing in Finance and Strategy. He is based in Kigali.

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Ideas from an eclectic mind; Artistes starved by economics