There’s been a lot of focus recently on Spotify’s launch in India – its 79th market – which finally took place last Wednesday (February 27) after months of speculation and even a legal challenge from Warner Music Group.
Lest we forget however, Spotify’s arrival in India comes only three-and-a-half months after its 78th market launch – in the Middle East and North Africa (MENA).
Spotify was made available in 13 MENA territories on November 13, including the United Arab Emirates, Saudi Arabia, Kuwait, Oman, Qatar, Bahrain, Algeria, Morocco, Tunisia, Jordan, Lebanon, the Palestinian Territories and Egypt. It was actually pipped to the post by Deezer, which launched in the Middle East a month earlier, complete with an exclusive deal for the catalog of Rotana (which claims to be the biggest record company in the region).
Both Spotify and Deezer are up against the same formidable rival in the Middle East – the region’s reigning music streaming king, Anghami.
Few tech companies have made as much of a local cultural impact as Lebanon-based Anghami. iTunes wasn’t available in Lebanon when the platform launched in 2011. Maintaining a resolute focus on MENA, the company has successfully introduced the notion of a legal music service to a region which continues to be plagued by music piracy.
Anghami’s co-Founders, Elie Habib (pictured) and Eddy Maroun, have adopted an evangelical approach to educating consumers, artists and labels about streaming and digital revenue.
“When we started in 2011 the biggest thing that we contributed to the region and to everybody that came afterwards [was] education,” says Habib. “We taught people what streaming is.”
The idea for Anghami (which means ‘My Tunes’ in Arabic) was conceived on a ski trip in 2010, when Habib found he couldn’t access iTunes – leaving illegal P2P services as the only option to download music.
Habib and Maroun, who in 2010 were working at another tech company in the mobile operator space, subsequently raised $1m and launched Anghami on December 30, 2011 on iOS and Android.
“It’s not like I’m afraid of competition from Spotify or Deezer.”
According to Habib, it’s music piracy, rather than other music streaming services, that Anghami sees as its main rival today. On the contrary, Habib claims that his company was actually “delighted” with its recently-arrived competition in MENA.
“It’s not like I’m afraid of competition from Spotify or Deezer or whatever,” he says. “I’m much more interested in competition with piracy and how we can actually help people or get people using a legal service.”
There’s another reason why Anghami isn’t concerned about competition from Western streaming companies, too.
As Habib explains below, his company has developed an in-depth understanding of the local region and its cultural nuances. This, combined with a vast network of independent label deals and partnerships with 29 mobile operators, leaves Anghami confident that it won’t be giving up its market-leading position in the Middle East any time soon…
Let’s start at the beginning. How did Anghami come to launch?
We researched a lot of services trying to do something around music in 2010. At the time, Spotify was a relatively young product, which was not very big on mobile.
We realized that the business model Spotify adopted at the time didn’t exactly make sense for us in [our] region. The Middle East is not a small place, but it’s not as big as Spotify’s [global] ambitions.
With the funding that we had, we wanted to think big, but the Middle East was going to be our focus. We worked a lot on talking to labels, local and international, about creating a streaming service. Most of the time [the response] was, ‘What is streaming?’
“What we learned from Spotify at the time is actually what makes us successful today – it’s to make sure that we don’t adopt Spotify’s business model, because it will not scale in the Middle East.”
What we learned from Spotify at the time is actually what makes us successful today – to make sure that we don’t adopt Spotify’s business model, because it will not scale in the Middle East.
We proposed [to] build a different business model, which we thought would be better, and which will allow us to actually scale and eventually get to profit.
We realized that if [a streaming service was] going to fail it was probably going to be for not generating [enough] revenues, or if [it was] paying more to labels than it could afford. Those were the original points we built Anghami on, making sure that it would be fair for the artists but, at the same time, making sure that we launched on mobile, because mobile would provide us with scale.
What are the key differences between Anghami and Spotify today?
We aren’t exactly tit for tat with Spotify – we have our own roadmap and differentiators that we focus on. We believe that the mobile music experience didn’t change much since [the] iPod, besides curated or algorithmic playlists.
You use your mobile to connect with all kind of people on all kind of apps, but when it comes to mobile, Spotify thinks that the user is suddenly lonely. While it’s true that at times the user needs time off, I see the traffic of all social apps growing significantly.
We noticed, for instance, that most users were sharing music with others on WhatsApp, and a lot of our incoming traffic [also] happens via WhatsApp. If users use WhatsApp to send music, this means that they want to share.
“You use your mobile to connect with all kind of people on all kind of apps, but when it comes to mobile, Spotify thinks that the user is suddenly lonely.”
We also noticed that by using machine learning to expose [other] user profiles that listen like you, users were actually discovering music and following the playlists of [their] matched users, which just validates our theory – music is meant to be social.
Being mobile first in an emergent market [also] means that a user should be able to purchase a subscription via a mobile operator wherever he/she is; we provide this functionality across 29 mobile networks in MENA, allowing a daily, weekly or monthly subscription. As far as I know, Spotify has no coverage on any mobile network [in MENA] today.
Also, we provide multiple pricing tiers on mobile that can go, with certain networks, down to $1/month. [Anghami works] on any browser, as many users in emergent markets have low-end devices.
Our app can [also] adapt to low quality mobile networks which plague the MENA region; Anghami streams music even if you are on 2G.
What else is different to Spotify?
Music Videos: we have over 300,000 music videos from majors, indies and local artists that you can watch in Anghami as a unique experience.
The video is linked to the song, so you can tap a button to switch between a song and a video. YouTube is by far a more important competitor than Spotify or Deezer [in MENA]; understanding that means that video isn’t a second [class] citizen for us.
“Youtube is by far a more important competitor than Spotify or Deezer.’
Also, lyrics: we don’t do ‘Behind The Music/Genius‘, but we have lyrics to over 2.5m songs – including most Arabic songs, which we worked in-house to create lyrics [for]. Lyrics is an extremely important feature to people in [MENA]; we allow them to share lyrics in a customized image on social networks.
Voice: besides voice control, which isn’t a differentiator [anymore] since Spotify launched theirs, we churn a lot of tests that are important for us, such as allowing you to do just about anything with Siri, [such as] liking the song you are listening to, or playing more [songs] like the song you are listening to, or [getting Siri to] tell you what song you are listening to.
The radar functionality [following the ACRCloud integration] allowing the user to know what song is playing now is [also] quite loved.
In December 2011 Anghami reportedly went from about 3,000-4,000 users a day to about 10,000 an hour after an ad placement during the voice. Is that correct?
That is exactly right. Anghami [as a company] was six people at that time. We launched in the December of that year but the first mobile operator deal was done in November, with Orange in Jordan.
We realized that we really needed to start making revenue from day one. We could not afford to say, ‘We’ll see how we’ll make revenue after a couple of years.’ At the time we didn’t even know about the concept of VC: we raised our first round in February of 2011. It was $1m.
“We raised our first round in February of 2011. It was $1m.”
After we did the deal with Orange Jordan, our first mobile operator deal, on December 30 we signed a partnership deal with MBC, which is a big TV network in the Middle East. The same day we signed, we prepared our first ad.
We launched our ad [during] the finale of The Voice. When the artists were singing [during the show], there was this stripe on the TV that said, ‘You can listen to this song now on Anghami.’ And so people were searching, What is Anghami?
I wasn’t able to see the TV ad that day, because the site was crashing. We weren’t ready for that much traffic. It was a good problem to have.
Tell us about how your payment tiers work.
There are multiple tiers. On the premium tier, there are users that pay us a small amount of money and there are users that pay us a bigger amount, depending on the territory.
Let’s take Egypt as an example. You can pay half a dollar and have a premium service or you can pay $2.50 and have a [different] premium service. We give you different things for [each subscription]
Why is that important? Because we realized that people were not ready to jump straight from piracy to full payment.
It’s hard to explain to someone that you have to suddenly pay for a regular subscription to maintain music. Most of our [early] users, in the first month, downloaded 1,000 songs. Then they unsubscribed because they thought those songs would remain [permanently]. So the whole concept of education was important at the beginning.
“It’s not just about launching a service but providing an ability for the people, to try it, taste it and then eventually commit to it.”
Anghami’s payment method is one of the core differentiators that we have: as an example, with Vodafone in Egypt, you could pay $1.23 per month to get the full service, but you could also pay one Egyptian pound per day, which would add up to around $1.70 dollars per month.
That’s the difference between emerging markets and western markets. It’s not just about launching a service but providing the ability for people to try it, taste it and then eventually commit to it.
We are currently connected to 28 mobile operators across the Middle East and by that I mean, we’re connected one-on-one. We don’t use an aggregator. That gives us a big differentiation and flexibility to provide services to users.
why are Telco Partnerships so important to your business?
Because credit card penetration is very low. Let’s take an example: Amazon bought Souq.com, which is a big eCommerce service based out of Dubai.
Souq had 70% cash on delivery three years ago. Last year, they had 75% cash on delivery. The volume grew but the percentage of cash on delivery grew even higher.
The concept of cash on delivery, which is not available on Amazon UK, is available across the region [in the Middle East]. People are not used to paying by electronic payments.
Putting that in terms of music services, obviously our biggest revenue stream comes in from mobile operators.
So across all of the different payment methods, how many paying users in total does Anghami have?
Generally we don’t disclose numbers; we don’t like the comparison to international services because you know, [Anghami is focusing on] an emerging market.
You probably have to compare [Anghami] to Saavn rather than comparing it to Spotify. But a significant number over 1m are paying for Anghami, which is, as my memory serves, the first time we have ever publicly disclosed any number of paying subscribers.
“a significant number over 1m are paying for Anghami, which is, as my memory serves, the first time we have ever publicly disclosed any number of paying subscribers.”
We recently signed a deal with with Nielsen, because what we care about is to make sure that our data is validated by a third party, so that all the data that comes up from Anghami is truthful. So Nielsen will be accounting our data, our streams like they do for everybody else within the next couple of months.
In terms of plays, Anghami crossed 1 billion plays per month over the past six months.
I read an article by someone saying the [Middle East] region is underdeveloped and nobody’s paying. It’s not underdeveloped: we’ve crossed 60 million downloads across on the App Store and Android store – and on the desktop app we have [another] 10 million. So we crossed 70 million a while ago.
Can you tell us the total number of active monthly users using Anghami?
Over 21 million per month. So this region is not underdeveloped – but the potential to develop further is still very significant.
If I’m not mistaken, 78 million people have used Anghami so far. From that 78 million, probably around 18% of those users do not come from the Middle East. We don’t focus on [marketing] outside the Middle East but we have licenses for Arabic music worldwide.
tell us about the content on Anghami.
Content is very important. When we started, we signed all the Arabic labels as well as the majors and we started growing.
Today we have over 31 million songs licensed and available on Anghami. [Other] services will launch in the region and will announce [catalog] numbers – but those numbers are what they have in their database, not necessarily what they’ve licensed in the Middle East.
“In our part of the world, most Arabic content is [independent]. It’s not under a label.”
There are a lot of legal implications in the Middle East. For instance, a lot of labels prefer by default not to provide licenses for explicit content, and we worked a lot to [get those licenses].
Take the Lady Gaga ArtPop album back in the day: it was released in the Middle East where she was like holding the ball [between her legs], but if you look up the the artwork, in the Middle East version she was wearing black leggings. Labels were afraid, so we worked to make sure that labels would actually open up [her] music because teens in the region are the same [as teens anywhere].
They see the same TV shows, so are quite familiar with everything, but we understand that there is a certain sensibility [required in] the region.
But for us the really critical thing is to [secure] the local content – and the local content is not with labels in the region. The biggest local content is unsigned. In our part of the world, most Arabic content is [independent]. It’s not under a label.
Rotana is a label we held exclusive rights for since we launched, until recently, until Deezer’s [announcement]. In 2019, having Rotana [exclusively], especially at the [deal price] numbers that were discussed in the the Deezer announcement is simply mind-blowing – I would call it highway robbery. It’s fine if I’m if I’m quoted on that.
Rotana, by the end of 2018, was around 6% of our usage. I’m not saying that’s bad, I’m not saying that’s irrelevant, but… you could live without Rotana. It’s not essential at all for us.
So without that Rotana deal, what’s your key unique strength?
What’s important for us is not [Rotana]. What’s important is actually to get the indies and everybody [else] in the region. That’s why, three years ago, we created an artist dashboard to allow artists to upload content directly to Anghami.
Spotify launched something similar some months ago, but we announced that a couple of years ago. Why? Because the problem is bigger in this region.
A lot of content was never on iTunes before [being made available] on Anghami. We actually had to get a lot of vinyl and CDs and whatever and digitize them, [which is why music] is available on Anghami that’s currently not available anywhere else, simply because we made the effort.
All of those [artists] were not signed, so we got a lot of content from across the region, whether from Egypt or from Sudan or beyond.
The point is that a lot of that content, especially Iraq for instance, the content is part of the culture of the region, but they were never digitized so we’ve taken that extra step.
Right now any artist can connect directly to our artist dashboard and start uploading content and start getting their content exposed everywhere.
We also started over the past year to produce content ourselves. We created something called Anghami Originals.
We don’t want to compete with labels, but we want to provide an alternative to artists that are not able to go to a label and release content.
“We also started over the past year to produce content.”
We would love to co-produce content, not produce ust for ourselves. We’re helping bridge East and West; one of the things that we did last year was the manager of the Weeknd, Sal [Wassim SAL Slaiby] became a partner in Anghami.
We also helped create [a musical collaboration] between Amr Diab, a big artist in the local region and Marshmello last year, and we have other such productions coming up.
Can you tell us anything more about the deals that you’re signing with artists direct?
Our intent is never to compete with labels. Our intent is to facilitate the artist’s ability to actually make money and get music to fans.
We will always work with labels if available. If an artist wants to sign to a label, we’d love that.
“Our intent is never to compete with labels. Our intent is to facilitate the artist’s ability to actually make money and get music to fans.”
It’s very important for us that we’re not trying to replace labels. We’re trying to help artists when it’s not available.
In Sudan, [there has] never been a concept of a label, but that doesn’t mean that we should not allow Sudanese artists to disseminate their music and grow and make money.Music Business Worldwide