Mazika, a homegrown Arabic music streaming service from Egypt, launched in the MENA region recently. Vibhuti Arora finds out what drives it and how the company plans to stay ahead of the game Trade experts claim that music streaming services based on low-cost subscription models will never make money. The profitability of the likes of […]
Mazika, a homegrown Arabic music streaming service from Egypt, launched in the MENA region recently. Vibhuti Arora finds out what drives it and how the company plans to stay ahead of the game
Trade experts claim that music streaming services based on low-cost subscription models will never make money. The profitability of the likes of Swedish streaming service Spotify and Rdio, which runs in 60 countries worldwide, is open to question, even as their subscriber base continues to grow. The idea, however, seems to be gaining traction in the Middle East as more streaming services come to the fore. France-based Deezer has announced its launch in the region; Spotify too is rumoured to launch soon, in addition to some local players, who are investing in such services. Music streaming is being viewed as a potential revenue-churner, at least in the Middle East, albeit with slight changes to the business model.
The region had its first taste of legal music streaming with Anghami, which was introduced in November 2012. More recently, Egypt-based ArpuPlus, a mobile value-added services (VAS) and platform solutions provider, re-launched Mazika, a music library service that was first established in 1998. This time around, Mazika has been launched as a free streaming service. The service saw 350,000 downloads in the first two months with more than 8 million songs played. In fact, it topped the iTunes chart in Egypt for free apps within 24 hours of its release.
Mazika offers a mobile app for Windows, Blackberry 10, iOS and Android to access playlists from a huge content library that it owns.
The app was designed and developed in-house at Mazika and is managed by a core team of eight that is based in Cairo. Looking at the demand for digital services in the market, Mazika was re-launched as a mobile-based service, says Moustapha Bekheet, Head of Mazika.
There is a clear shift towards digital nowadays and we wanted to tap into that segment, using music as the peg, he says.
Mazika had a soft launch in early April this year and was officially launched on the sidelines of the ArabNet forum held in Dubai last month.
A known brand in the region, Mazika used to be a music portal, which enabled listeners to download single tracks from the web site for a small fee. The web site was quite successful until 2005-2006 but gradually began to fade out. Rampant piracy and users preference for free content dealt a big blow to the web site.
As a result, we decided to change the business model and began looking for technical and commercial alternatives, says Bekheet.
We had two choices to close it down or revamp it. That’s when we decided to go from downloading to mobile streaming.
We have been working on the project for more than 11 months now. Alongside the app, we revamped and improved the web portal as well. Unlike the mobile service, we have a limited library through the web but it has the same look and feel as the app.
The business proposition
Music streaming is here to stay, according to Bekheet, who says its about finding the right way to make it into a profitable revenue-generating model.
The fact is that the ad-spend on digital platforms in the MENA region is far less than traditional mediums. We work very closely with our media agency to create new advertising solutions to attract advertisers. This way, we can cover a sizable number of content royalties through ads and sponsorships, while keeping the streaming free for the end users.
The Middle East is a tough market for any paid entertainment service model to break through, agrees Bakheet, citing piracy as the single biggest killer.
The Middle East consumer is not ready to pay for entertainment, and we have to accept that. We are well aware of this fact and have designed our business model in such a way that the end user is required to contribute very little just to cover our operating costs. Our revenue stream is based on other sources such as ads, bundled offers with mobile data packages and live events, informs Bekheet.
How does Mazika do it?
Mazika undertakes the entire process in-house with the support of its parent companies, ArpuPlus and OT Ventures. OT Ventures is one of the major online and mobile players in the MEA region. The company claims to serve 25m customers through its portals, empowering 75% of internet operators regionally. It has a presence in more than 16 countries worldwide. Operating alongside OT Ventures is its subsidiary, ArpuPlus, a telecom service provider in the MENA region, Asia and Europe.
Mazika’s media content or library is hosted in an internal hosting centre in Egypt in Link Datacentre (Link DC), which is also owned by OT Ventures. Link DC owns and operates one of the largest data centres in Egypt located in the capital business area in Mohandessin.
Link DC is an international datacentre and telecommunications services provider, connected to the internet via two of the largest IP providers in the world (UUNet and Flag Telecom). It uses the two main ISP local networks, which serve around 85% of the internet users in Egypt, thereby, providing Mazika with good exposure domestically as well as internationally.
Link Datacentre was founded in 1996 as a subsidiary of OT Ventures, an OTMT Subsidiary. LINK DC is engineered to the highest levels, with extensive systems to address security and network redundancy, offering robust infrastructure availability. The data is hosted in dedicated secured Linux servers in the datacentre, informs Bekheet.
ArpuPlus with support from OT Ventures and Link DC hosts Mazika without the involvement of any third party. The RAW high-quality media content goes through an internally developed content workflow automation system (Robocon) with its own encoding platform to generate multi-format files and a different quality, in order to cover a large number of mobile handsets. The system contains its own content delivery platform that detects the user handset mode of delivery to the end user. It also chooses the most appropriate format as well as quality.
The end user has the ability to download the media content with an applied Digital Rights Management (DRM) system to protect the content or the customer can play the content online in Mazika’s advanced player.
The content life-cycle, therefore, begins with the RAW high-quality content uploaded to Robocon (content automation system) with detailed metadata. The system then receives the bulk of uploaded content at once and encodes the file to generate handset adaptive formats. The files are saved in a secured repository where they are classified by tagging, metadata, genre and editorial classifications. This helps the end user to play or download their requested songs through a delivery platform that selects the best adaptive format, applying the required forward lock and DRM. The service is based upon a progressive download algorithm.
The system is presently available with a high-speed dedicated bandwidth and a highly stable system architecture that enables us to serve large traffic, says Bekheet.
The content is accessible through a secured http connection with RSA 2048 encryption, which has been applied to prevent access from untrusted storefronts.
Mazika’s business model
Rather than depending on advertising money, music streaming companies are rethinking the subscription model and trying to monetise using other revenue streams. For instance, Anghami announced a partnership with Alfa, one of the two leading mobile operators in Lebanon, integrating 3G data plan to offer its users unlimited music on the go, under a bundle called Alfa Anghami for as low as US$1 per month.
Mazika will be launching a similar service soon. As for now, Mazika is offering its service free of charge, offering more than 30,000 tracks from major Arabic labels, Mazika has a growing library of content from local productions about 15,000 tracks for Rai music, and at least 2,000 tracks from independent musicians from the region.
Bekheet says Mazika will focus on minority musicians and find new talent. This will differentiate it from other service providers.
The company has an ambitious plan to support new talent and plans to organise live concerts and produce online video content for independent musicians.
In addition to this, Mazika also offers SMS subscription to serve non-smartphone users via WAP technology.
We have a dedicated section for music news and scoops covering album releases and live gigs with a possibility of online ticketing for concerts. We provide the only integrated solution that enables users to assign ring tones on their mobile lines directly through app, comments Bekheet.
Mazika is considering live events and music competition formats to add to its existing service. This is expected to yield substaintial profit and help support the main music streaming business.
We are now focusing on Iraq and Jordan, especially the local musicians, who dont have much exposure. You will find your own local, lesser known brands on our portal. We didnt want to invest heavily in international labels, to start with, but in due course, we will add major international labels as well, he explains.
Mazika has introduced several Ramadan offers to host established and upcoming Arabic artists in live events. Starting with Egypt, the events will tour Algeria, Tunisia and Morocco, followed by other countries in the region.
The road ahead
Our content is very secure. The idea is to monetise from the end users eventually, but piracy impacts us greatly. If they get everything for free, why will they pay?
We are offering free streaming for now and will introduce the offline mode in the coming months. Technically, our offline mode is ready for launch; we are just waiting for the right time, comments Bekheet.
Geographical expansion is on the cards as Mazika readies to launch its services in Italy and Pakistan this month, with more additions in the future.