This presents a problem to the industry given the advent of smartphones, MP3 players and the internet.
A young man from eKasi (slang for township in South Africa) has gone on to bootstrap and build a music platform which now has more than 38,000 music artists in South Africa signed up and earning royalties through the platform.
HumanIPO caught up with KasiMP3 founder, Mokgethwa Mapaya, and discussed the digital music platform hoping to revolutionise the music industry.
HumanIPO: Give us a bit of background regarding KasiMP3?
Mokgethwa Mapaya: KasiMP3 is a web platform that allows music artists to earn royalties by sharing their music for free. It is the third incarnation of one of my previous projects, Shipa Music, which was initially a music store before we eventually pivoted it into a freemium platform.
Who are the founders?
KasiMP3 is founded by myself.
What inspired the idea of KasiMP3?
I just wanted to have a platform where people can access township music.
I then noticed critical flaws in the engineering of the music industry mechanics that needed to be fixed. I believed the business models were all wrong and obsolete, and I saw great value in using IT industry solutions in the music industry.
I saw that Facebook, Twitter and Google are already deriving their revenue from freemium business models, and I thought the music industry had to start following the same trend.
Any well known artists signed up on KasiMP3 yet?
We do have a couple of well known artists, but I do not pay any more attention to them because systematically all music artists are of a similar value to us.
Known music artists have many options in their career, so they just dump their music into our servers and go on with their lives, and fans would then stumble upon their songs through the search page.
Whereas, up and coming music artists on the other hand upload their songs and share their download links everywhere, and collectively they give KasiMP3 platform a certain amount of invaluable reputation on the web.
The reputation that up and coming artists give KasiMP3 is a contrast to the psychological dominance of brand affiliation that comes through well known artists.
KasiMP3 can be grown through either or both successfully.
Have any KasiMP3 artists gone on to become superstars?
I believe it takes around six years to build a superstar, so I don't think the last question is applicable to a one-year-old platform.
What is the value for the consumers and musicians who use KasiMP3?
Consumers get all songs for free, without someone taking them on a guilt trip of how free downloads kill music.
Musicians get the greatest benefits of making as much money or more money than they would have made by selling their songs, while at the same time letting the music reach more people, which as a result increases the probability of going viral.
Kwaito and Hip Hop were once “oppressed” niche music genres that mass broadcast media refused to give a chance, until fans decided to share the tapes and CDs themselves to spread the word.
Any mobile app plans?
I like keeping things simple, and I hate the drama that comes with native apps. I had a BlackBerry app before, but I am relieved I discontinued it.
Are you bootstrapped, VC funded or do you have an angel or seed investor?
I like the romance of making it from nothing, I know history is watching all my moves, so I'm very strict when it comes taking the easy way out. I thought of asking for funding before , but it often makes me feel like I'm cheating, and I would then opt to do best with the little I have.
The other thing I don't like about involving “capitalists” is that it automatically simplifies kasimp3 into a business instead of a movement for change.
Is the platform purely South African based?
I'm currently only focusing on consolidating KasiMP3's position in SA.
Any plans for expansion across the continent?
I will be expanding to Nigeria in the next couple of months. Expanding a music platform is complex work, because music is so different from province to province, let alone country to country.
What is the business model?
KasiMP3 uses a freemium business model. Songs are given [to] the consumer for free and in return we make revenue from the ad space. The revenue from the Ad space is then taken through a financial model that was inspired by the insurance industry.
The model enables us to pay an artist ZAR0.20 per song from revenue of ZAR0.005 generated from the ad space. We pay artists R0.20 specifically because the artist would make approximately the same total if he was going to sell the song instead.
That's because according to the IFPI, one in 20 online downloads are legal, meaning if an artist makes around ZAR4 by selling a single download, then he will need to make ZAR0.20 per download if he were to give away all 20 the downloads for free.
What are the plans for the future?
I want to build a home where musicians will feel a sense of belonging.