iTunes was launched in Nigeria in 2012. The company opened up its services first to Nigeria, Kenya and South Africa, up until this new change, carried out its transactions in African country, exclusively in dollars. In 2015, Apple launched its streaming service – Apple Music – a subscription-based service which was enabled worldwide. Subscriptions to this service was paid for in dollars, with individual subscribers coughing as much/low as $4.99 dollars for an individual plan, and $8.99 for a family plan which accommodates up to 6 people.
But all of that is no more. Since the increase in the exchange rate, Nigeria has seen a reduction in online dollar purchases from app stores, content streaming platforms and paid ads. And obviously, iTunes is not left out of the dearth of online patronage from Nigeria.
For local businesses, the effect of the policy has been tough. Unable to pay for raw materials and imports with local currency denominated cards, they’re forced to purchase dollars at a steep price on the parallel market. Jet-setting Nigerians have also had vacation and shopping trips disrupted. But, a silver lining has emerged.
Faced with losing subscribers in Africa’s largest economy, some of the world’s biggest tech companies are beginning to charge for services in naira, Nigeria’s local currency, rather than US dollars. Over the past month, Apple subscribers have taken to social media to complain about being unable to pay for the company’s services.
In changing the transactional currency to naira for Nigerians, iTunes is seemingly towing the same line that Facebook took in October.
Before Apple, Facebook had also adopted a similar tact. The social networking site started charging for ad campaigns in naira back in June, as the currency situation got worse. Nigeria, with more users than anywhere else on the continent, represents an important market for Facebook. Google started accepting naira payments for apps and games in its Play Store in Aug. 2015, just as the forex problems started to bite initially. But Google still requires Nigerian business users of its AdSense and AdWords services to pay in dollars.
These are initial days, and Apple is yet to reveal their conversion rates, but everything has become cheaper in Naira. Previously a song off Beyonce’s Lemonade album will cost $0.99 ($475.2) dollars to purchase. Right now, it is sold for N100. The full album, which previously went for $9.99 (N4,795), is sold for N900.
So with N900 you can own a Beyonce album, while J.Cole fans can smile to iTunes with N700 for his forthcoming full-length project – “4 Your Eyez Only”.
Beyonce’s “Lemonade” album now costs N900
On Apple music, an individual subscription will cost you N900 as opposed to the earlier $4.99 (N2396). By doing this, Apple has become more accessible to more Nigerians, and will now compete directly with local streaming and download digital stores.
Digital music downloads and streaming in Nigeria have become the most favourable source of revenue for local musicians, particularly Tekno, Olamide, Wizkid and Davido. The earnings are estimated between $US15 million and $US20 million monthly, which amounts to between $US180 and $US240 million annually, according to Sam Onyemelukwe, managing director, Trace EMC Limited. This comes to between N54.9 billion and N73.2 billion annually, based on an average official exchange rate of N305 to the US dollars.
On Apple music, an individual subscription will cost you N900 as opposed to the earlier $4.99 (N2396).
According to new figures revealed at The Brook, BusinessDay’s corporate office in Lagos, 80 percent of music downloads in the country are the works of Nigerian artistes and are done primarily on mobile networks. Telecommunication companies lead others in the music download and streaming business in the country, with MTN controlling about 35 percent of total market share with its MTN Music Plus service, while Apple’s iTunes leads the other non-telecommunication platforms.
By localising their transaction currency, Apple levels the playing field between them and MTN and would now compete at their level.
How would this impact local artiste revenue? For the short term, this would create a reduction in their income via iTunes and Apple Music. With purchases now made in local currency, they stand to lose more from Nigerians who use the services. But the reduction in prices mean that Apple can now attract more users, with a projected exponential growth of subscribers on Apple Music. When this happens, their income would tremendously appreciate.