ICTworks

When Russel Southwood of Balancing Act, interviewed Ken Njoroge, CEO of Cellulant, on mobile phone music downloads, I was expecting a general overview of the musical tastes of Kenyans. How wrong was I!

In his telling interview, Ken Njoroge revealed that music downloads via mobile phones is a $4 million dollar Internet business opportunity:

Q: So how many monthly music downloads are you dealing with?

A: It fluctuates depending on marketing activity but in a typical good month we get somewhere between 300,000-400,000. A successful artist might have 200,000-300,000 downloads over 3 months.

Q: What’s the cost of downloading a track?

A: In Kenya it ranges from KS50-70 (US64-89 cents) and in Nigeria it’s about the same at around N100 a track (US66 cents).

Q: Who gets what out of that?

A: First, the Government takes 26% in taxes. After that, the operator generally takes 50-60% and we pay 10-12% to the artist in royalties. Prices across the countries we operate in are broadly similar.

Now let us do the math to see where the money is. First, 400,000 downloads at KS70 gives us 28,000,000 Kenya Shillings per month in gross revenue (or about $4 million USD annually).

Now with the calculation to the right, we get 2.5 million Kenya Shillings in net revenues each month. Not bad for an Internet business, eh?

Especially when you realize that Ken feels that he’s only reached a tiny fraction of the 7 million buyers across Kenya, Tanzania, Nigeria, Ghana, Zambia, Botswana and Malawi where Cellulant operates.

In addition, Ken estimates that 20-30% of that total market have media capable handsets – today. As that percentage grows, so will revenue opportunities with multimedia savvy Internet consumers who see their mobile phone as a mainstream music distribution channel.

I can’t wait to see what will happen when Ken & Cellulant take on the video download business at Wuse market. Movies will be a whole other business opportunity for him…. or for you!