Streaming service Spotify is expanding into more than 80 new country markets, as well as adding 36 new languages to its platform. The expansion will include 40 African countries, including Angola, Cameroon, Côte d’Ivoire, Kenya, Tanzania, Uganda, Ghana and Nigeria. Spotify is already available in Algeria, Egypt, Morocco, South Africa and Tunisia.

The move means that Spotify will offer its full global catalogue in these new markets. It will also work with local rights holders and partners to expand its catalogue to include more local content.

The inclusion of 40 African countries in Spotify’s offer marks a watershed in the penetration of streaming digital content in Africa. For years, analysts have speculated about the process of leapfrogging in African markets. In some cases, those predictions have been premature (or the impact of leapfrogging has been limited to certain demographics or geographies).

In the case of entertainment, however, leapfrogging is a core feature of African markets. The importance of the Spotify expansion is that it will have a follow-on effect on the price of data. By 2025, GSMA estimates that smartphone penetration will reach 65% in sub Saharan Africa. In 2022, it forecasts there will be 500 million 3G connections in sub Saharan Africa. By 2023, 4G will overtake 2G.

But: the price of mobile data is still relatively expensive and above UN recommendations, although in the majority of countries in sub Saharan Africa it is falling rather than increasing. In Nigeria, mobile data prices in Nigeria reportedly dropped by 75% between 2014 and 2019. If the Naira devaluation alone is taken into account, the cost of mobile data has decreased by just 45%. When you factor in inflation, the price of data in Nigeria has actually increased.

Naira pricing but Spotify Premium comes with a premium

A benefit to consumers of Spotify officially coming to markets like Nigeria, Ghana and Kenya is local currency pricing. To use Spotify now, a Nigerian user must use a VPN and has to pay for their subscription using dollars – which has gotten expensive as the Naira has depreciated. Local pricing means less hassle and less risk and, importantly, less cost.

Spotify Premium will cost NGN900 ($2.36) per month. A single bottle of Coca-Cola retails for around NGN85. So a subscription is roughly equivalent to 10 35cl bottles of Coca-Cola. Still quite premium for most consumers.

By contrast, in the US, Coca-Cola’s new, smaller 13.5oz (40cl) bottle has a suggested retail price of $1.59, while Spotify Premium costs $9.99 – equivalent to just over six bottles of Coca-Cola. If we applied the same factoring to Nigeria, Spotify Premium should cost about NGN535 ($1.40) or 40% less.

Why does Spotify’s expansion matter?

Although Spotify is relatively expensive to African consumers and, on current pricing, targeted at the wealthiest 10% of consumers, it signals another milestone in mobile data usage and how it has an integral part of consumer lifestyles. Repeated waves of young, mobile digital native consumers will want to consume their preferred entertainment through their mobile devices, just as they do anywhere else. The difference in African markets is that the median age in Africa is just 18 years old and will barely shift upwards over the next 30 years.

These consumers will shape their markets – at the ballot box, how they spend, what they protest. If Spotify’s expansion is successful it will help do for data prices what Netflix has done for broadband speeds in the markets it operates in: set a benchmark for acceptability. [Netflix operates in a handful of African markets. It launched in South Africa in 2016 but didn’t arrive in Nigeria until December 2020].

We think these consumers will push harder for cheaper data, regulators will be under more pressure to curb data prices, and mobile operators will be forced to be more competitive on data prices. If they don’t, it risks become a popular issue, just as you see protests for fuel prices.

Sure, but is data really as important as fuel? In some ways no, but it isn’t trivial either. In Egypt post Arab Spring, power outages saw turned into a political crisis for the Morsi government. Consumers experienced those outages as the loss of air conditioning, light and TV in their homes. It created discomfort, isolation and inconvenience and immense amounts of bad feeling towards the government.

The digitalisation of aspects of the consumer economy (payments, communication, shopping, media consumption) means an inaccessibly high cost of data will be no less inconvenient. As smartphone penetration increases, so the cost of and accessibility data becomes a benchmark feature of consumer lifestyles, just as the price of gas or other household commodities is now.