👨🏿‍🚀TechCabal Daily – Musk’s sticky pull out

11 JULY, 2022

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* Data as of 05:40 AM WAT, July 11, 2022.

ELON PULLS OUT OF TWITTER DEAL

The deal is off!

After months of back and forth, billionaire Elon Musk has revealed his final decision on his $44 billion Twitter acquisition deal. 

ICYMI: In April, days after he declined the offer to join the Twitter board, Elon Musk offered to buy the social media company for $44 billion. Twitter, eventually accepted. 

And now?

Musk is out, and it’s no surprise to anyone. 

Since April, the billionaire has tried to undermine his agreement with Twitter. Twitter has reported that 5% of its 229 million users are spam bots but Musk argued, in May, that the percentage of spam bots on the platform is as high as 20%. This is especially a problem for a social media platform like Twitter where 90% of its revenue comes from advertisement, and an audience with ⅕ of spam bots doesn’t make for very good financial services. 

In the termination letter addressed to Twitter, Musk claims this is the reason he’s terminating the deal with Twitter. 

“Mr. Musk has reason to believe that the true number of false or spam accounts on Twitter’s platform is substantially higher than the amount of less than 5% represented by Twitter in its SEC filings. Twitter’s true mDAU count is a key component of the company’s business, given that approximately 90% of its revenue comes from advertisements,” the letter read.

Musk also claims that Twitter deviated from a clause made in his original merger agreement with Twitter—to preserve the material components of the business. On July 7, Twitter laid off a ⅓ of its talent acquisition team as well as 2 key, high-ranking employees, its Revenue Product Lead and the General Manager of Consumer. 

It’s not over

But Musk’s walk with Twitter is far from coming to an end. The billionaire signed onto a $1 billion termination fee which he’ll have to pay to Twitter if he walks away from the deal. Twitter, on the other hand, is adamant about keeping up the deal. Board Chair Brett Taylor mentioned that the Twitter team is pursuing Musk’s original offer to buy Twitter at $44 billion. 

Big picture: It looks like Musk might have murky waters ahead. Since Twitter accepted his offer, their share prices have dropped from $54.20/share to $38.81 per share. Tesla shares have also significantly dropped since the affair began. Musk, however, appears to be playing the long game as the billionaire has tweeted that any court action will force Twitter to reveal the truth about its spam bot composition.

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UMG PARTNERS WITH MDUNDO

Kenyan-based music service Mdundo has announced a partnership with Universal Music Group (UMG) to bring UMG’s music catalogue to Mdundo’s users across key African territories.

According to Mdundo, the licensing agreement will provide its users with access to the world’s most comprehensive music catalogue, supporting the company’s ambitions for rapid market growth across the continent and increasing UMG’s reach within the African market.

In a statement shared with TechCabal, Mdundo CEO, Martin Møller Nielsen, stated that the company is pleased to work with UMG within Africa towards its vision of providing Africa with an easy and legal solution to accessing music that fits the local consumers.

Nielsen further claimed that Mdundo grew from 5 million monthly users in June 2020 to 19–20 million monthly active users in June this year and an over 225% growth in revenue for the year ending June 2022. 

CEO of Universal Music South Africa & Sub-Saharan Africa, Sipho Dlamini, said that UMG is excited for more fans across Africa to have greater access to some of the continent’s most exciting musical talent, as well as UMG’s extensive catalogue of international artists.

Mdundo is one of Africa’s leading music services, boasting over 17 monthly active users. Before the UMG partnership, the service, which pays over 50% of its income to artists, had 1.7 million international songs and 367,000 tracks uploaded by 122,000 African artists.

The agreement with UMG seems well-timed to allow the service to offer some strong competition to Nigeria-based music service Boomplay, which currently racks up an impressive 42 million monthly active users and a catalogue of over 5 million tracks.

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TC INSIGHTS: SWEEPING SOUNDS

Speaking of music in Africa, music consumption has experienced slight changes in recent years. Increased smartphone and internet penetration have made music easily accessible to Africans via streaming platforms. 

These platforms have grown, with streaming revenue on the continent projected to reach $ 440 million by 2026.

Yet, this shift hasn’t been smooth. Mobile data costs remain high for most Africans. According to a report by the Alliance for Affordable Internet (A4AI), some Africans pay one of the world’s highest rates for internet access. Some streaming platforms such as Mdundo and Audiomack have optimised their products to match these realities. 

Mdundo offers free downloads of millions of songs mainly from Africa and allows for a freemium and subscription-based model. Its primary source of revenue is advertisements in the form of banners and audio ads in the music. This has proved effective as the music streaming service experienced a 22.7% growth in the last quarter of 2021.

“As much as streaming is growing across the continent, the entire premium subscriber base is still low. We haven’t scratched the surface yet. Music listenership remains fragmented, and consumer behaviour varies according to demography. Streaming platforms are not an accurate reflection of our consumption palettes yet.” Motolani Alake, Managing Editor at Pulse, shared on a call with TechCabal

Similarly, Tik Tok has altered music consumption and distribution on the continent and across the globe. Consumer behaviour data compiled by Midia, an entertainment research firm, shows TikTok users are more likely to spend money on music and be more invested in it. But the reality is somehow different in Africa. “TikTok users may create music challenges by lip-syncing to a song, dancing and singing, but the platform needs other popular social media networks to amplify music on the continent,” he further shared.

The digital world may disrupt music consumption and distribution in Africa, but the destination remains far away.

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