A British Entrepreneur Builds a Music Business in Nigeria

Michael Ugwu explains the challenges, and opportunities, of building a company in Lagos.

April 07, 2013

| by Lee Gomes

The siren-like lure of making a business out of online digital music transcends national boundaries. Just ask 32-year-old Michael Ugwu, who, five years ago, was working in a secure and well-paying job in the U.K. finance industry, as befitting a graduate of University College London. Ugwu, though, was interested in music; specifically, the music of Nigeria, where his parents had been born, but where he had never visited. So he moved to Lagos to help build iROKING, which, with its 120 employees on 3 continents, is helping bring digital distribution — partly ad-supported, partly through monthly subscriptions — to the thriving Nigerian music and movie scene. Ugwu was a member of a panel discussion on entertainment at the recent Stanford Africa Forum, held at Stanford GSB. We interviewed Ugwu after his session.

Nigeria’s 175 million people makes it Africa’s most populous country by far. But its music isn’t as well known in some parts of the West as is the music from less populous countries, like South Africa or even Mali. What are some of the most popular musical genres in Nigeria?

One of the most popular is “highlife,” which is popular throughout West Africa. Some of the biggest highlife musicians are Fela and Sir Victor Uwaifo and Chief Stephen Osita Osadebe. And, of course, there is Afro-pop, which is pop music with African rhythms.

You said that you went to Nigeria to start a digital distribution business for Nigerian music. How was music distributed in the country before you got there?

Most of it was sold on physical CDs in Alaba, a huge central electronics market in Lagos. It was like the world’s biggest Virgin Megastore. Of course, there was a lot of piracy.

How about digital piracy? Is it the same problem in Nigeria and Africa as it is in the West?

I think it’s a global thing. When I talk to artists, I tell them, “Stop putting your music for free online unless you really, really have to. Encourage your supporters, your fans, to support you.” In the West, you have things like Kickstarter, which allow people to support artists and help them put food on their tables. We need that in Nigeria, too.

When you first started the company, what sort of technical challenges did you face?

When we first started thinking about the company, we were reading TechCrunch a lot, and all we read about were apps, apps, apps. Everyone was building apps for the iPhone or Android. And so we said, “OK, let’s do that too,” and we charged ahead. But the problem we found is that 56% of handsets in Nigeria are still the Symbian device from Nokia. You may have forgotten about Nokia here, but in Nigeria, they still have most of the handset business. Unfortunately, it’s almost impossible to find someone to write a Symbian app, because they are all developing for the iPhone or Android.

During your panel discussion presentation, you mentioned that in Nigeria, an entrepreneur can’t offer an “over-the-top” digital service that runs independently of a telecommunications carrier, the way, say, iTunes or Netflix do here. Why is that?

It’s easy to go over the top in the West because it’s easy to integrate [a payment system] with the banks. But there’s nothing like that in Nigeria. So you have to go through the telcos, and they can end up taking a big cut. iTunes just launched in Nigeria about eight weeks ago, which is fantastic for us. You can go online there and pay with your local Nigerian debit card.

Are there different kinds of digital music products in Nigeria than we have here?

The ringback market in Africa is probably bigger than anywhere else in the world. You set it up so that anyone who calls you listens to the recording of your choice instead of a ringing phone. If I call you, I might be listening to the Beatles or Beyoncé or Jay-Z. You have it here, but the market is so small that it’s not even considered a real market. But in Africa, it’s huge, especially for young chaps. I don’t have one myself, and I personally don’t understand what the big attraction is. But it’s a $200 million a year business over there. And 60% to 70% of those revenues go back to the telcos, even though all they are doing is distribution.

You grew up in London. What was it like for you moving to a city like Lagos and starting a business?

It was damn tough. Doing business in Nigeria is not for the faint-hearted. For one, there are very few creature comforts. No Starbucks. Something else, too: In the West, things tend to be black and white, and you stick to one side. In Nigeria, you have to get used to operating in a gray zone. And you have to keep moving. It might be black one day and white the next day. You just don’t know, but you keep moving.

I was born and brought up in the U.K.; all my family is in the U.K. I wasn’t struggling for anything. I had a good job in finance. But the fact that I am in Nigeria now, and have no visions to leave, says something. I am bullish on Nigeria and bullish on Africa.

Most people know that Nigeria has a huge film industry. But the movies have a reputation for being second-rate gangster films. What’s a good movie to get people excited about West African cinema?

Somewhere in Africa. And you can see it for free on our site.

For media inquiries, visit the Newsroom.

Explore More