Building business on the internet in Africa – Lessons from Linda Ikeji and Afrostream use cases
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Last week, I was on my way to my job when I read an open letter from Afrostream CEO, Tonje Bakang. That letter stated that the streaming service, available in 24 African countries was about to shut down. Even though failure in an entrepreneur’s life should not be considered as such, I realized how building business on the Internet could be tricky, especially in Africa.
Just a few days ago, I watched a TV show about the blogger, Linda Ikeji an African internet success story.
What can be learned from Afrostream experience and from Linda Ikeji, one of the most successful blogger in Africa?
How do most of the businesses on the internet work?
The abundance and availability of information made possible by the Internet has led to a situation where everybody can get so many things for free. Nowadays, newspapers, academic resources, etc are easy to find without paying anything. This implies that for many “electronic goods”, prices are declining because of competition with free electronic goods. In addition to that, there are also illegal resources such as illegal movie streaming, books download, etc…
It is now possible to sell products to the final consumer directly on the internet. We have e-commerce businesses such as Jumia and some subscription-based services such as Afrostream. Finding a good price for selling directly to final consumers is critical for a business to succeed on the internet. This is so because so many free resources are available for substitution.
This situation has influenced many businesses to rely on advertisement as a business model so as to earn money from their online activities. These businesses monetize their audience to other brands and companies that want to raise their product awareness. Linda Ikeji, one the richest blogger in Africa has built her fortune on advertisement.
Afrostream, Africa’s Netflix: lessons from a sad but inspiring experience
- As a start-up, you should focus on reaching the break-even point in order to attract investors. In Africa, this is of huge importance as investors don’t really know the African market and are reluctant to invest huge amounts of money.
- Media industry is booming and content acquisition is soaring high. Producing a standard episode of Game of thrones costs an average of 8 million dollars. Being able to pay content rights when prices on the Internet tend to go down is crucial and if you can’t go big (thanks to investors), you should go home.
Linda Ikeji: Advertisement, but what’s next?
- With the Internet, getting an audience to monetize via advertisement is THE means to get paid. Linda Ikeji has succeeded. The more you get audience, the more you have the possibility to succeed.
- Linda has decided to diversify her revenue stream. So she is investing in video contents creation…but as I said earlier, many people might not be willing to pay for media content on the Internet if they can find the same content for free on other links on the web. The good news for her is that she produces her own programs. By doing so, she can both sell diffusion rights to other party (pay TV, ..) and also find a way to continue to monetize through
Internet-based businesses are gaining momentum in Africa, as we are all going digital. Even though advertisement business model is mostly used to monetize online presence, selling products is evolving tremendously. However, finding the good price to convert more prospects into customers and quickly reach the break-even is critical for businesses to succeed, as critical mass of “digital consumers“ is yet to come
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