Forbes Middle East - February 2017 - Anghami Coverage
1. FEBRUARY 2017 ISSUE 56
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CHART
TOPPERSHOW EDDY MAROUN AND ELIE HABIB BUILT
ANGHAMI INTO THE LARGEST ARABIC MUSIC
STREAMING SERVICE.
ELIE HABIB
EDDY MAROUN
ARABS ON THE 30 UNDER 30 LIST
2. Contents // February 2017 ISSUE 56
40 I CHART TOPPERS
Eddy Maroun and Elie Habib built
Anghami into the largest Arabic music
streaming service. They’re now on their
way to becoming music impresarios.
BY SAMUEL WENDEL
ON THE COVER
IMAGECOURTESYOFANGHAMI
FEBRUARY 2017 FORBES MIDDLE EAST 1
3. Eddy Maroun and Elie Habib built Anghami into the largest
Arabic music streaming service. They’re now on their way to
becoming music impresarios.
BY SAMUEL WENDEL
Chart Toppers
IMAGECOURTESYOFANGHAMI
COVER STORY ANGHAMI
E
ddy Maroun wanted to listen to mu-
sic while skiing in Faraya, a Lebanese
mountain resort. It was the winter of
2010, and iTunes wasn’t yet available.
Like everyone else with an iPod, he bought CDs
and uploaded the music. The other option was to
illegally download MP3s—altogether a tedious
and unseemly affair.
It got Maroun, 41, thinking about offering a
music streaming service like Spotify. Users can
select songs from a large playlist without having
to download them onto a computer, and it has the
blessing of artists.
Perhaps unexpectedly, Maroun can now claim
to play a small part in helping the music indus-
try fight intellectual property theft in the Middle
East, where piracy is rampant because of lax copy-
right enforcement. “We’re working hard to bring
back value to music,” he says.
His wildly popular Beirut-based music stream-
ing service Anghami has 32 million downloads and
5 million active listeners a month. For free, they can
pick songs from more than 20 million Arabic and
international tracks, making it the largest music
streaming platform in the Middle East and North
Africa. On average, listeners stream 500 million
songs per month.
“Today, [Anghami] is the biggest home-
grown mobile business,” says Walid Mansour,
a managing partner at Middle East Venture
Partners, Anghami’s first backer. “There are no
apps that have that size that are from this part of
the world.” By comparison, tech darling Careem,
which sports a $1 billion valuation, has around 5
million downloads.
Being first to approach Arabic record labels,
at a time when many had never heard of music
streaming, worked massively in Maroun’s favor. It
helped Anghami build an extensive music cata-
log, setting it apart from other streaming services
in the region. Rotana Records gave it exclusive
streaming rights in Saudi Arabia, the U.A.E. and
Lebanon. As one of the Arab world’s largest mu-
sic labels, Rotana represents some of the biggest
artists, such as Elissa, Assala Nasri and Kathem
Al-Saher. Other Anghami partners include MBC
Group’s Platinum Records, Egypt’s Mazzika and
Lebanon’s Watary.
The record companies saw no downside in
signing on an upstart that was essentially protect-
ing their interests. “Music streaming is a way to let
people discover the music of our artists and some-
how it helps reduce the level of piracy,” says Michel
Elefteriades, founder of Lebanon’s Elef Records.
Through these agreements, Anghami gets
to exclusively stream new singles and albums,
sometimes up to a week before they appear any-
where else. In December 2016, Lebanese pop star
Nancy Ajram’s new single “3am Bet3alla2 Feek”
made its debut on Anghami, where it attracted
nearly 5 million plays, before Ajram released it on
YouTube on January 1st.
The company also has streaming rights in the
Middle East for international music labels, such as
Sony Music, Universal and Warner, giving it access
to artists from Michael Jackson to Lady Gaga.
These licensing deals come at a price though.
They require Anghami to shell out hefty royal-
ties to labels and their artists, one reason the
company is still in the red.
40 FORBES MIDDLE EAST FEBRUARY 2017
5. COVER STORY – ANGHAMI
Launching a music streaming business was an expensive
proposition. Back from his Faraya ski weekend, Maroun, who
was creating products for telecom operators at a developer of
mobile messaging systems, ran the idea by his colleague Elie
Habib, a 43-year-old software engineer and the company’s
chief technology officer. The two struck up a friendship in
2000, when Habib hired Maroun, a skilled musician, to play
tunes he wanted to turn into ringtones for mobile phones. He
was receptive to Maroun’s idea. “I needed a change,” he says.
Together they quit their firm in 2012 and started develop-
ing their service, which they dubbed Anghami (“my tunes” in
Arabic.) The first employee they hired was Maroun’s future
wife, who helped with web design.
A key part hinged on adapting streaming technology that
could function smoothly on slow networks. Habib developed
an app that could maintain good sound quality even on 2G
networks, using audio encoding and compression software
from Dolby. “It was a rough period; I don’t count the number
hours we worked,” he says.
While Habib toiled away on the technology, Maroun
reached out to record labels, where he already had contacts.
When he recorded ringtones, he had to seek their permission
to use certain songs. In 2011, Rotana Records quickly agreed
to sign a licensing agreement, with Anghami paying for the
rights to stream its artists.
Maroun won’t provide an exact number but says the Rotana
agreement cost in excess of $1 million, payable in installments.
“The agreements we were signing were much more expensive
than we could afford,” says Maroun. Between him and Habib,
they had about $100,000 saved up. That was enough to cover
their first payments to record labels, but after that they were
living on a prayer. They began hunting for investors, which
brought them face to face with Mansour in late 2011.
“All they had was a piece of paper, a signed contract with
Rotana,” says Mansour. “There was no product, no company,
no team, just the two guys.”
The venture capitalist was impressed by the pair’s deter-
mination to get the widest selection of pop music possible.
Other streaming services, such as Morocco’s Yala, had lim-
ited catalogs, most likely because they couldn’t afford to pay
for them.
Anghami had also quickly embraced mobile. Initially,
Habib began developing a web-based platform, but with the
rise of smartphones he moved to a mobile-first strategy. “If it
weren’t for that decision, Anghami wouldn’t be at its size to-
day,” says Mansour, who agreed to invest $1.2 million in 2012.
That year, the startup launched its free mobile stream-
ing app, which also allowed users to legally download songs.
Within four months, Anghami hit one million users. Maroun
and Habib were astounded; Anghami was a hit.
Celebrating 30
million downloads
in October 2016.
IMAGECOURTESYOFANGHAMI
42 FORBES MIDDLE EAST FEBRUARY 2017
6. Its business model is similar to
Spotify’s. For free, listeners get un-
limited songs, with ads. For $4.99 a
month, they have access to unlimited
downloads and offline listening with
no ads. But, to acquire customers
averse to paying for music and hesi-
tant about making payments online,
Maroun did a smart thing. He struck
deals with telecom companies.
Anghami’s first partner was
Orange Jordan, which agreed to
bundle the nascent app with its data
plans. Others followed, including
Vodafone Egypt, Zain KSA, and du
in the U.A.E. The company now has
more than 20 telecom partners. In
Lebanon, for example, Alfa charges
$3.99 a month for Anghami’s pre-
mium subscription. The startup
shares revenues with the telecom,
although it refuses to disclose its
cut. Signing up with Anghami
through a mobile operator also
allows users to stream music on
their phone without incurring data
charges up to a point.
Currently, 70% of the company’s
revenue comes from paid subscrip-
tions, mostly through telecoms, with
ads accounting for the rest. Habib
thinks advertisements could gen-
erate 40% of sales in 2017. Nestlé,
P&G, Pepsi, Unilever and Puma
already advertise on the streaming
service, attracted by its primarily
millennial audience. To gain more
customers, Maroun has employed a
variety of marketing tools. In 2013,
Anghami partnered with Facebook
to let people sign up through the so-
cial media platform.
It is also getting into music
production. Last year, it produced
Alaa Wardi’s smash music video
“Evolution of Arabic Music,” which
racked up nearly 7 million views on
YouTube. (See sidebar).
The company recently set up re-
cording space in its office, where mu-
sicians can record live sets, dubbed
Anghami Sessions. It plans regular
video releases of the performances. To
date, two bands have recorded a total
of nine songs in its studio.
Anghami also nurtures up-
and-coming artists by streaming
their music. Jordanian independent
Arabic rock band JadaL was one of
the first to play on Anghami, gain-
ing 57,000 followers on the platform.
Being able to feature its music along-
side pop stars helped increase its
exposure says Mahmoud Radaideh,
the lead singer, and earn royalties.
Anghami’s website has a page where
independent artists can request to
upload their music.
All told, the company is becoming
a significant cog in the music busi-
ness. But, the playing field has got-
ten more crowded. There’s Deezer, a
French competitor with more than
100 million downloads worldwide,
and Apple entered the fray in 2015 in
eight Arab countries. Spotify has yet
to launch its service in the Arab world.
Anghami has advantages: it has exclu-
sive streaming deals with Arab music
labels in some countries, and Apple
Music is a paid-only service.
In November 2016, Maroun
closed a series B round for an undis-
closed amount from U.A.E. private
equity firm Samena Capital and du.
He previously raised $14 million
from investors that include MBC
Ventures and Mobily Ventures, the
venture arm of Saudi telecom Mobily.
With its most recent injection
of funds, Anghami is preparing
for a splash in 2017. “We’re going
to spend a lot on marketing,” says
Habib. The company is in talks with
concert promoters across the region
to sponsor festivals and shows, and
is set to sponsor 12 small concerts
at the Dubai Mall throughout 2017.
Anghami also partnered with the
STEP Conference in Dubai to host
a music-themed forum in April fea-
turing musicians and music indus-
try players. Discussions will revolve
around the future of the region’s
music industry. Anghami has be-
come a key part of it.
Golden
Oldies
Last year, Anghami was looking for
a way to promote Arabic music to
younger generations. Alaa Wardi,
a talented Saudi a cappella singer,
pitched the idea of a greatest hits
medley from the late 19th century to
the present. Anghami helped create
a six-minute video, with the protean
Wardi belting out tunes by Abdel
Halim Hafez, Oum Kulthoum, Fairuz
and other celebrities. Since its release
in April 2016, the “Evolution of
Arabic Music” has garnered nearly 7
million views on YouTube.
SOURCE:ANGHAMI
FEBRUARY 2017 FORBES MIDDLE EAST 43