Brian Pottinger, CEO of Johnnic Communications (Africa), takes a strong interest in the video CDs sold on the streets of Lagos. As well he should, being head of the South African media company’s foray into other parts of Africa.
Among Johnnic’s businesses is Nu-Metro, which makes its money out of cinema and home-entertainment products. Accordingly, movies are part of Pottinger’s brief.
“Just two days after the international release of The Passion of the Christ, the street vendors in Lagos were selling pirate copies,” says Pottinger. The bootlegs were, however, of poor quality, with the subtitles falling off the screen.
“We estimate that 100Â 000 of these were sold in six weeks, and meanwhile I kept thinking of all those religious Nigerian families trying to watch the film without being able to understand it.”
Six months later, Nu Metro West Africa had secured the rights to distribute legitimate copies of the movie in Nigeria. The company went into action by releasing 50Â 000 units, each with an encryption hologram to certify its authenticity.
Soon after, Pottinger was driving down the streets of Lagos.
“A vendor came alongside me, saying that I should buy a copy. His price was 400 naira [about R18], so I told him I had previously got a copy on the streets for 350 [about R15].”
The man replied that he was selling a quality product, as indicated by the hologram packaging.
“When he heard I was South African, he told me that Nu-Metro was a very good company.”
Unable to resist, Pottinger forked out the 400 naira.
Within six weeks, says the Johnnic executive, 40% of the stock had been sold. The lesson he draws is that there is a viable market for selling bona fide content in Nigeria. Piracy, in Pottinger’s view, is less a question of criminality than of economics.
“There is a view that intellectual property theft in Nigeria should be countered only by locking up the pirates, but that just won’t happen. Instead, you need to work on the economic front, by producing low-cost content that will sell at street prices.”
Furthermore, “you can then use the pirates as your legitimate distributors”.
Based on this approach, Pottinger persuaded some of the international studios to give Johnnic Africa a three-year period of reduced royalty payments from sales in Nigeria. The aim: to develop a competitive industry for legitimate copies.
At the same time, he is working with a local copyright association and the Nigerian authorities to enforce intellectual property rights at the points of production and sale.
“But that’s ancillary to the business strategy,” he adds.
Johnnic’s Nigerian strategy has resonances with trends in the United States. There, the music industry in recent years has been struggling to maintain its high-priced CD sales. Blame was laid on Napster’s super-popular peer-to-peer distribution, whereby listeners simply shared the songs purchased by each other.
The outcome was legal action forcing Napster to cease its service. But with no sign of cheaper prices, a host of similar services sprang up. With tweaks to the technology, they exploit legal loopholes and remain immune to prosecution.
Parallel to these developments, the Apple computer company began selling its fashionable iPod portable music player devices along with cheap pay-per-song services off its iTunes website.
Thus, while the US music industry has blundered along an anachronistic quest to continue selling overpriced CDs, Apple has successfully pioneered a commercially viable alternative.
Along the same lines, Pottinger’s Nigerian strategy might well show that people on this continent are prepared to pay for entertainment content rights — if the price is right and quality guaranteed.
Johnnic Africa is also working on interesting responses to the challenges of copyright and logistics in newspaper publishing in Nigeria.
An early issue was what to do about a Nigerian company that was already using the name and masthead of Johnnic’s Johannesburg newspaper Business Day. Johncom Africa’s strategy was a share-exchange deal along the lines of joining them, rather than trying to beat them.
About 6Â 000 copies of the paper are now being sold each day, says Pottinger, the bulk through street sellers.
Difficulties with this system, however, include the fact that the vendors are controlled by powerful agents who operate only on a payment-in-arrears basis. In addition, the paper blurs into the array of publications carried by the vendors, and the bulk channel anyway fails to reach some of the targeted market of business readers.
So, the company has embarked on building an alternative system based on subscriptions and sponsored sales, with papers delivered by its own fleet of 45 motorbike riders.
“If we can achieve 20Â 000 to 25Â 000 sales in West Africa, and replicate this in East Africa, then we have a continental platform,” says Pottinger.
The aim along the way is also to build a distribution network that can also sell other Johnnic Africa products — books, maps and CDs.
The focus on business-oriented content reflects Johnnic’s strengths in South Africa where the company owns not just Business Day, but also the Financial Mail, Summit TV and I-Net Bridge.
It also hinges on a cautious approach. Pottinger argues that it could be risky to invest in political publications, particularly during election periods. He’s also hesitant about rushing into the radio business around Africa.
“Print and business intelligence are what we know best, so we’ll build a basis on that first. Radio has high margins, but it is also trapped in the regulatory and political environment.”
Pottinger’s plan is for the company to demonstrate it has a long-term commitment to a given country, and that it will use the time to build up a knowledge base and local partnerships.
“At that point, we can consider applying for radio licences.”
Johnnic Africa began with three people near the end of 2003, and will have more than 400 on its payroll by the end of 2005.
Wondering about the prospects of the company? You’ll need to monitor what’s selling on the streets of Lagos.