You have to remember as well that cheapness matters, especially when piracy is actually the norm to the point that genuine copies are considered a frivolous luxury... which is true for the vast majority of people on this planet.

I'd easily take 10M units at 10c profit a piece over 50k units at 70c profit.

Imagine your lunch costs 5c instead of $5... not everywhere has the same economic values.

You can reduce your margin, but you can't really reduce the wholesale price. If the big labels expect to take $0.70 from you and your target audience is not willing to pay a dollar but rather something like $0.50, then you can only make negative profit.

You are assuming the music execs are rational, which evidently they are not.

>I can't tell from the article if the story has relevance to the USA market.

Unless the US market has suddenly grown an appetite for Nigerian artists, I don't think it does.

Their primary target is Nigerians. Yet, the site's only means of payment is paypal. Paypal won't work for this market as the class of people they are targeting wouldn't have a credit card. Not all debit cards issued in that country works on paypal.

The country's e-commerce is in its infancy. Therefore, trust - especially with their fellow countryman with debit cards is currently low.

>offers users the ability to download music for ₦30 ($0.50)

50 cents is not ₦30. It's ₦99.49 according to Google. At this price, it's hard to see them succeeding because a pirated mp3 disc containing as many songs as the disc can fit is priced at ₦200 and sometimes less. http://www.nairaland.com/125619/why-buy-pirated-cds-it

Additionally, they aren't really bringing anything new to the table apart from a fee and legality. There are lots of blogs where people can download songs in a single click at high quality and with cover art and some of the tags intact.

I just don't see this working. Even their target wouldn't mind paying ₦100 for a song, most would't be able to buy. If they really want to hit it big, they should solve the payment issue instead.

> At this price, it's hard to see them succeeding because a pirated mp3 disc containing as many songs as the disc can fit is priced at ₦200 and sometimes less.

A disc won't do you any good when all you have is a phone.

Once you (or somebody you know) has obtained such a disc, it is trivial to get all the music you want over to that phone. You don't need to own a computer, any public place that offers computer service is enough and may even do the copying for you.

Sure, it's not as convenient as spotify, but just as in western world you can charge people a few bucks for extra convenience, in the developing world people will usually take awkward steps to avoid paying multiple dollars.

Also note this is already a saturated market. There are companies that specialize in distribution (such as The Orchard and Isolation Network), and some of the big players like Sony and Warner have divisions within them that operate semi-autonomously, and even do distribution for smaller labels. A good example of this is BMG, who recently signed with Warner ADA[1].

Distribution is a solved problem. The value adds are really in the surrounding services, such as dashboards that show sales trends etc. These BI applications aren't traditionally startup friendly. I'd be very surprised if any startup were able to not only disrupt this industry, but make money doing it.

[1]: http://www.musicbusinessworldwide.com/warner-signs-bmg-deal-...