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Of beer and boy bands September was a busy month in terms of foreign investment in Egypt, with a leading multinational entertainment vendor quietly leaving the country while a major global brewing company roared into an almost unsuspecting local market through a rapidly executed stock-market buy-up. Dutch brewer Heineken’s 98-percent takeover of Al Ahram Beverages Co. came too late to get full coverage in Business Monthly’s October issue. The other event, the closure of Sony Music Egypt, happened so swiftly and silently that we missed it altogether. The youth-oriented Campus Magazine has better connections than we do with Sony Music’s one-time managers in Egypt and the Middle East. According to its October issue, the Sony pullout followed a head-office decision on September 12 to close all the company’s operations in the Middle East and eastern Mediterranean. Sony Music Egypt had just signed a one-year deal with WAMA, “Egypt’s very first all-boy band” and was about to “raise the young hopefuls to stardom,” Campus said. But aside from some cryptic, anonymous murmurings to the youth magazine, the company made no official announcement of its departure. Even if Sony’s exit was due to a global change of strategy, this should not deter us from questioning what it was about the Egyptian market that might have been inhospitable for a multinational music label. Sony had come in talking about snuffing out pirate recordings, first, by making alliances with the local music distributors and, second, by offering consumers a preferable alternative: CDs by international artists, recorded legally and sold at an affordable price. Yet Business Monthly’s own insider information indicates that, as of mid-summer, Sony’s top selling artist in Egypt (the Lebanese-Colombian singer Shakira) had only rung up sales of a few hundred CDs. This was at a time when prices for home CD burners were falling sharply – from £E 1,500 a year ago to about £E 500 now. Given the prevalence of CD piracy – which is hurting record labels globally – Sony Music may have overestimated the potential for its wares in Egypt. In this market, cassettes (legal, Sony-branded ones) cost about a fifth of the price of the equivalent CD. The lower price of cassettes attracted a far larger number of consumers, but left a slimmer profit margin for the label. As for Egyptian shaabi singers – a market segment that Sony had talked of entering with a view to cultivating exports – the existing cassette market is vast, but it’s also that much more riddled with piracy. Maybe Sony had wider considerations than the Egyptian market. But we cannot claim – after the loss of an enthusiastic foreign investor that had promised to reform a moribund industry – that local market conditions had nothing to do with it. What about Heineken, then? Well, the multinational beer maker faces a completely different set of conditions. Its local acquisition comes complete with a vice-grip on the domestic beer market. Besides which, home brewing is not exactly a common hobby in Egypt, and the imminent passage of an antitrust law does not appear to threaten those companies whose monopolies are already in place. Somewhere, between the still hard-to-enforce law on copyrights
and the upcoming law against monopolies, there has to be some kind
of balance to entice a wider range of foreign investors. In the
meantime, all we can do is crack open a Heineken and celebrate that
we’ve been spared a new boy band. |
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