US music company taps into Saudi hip hop with new deal

Supplied

• Reservoir and PopArabia have jointly purchased hip hop label Mashrex
• They previously bought Voice of Beirut and Egypt’s 100Copies
• Reservoir Media’s market cap is $403m

Abu Dhabi’s PopArabia and Nasdaq-listed Reservoir Media have bought some of the song catalogue of Saudi Arabian hip hop label Mashrex, and will jointly release new music through the specialist label.

In a similar deal last September, PopArabia and Reservoir Media acquired Lebanon’s Voice of Beirut.

The US company says it aims to become the world’s largest holder of Arabic music copyrights and will also work with PopArabia to develop Egyptian musicians following PopArabia’s purchase of Cairo’s 100Copies label in May 2022.

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As part of the latest tie-up, PopArabia will manage Mashrex’s YouTube channel, which has 385,000 subscribers. The channel’s most popular music video – Randar’s Idle – has 13 million views.

The first new music releases under the deal will start this summer, according to a statement.

Writer, producer and rapper Ameer Mashhour founded Jeddah’s Mashrex in 2016.

Mashrex specialises in Khaleeji rap, which is delivered in the Gulf Arab dialect, and is influential in Saudi Arabia’s emerging hip hop culture.

“Due to its population and outsize influence, the rapid development of entertainment in Saudi Arabia has major impact on the regional music ecosystem,” said PopArabia’s founder Hussain Yoosuf in a statement announcing the deal.

Also known as Spek, Yoosuf is a former member of Canadian hip hop pioneers Dream Warriors.

Reservoir Media has a market capitalisation of $403 million and made a net profit of $2.54 million in the 12 months to March 31, down 81 percent year on year as costs and interest expenses rose.

“As Saudi Arabia continues to make investments in music and as hip hop’s popularity continues to surge, we expect to see strong growth from this market,” Golnar Khosrowshahi, Reservoir Media founder and chief executive, said.

Her company says it owns more than 150,000 copyrights and 36,000 master recordings. Its catalogue includes music by A-Ha, Joni Mitchell, Sheryl Crow and composer Hans Zimmer.

After a slow start compared with Europe and the United States, music streaming is gaining traction in the Middle East.

The region’s young population and high smartphone usage should make it a market ripe for music streaming, which is a way of playing audio directly online, in real time, without having to download it first.

Subscribers to the likes of Spotify and Apple Music typically pay a monthly fee.

The platforms, in turn, pay artists, although musicians have long complained about the paltry revenues they receive – around $0.003 to $0.005 per stream, according to industry consultants Label Grid.

The average time spent streaming music in 2022 was 38 percent lower in Mena than in the US, according to a May report by Redseer Strategy Consultants.

The industry is “underpenetrated and restricted to a few dominant cohorts”, specifically Gen Z (those aged between eight and 23), the report said.

However, take-up is rising, and since 2018 Spotify, Deezer and others have set up regional operations, joining UAE-based Anghami, which launched in Lebanon in 2011.