Horizons Newsletter – week 8 // 2020
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
Do you have a question about the digitalization of consumer’s daily lives? As a research-driven investment company, we want to be relevant to you, so please provide us with your questions and remarks. Your feedback will help us to drive our research agenda.
Africa’s decentralized energy future
Sub-Saharan African countries’ energy grids could be set to become ‘decentralized first’, relying on renewable energy and mini-grids. Much in the same way as smartphones in China and mobile payments in Africa helped to leapfrog earlier technologies, decentralized energy grids can replace the need for traditional energy production and distribution techniques. Improving affordable, reliable and sustainable electricity access is one of the UN’s Sustainable Development Goals, which can spur economic activity in a region with some of the world’s fastest growing populations. Sub-Saharan Africa, however, has only a 44.5 percent electricity access rate. Moreover, adding unconnected areas to existing energy grids is expensive; in Rwanda, this typically costs $2,000 per home, making less capital-intensive solutions such as mini-grids and solar home systems realistic alternatives. These technologies are attracting a lot of venture capital. As of the end of 2018, roughly 80 percent of corporate investment went to the pay-as-you-go solar market, with another 15 percent for mini-grids. Furthermore, large corporate investors are becoming increasingly active with investments, partnerships and joint ventures; positioning themselves to serve these growing markets.
Rise of digital mega-ecosystems
Companies such as Uber, Airbnb, and Facebook define today’s platform economy. These platforms still reflect traditional ‘secluded’ value chains. Through application programming interfaces, however, platforms are becoming interoperable. Digital mega-ecosystems are emerging beyond the boundaries of traditional industries, consisting of networks of services that depend on each other’s data and value creation to create as-a-service models. WeChat, for instance, is organizing multiple daily needs of users in one frictionless model. McKinsey predicts that in 2025, almost a third of the global economy could run through digital mega-ecosystems. Nevertheless, these increasingly dominant mega-ecosystems are not necessarily supporting cross-sectoral data exchange and open innovation. Therefore, responses to this concentration of power are becoming visible. In an effort to reconcile numerous small-scale, and mostly sectoral, initiatives, the Dutch Ministry of Economic Affairs published a proposal for a rulebook for the exchange of data between Dutch companies. Simultaneously, open ecosystems (like Ethereum or Linux) are on the rise, aiming to reduce the role of the central party by decentralizing important functions, such as data exchange, payments and governance.
Music is shifting gears
This month, Warner Music Group announced that it is going public again. This announcement is indicative of the transformation music has undergone. Warner Music – one of the big three record labels – went private in 2011, when the music industry had been in a downward spiral for years, characterized by declining CD sales and rampant piracy. Apple’s iTunes managed to turn the tide by enabling consumers to easily buy, download and consume music in a legal way. By 2010, iTunes was the world’s largest music retailer. Next, Spotify’s streaming service came along and the model shifted again, this time from ownership to access. Warner Music is a major beneficiary of this streaming development. Meanwhile, music continues to evolve; along the horizon new music formats and revenue models are emerging. In a development similar to the live streams popular in gaming, artists are creating new music experiences, using live streaming, real-time tipping, comment streams, virtual gifts and collaboration tools. It shows the versatility of an industry that was the first to face the disruptive forces of digitalization and is now shifting gears once again.
