The Nigerian Music Industry: Random Thoughts

It’s been an eventful couple of weeks for the entertainment industry here in Lagos, on the legal side of things. Injunctions were sought (and allegedly flouted), some arrests were made (a label was following the money) and some deals were re-done. Some thoughts on the goings-on and more –

 

  1. It’s a business, not a charity

One of the viewpoints to first make the rounds on social media was that labels ‘in the abroad’ aren’t as hardnosed as Nigerian ones. They, allegedly, invest millions in the artist and if the artist doesn’t make it, everyone just parts ways.

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It’s a slightly outside way of looking at things. Yes, it’s a risk the labels are taking and if they’re not happy at the end of your contract, everyone parts ways happily (see, for example Skales and his former label, EME). However, no “abroadian” artist is going to simply up and try to jump ship. You either run out your contract, try to get the label to release you, or ask the court to tear the contract up. It’s a very naïve or poorly advised artist that declares a unilateral end to a contract that hasn’t yet expired.

 

  1. Contracts are almost unbreakable. But bring the tear of a dragon & a unicorn’s horn & we’ll see…

Contracts are the lifeblood of commerce. If people were able to make commitments to others and fail to honour them without any consequences, business/trade would be in tatters. For this reason, all over the [free] world, Courts are very reluctant to end or amend contracts that have been freely entered into.

 

However, courts have in the past released musicians from their labels, where they were convinced that the recording contract, or the circumstances of the relationship between the parties, prevented the musician from making a living (restraint of trade). Typically, this is where the label has refused to honour music release/publication commitments or has made the terms for doing so too tasking for the artist. Courts might also be minded to declare a contract invalid if the artist can show undue influence on the part of the label. So, basically, if you can show that you were strong-armed into signing onto the label, or that the label is making it virtually impossible for you to earn any income, you might want to talk to a lawyer about securing your release. Lawsuits can be expensive though, especially for an artist alleging that the label is closing off his/her income…

 

  1. Those Unbelievable Clauses? It’s the economics, St#$@*!

Following the ‘arrest’ and questioning of one artist and his manager, snippets of the artist’s recording contract were released and many commentators were shocked at the terms. The most fantastic of the terms appeared to be the £10m release/buy-out clause (riddle: when is a label like a Premier League club?) and the assignment to the label of the artist’s copyright in compositions that existed prior to his joining the label.

 

The immediate assumption was that the artist signed the contract without seeking legal advice or, in the alternative, that he had a bad lawyer. It’s an assumption that misunderstands the dynamics of the Nigerian music industry, as the thinking behind it is that an artist can get a label to significantly change the terms of its contract.

 

There are indeed a few artists that can get their requests for changes agreed to, but most are either label owners or execs themselves. For artists on the up and come, there is very little leverage that can be applied on the label, so it’s usually a take-it-or-leave-it situation. The artist in question here had just been released by his former label, where he’d only been moderately successful and had this new label promising him a signature bonus, a brand new SUV and a flat in Lekki. How many artists in that situation would listen to the lawyer’s advice not to sign?

I’m speaking from personal experience, having advised an artist on a nearly identical contract (whose template is it, anyway?) sans SUV and flat. The label lawyer rejected virtually all the changes requested, so the artist was advised not to sign. Artist signed anyway.

 

  1. Where’s the money, anyway?

Ask the average Nigerian artist where they expect their money to come from and you’re likely to hear live performances and product endorsements. Maybe caller ringback tunes as well. Virtually no one is interested in record sales. This Nigerian model is predicated on music being given away for free in the expectation that fame (and then the live performances and endorsements) will follow. This model probably only works for the Top 20-30 artists in my estimation and I don’t believe it to be sustainable. In addition, on CRBTs side, the average artist will get only 6-12% of the gross revenue, depending on the network (those that pay, that is; some are notorious for not paying).

 

Globally though, the highest growth area for music revenue is music streaming, with the IFPI 2016 Global Music Report showing that streaming revenues increased globally by 42.5% on 2015’s numbers. Digital sales on the whole have overtaken physical, the figures now standing at 45% and 39%, respectively.

Streaming accounts for nearly half of the global industry’s digital revenues. I might have a slight occupational bias here, but artists as a whole stand to make a lot more if they began to take digital REVENUES (not merely distribution) seriously.

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  1. Which brings us to COSON…

COSON continues to do a great job of informing the public in the various rights that music users should respect. They have also done well, as the sole collecting society authorised by the Nigerian Copyright Commission, in collecting license payments from broadcasters and public venues where music is played and enjoyed (hotels, bars, restaurants, etc.).  However, this is performance rights revenue, which globally accounts for only 14% of the pie. If the aim, as the representatives of COSON frequently say, is to ensure that producers, session musicians, songwriters, etc. also get a slice, there’s the question to be asked whether or not it’s helpful to join the industry in ignoring sales. A few producers have been in the news recently, accusing artists of not having paid for the work – they have no share in the revenue from the artist’s live performances, so what’s the remedy? There’s also the issue of sampling and covering – ordinarily, there should be a minimum statutory fraction of the sales revenue (from the song doing the sampling or covering) that goes to the original composer. In a jurisdiction where sales aren’t paid attention to, and no statutory rates apply, how do the original rightsholders get compensated?

 

I am aware, I should say, that COSON has a digital licensing framework in the works, and I look forward to its publication in the near future.

 

 

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Cracking Digital Music in Nigeria: The COSON Summit

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Disclaimer: The views expressed in this piece are totally personal to me, in my personal capacity as someone who has had a keen professional interest in the development of the copyright administration system in Nigeria for over 10 years.

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The Copyright Society of Nigeria (COSON) just concluded the hosting of a summit on digital music distribution, licensing and consumption. The 2-day event was tagged “The Nigerian Digital Music Summit” and its theme was “Establishing the Basic Rules of Engagement in the Digital Environment”. It was attended by industry practitioners, lawyers and also had resource people from countries with more mature copyright systems, such as Norway, Finland and South Africa. At the end of the summit, a communiqué was published, outlining the various things the community wanted to see in place.

The summit was timely for a couple of reasons – this year, for the very first time, it was reported that revenues from digital exploitation surpassed sales from physical. Revenue from streaming is quickly bridging the gap with revenues from downloads, with some companies actually reporting higher income from streaming than downloads. Streaming is the future, as I have previously written, and the time to begin to lay the groundwork for the Nigerian music industry to fully partake of it, was at least 3 years ago.

THE TELCOS ARE EVIL CORP.

Moving quickly to the substance of the proceedings, the gathering very quickly turned on the telcos, accusing them of benefitting unfairly from the music they exploited, mostly via Caller Ring Back Tones (CRBTs – the songs you hear playing when you give someone a call). And it was understandable. For an industry that has risen from piracy-ridden ashes to becoming arguably the leading hub in Africa and a major contributor to GDP post-rebasing, CRBTs were the content producer’s goldmine for sometime. Network saturation, in terms of subscribers and availability of CRBTs now means there are lots more mouths contending for the same pot of beans and individual revenues are declining somewhat.

In the middle of all this however, is the [unsavoury] fact that the telcos retain anywhere between 60 and 80% of the income generated from CRBTs. The remaining 20-40% is then shared between the Value Added Service (“VAS”) Company and the artist/or record label, with of course an even smaller share for the artist if they are signed to a label. With the bulk of their earnings coming from either corporate endorsements (but we can’t all be Don Jazzy, Phyno, Wizkid or Olamide) and CRBTs, the industry is probably justified to demand a larger cut.

Tellingly, however, very little attention was paid to streaming in spite of the efforts of CAPASSO CEO, Nothando Migogo, to stress that the time to focus on it was now i.e. before bandwidth and data costs stop being issues.

The industry should be worried about streaming because each of the four telcos in Nigeria now operates a music streaming service – MTN Music+, Airtel Wynk, Etisalat Cloud9 and Globacom’s Music App. If these telcos have held on to the lion share of the revenue with CRBTs, what’s going to happen with streaming revenue from their services? For other music streaming services, the most efficient way to take payments from subscribers and purchasers is via their airtime. However, when the telcos convert airtime to cash to pay for a transaction, they typically retain about 70% of it, leaving only 30% to be shared between the stand-alone streaming service and the artist/label. Perhaps the even more pressing issue is that the aim of the telcos in starting these services, in my opinion, is to sell data, as voice revenues have peaked globally – data is the new frontier. It’s the same reason some of them are getting into video on demand, etc. In other words, data sales are the real target, the real pot of gold at the end of the rainbow for the telcos, and these guys don’t share data revenue (larger than music download or streaming subscription revenue) with anyone.

BUT EVERYONE LOVES THE FREE DOWNLOAD SITES

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Perhaps it’s even more striking that an industry that wants to earn serious digital revenues made no reference to the industry practices that cannibalise the larger portion of digital earnings, particularly the way nearly everyone offers vast amounts of music for free downloads. What will the incentive be for consumers to buy albums when 70% has previously been released for free. If one also considers the fact that the industry is globally now more singles-driven than albums (iTunes killed the album), this is effectively a limiter on potential earnings, if all singles are given away. The CRBT gravy-train won’t last forever and it isn’t even really working for those who need it to, who have neither the eye-watering performance fees or the juicy telco endorsement deals. Will those ones dare cross the picket line against their benefactors?

ENTERTAINMENT DEVICE LEVY?

Another interesting issue that came up was the Private Copy Levy. This is basically a surcharge on all mobile phones, tablets, PCs, storage devices, etc. to compensate musicians for the revenues they lose when we email or Bluetooth music to each other. I would be very interested to see how our analogue National Assembly would treat this sort of legislation.

F.U.B.U.

Perhaps a final impression is on a comment made by the panellist on the need to develop homegrown solutions to our problems. Yes, benchmarks can be drawn against global best practice, but ultimately the mature systems matured because they developed relatively organically and catered to the needs of their locale, not necessarily pidgeon-holing themselves into systems others had developed. I think it’s important to take local peculiarities into account, to get the system that works best for us.

All said, COSON is doing very important work and deserves commendation for how far its come in the past few years. As long as it becomes clearer how it distributes revenues it collects, and as it increasingly delivers value to the industry, the benefits to will be immense.

Guest Post – Collective Rights Management in Nigeria: Unitary v Multiple Collecting Society Models by Olumide Mustapha (@lumes_bg)

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The recent reports regarding the Concerned Copyright and Intellectual Property Owners’ (CCIPO) open letter to the Honourable Attorney-General of the Federation, Mohammed Adoke-Bello (SAN) (AG-Fed) is of tremendous import with regards to the development of the music industry in Nigeria. The letter contained a plea by the CCIPO for the AG-Fed to intervene on behalf of the former to compel the Nigerian Copyright Commission (NCC) to approve another collecting society for owners of music copyrights.

 

The matter centres around the issue of collective administration of musical copyrights in Nigeria. In particular, the issue of the collection of royalties and the monopoly of the Copyright Society of Nigeria (COSON) in this area, being the only body approved by the regulator, the NCC, to operate as a collecting society for music rights.

 

As it stands, COSON has both been very vocal and visible with respect to its fight against criminal copyright infringement as well as holding various organisations and industries liable in civil law for lack of payment of license fees. This is in addition to its public relations offensive and educational activities to promote the issue of copyright in the music industry. The organisation’s efforts over the last two years have been commendable and the amount of fees they have been collecting and distributing have reportedly been increasing year on year.

 

Where the organisation has been heavily criticised has been in relation to its royalty calculation and distribution formulae, and associated methods. Lack of transparency has also been a levied at the company in addition to the issue of its lack of adequate infrastructure for monitoring the uses of works by commercial users throughout the country.

 

Now, while I am in total agreement with the wide held view that competition is crucial to the development of any industry and economy, the area of collective rights management is unique and therefore requires a gradual process of development until it can be (fully) de-regulated.

 

The mere approval of another collecting society will not in itself ensure that more users will pay license fees for use of music in their respective businesses, nor that music owners will enjoy greater compensation for use of their works. The tendency of (over)- “fragmentation” that is prevalent in most spheres of Nigerian social and economic structures will likely be the result of this desire for ‘de-regulation’, resulting in more confusion, higher transaction costs and ending in less users paying license fees or using music.

 

What   is Collective   Rights   Management:   Pro-Monopoly   v Anti-Monopoly

 

Collective management of copyrights is a system in which owners of works authorize collective management organisations (“Collecting Societies”) to monitor the use of their works, negotiate with prospective users, issue licenses against appropriate remunerations, (usually on the basis of a tariff system), collect such remuneration and distribute it amongst the owners of the works.

 

The rationale for this system arises from the impracticability of managing these activities individually. The transaction costs involved for rights owners to individually administer the public performance rights, (for example), to their works would likely end up being more than the price of the license fee for the use of same.

 

Thus, third-party organisations represent the interests of a group of owners and these ‘collective rights’ organisations, (by virtue of their core activities), enjoy economies of scale when administering these rights on behalf of a large group of rights holders.

 

COSON has repeatedly argued that it is adequately protecting the interests of Nigerian music copyright owners, citing the many civil suits it has filed against various organisations and industries that use music in the course of their businesses. The anti-monopoly advocates, on the other hand, point to COSON’s lack of transparency and accountability, with particular regard to monitoring of works and royalty distribution amongst its members.

 

NCC: Collecting Society Approval Powers

 

Nigeria’s current legal framework with regards to the collective management of music rights (and its regulation) is contained in the Copyright Act Chapter C28, Laws of the Federation of Nigeria 2004 (the “Act”), and the Copyright (Collective Management Organisation) Regulation 2007. We operate what can be described as a unitary Collecting Society model with the flexibility to accommodate multiple societies, while having NCC as the overall regulator.

 

Based on our system, the NCC is not obliged to grant any other organisation a license to operate so long as it is of the opinion that COSON is adequately serving the interests of music copyright owners. Also, because the Act is silent on what would constitute the ‘adequate protection of interests’, it is presumably left to the NCC to decide upon.

 

Going Forward

The primary focus should be on issues surrounding the distribution methods of COSON as well as the adequacy of its infrastructure for the monitoring of the use of works. Audio recognition software as well as the use of ‘field operatives’ to gather accurate evidence of use of works by businesses, broadcasters and other commercial users should be the short to medium term aim. The accurate collation of music usage by licensees also serves the secondary purpose of providing a basis for a more equitable distribution of royalties and license fees amongst members. Commercial users are not mandated by law to keep playlists and logbooks so it is even more imperative for COSON to carry out these activities.

 

Both sides in the dispute must not lose focus of the ultimate goal; to wit, having a suitable administrative framework for music copyright administration in Nigeria, that would involve a simple and efficient method for users to obtain lawful   licenses   to   enjoy   creative   works,   whilst   ensuring   the   equitable distribution of fees and the rewarding of creators thereby stimulating further creativity and innovation. It seems both sides of the argument have this intention in mind and must therefore cooperate and engage in continuing dialogue to find some middle ground on which a consensus can be built.

 

Olumide Mustapha Esq (QSEW) is a Media and Entertainment Attorney. He can be reached by telephone on +234 810 421 55 00, or by email at lumimustapha@gmail.com. He also tweets from the handle @lumes_bg.

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To read further on COSON and its battles, disputes and progress, check out BON, COSON and MUSIC-SHUNs: 5 THINGS.

 

 

 

Streaming IS the Future; but Nigerian Music Needs to Turn on The Tap

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Last week, Adele’s manager, Jonathan Dickins, was reported as saying during an interview that streaming is the future whether musicians liked it or not. His comments followed news that Taylor Swift had pulled her entire catalogue from Spotify, the world’s most popular streaming service.

Taylor Swift is not the first musician to grow less than enamoured of the service, or with streaming as an income generator for the industry. Last year, Radiohead musician Thom Yorke described Spotify as “the last desperate fart of a dying corpse”, when the group pulled its music off the service. More recently, musician/songwriter Aloe Blacc published an op-ed in which he also expressed grave reservations about streaming as a sustainable source of income. How true, can it be then, that streaming is the future?

Looking at it from Blacc’s perspective, there might be a point about the reward system but I think rather than an indictment on Spotify, it’s more symptomatic of where the industry is, as a whole. Blacc writes –

“Consider the fact that it takes roughly one million spins on Pandora for a songwriter to earn just $90. Avicii’s release “Wake Me Up!” that I co-wrote and sing, for example, was the most streamed song in Spotify history and the 13th most played song on Pandora since its release in 2013, with more than 168 million streams in the US. And yet, that yielded only $12,359 in Pandora domestic royalties— which were then split among three songwriters and our publishers. In return for co-writing a major hit song, I’ve earned less than $4,000 domestically from the largest digital music service.”

If that’s what’s now considered a streaming “success story,” is it any wonder that so many songwriters are now struggling to make ends meet?”

It sounds dire, but that’s 168 million streams versus exactly how much in sales? According to this site, the track sold 237,000 copies when it debuted in July 2013 and only broke the 1,000,000 mark 5 months later in October. Take a look at Billboard’s half year charts for digital singles too. Album sales are down, and have been on the downward trend since 2010. Streaming and subscription revenues, on the other hand, are growing, climbing 51% in 2013 and crossing the $1bn mark (summary here; full report here). The head of Global Trends and Futuring for the Ford Motor Company has also been quoted as saying that “young people prize access over ownership.” So, what’s the issue? Is Spotify, together with the other streaming services simply ripping people off?

The issue may be that content creators don’t fully understand the service yet. Chances are that many users don’t understand the back-end either (they don’t really need to, in all honesty), so if you’re one of them, you might want to check out this post. Another post suggests that Spotify has not sufficiently controlled the narrative and has allowed content creators and the media replace fact with fantasy.

In the latter post (the Lefsetz Letter), the point is made, agreeing with Adele’s manager, that YouTube is by far the bigger monster, paying far less than Spotify does, closely followed by P2P platforms, which pay nothing at all. The post however disagrees with Adele’s manager on some music being taken behind the subscription pay wall, because that would simply push users to YouTube and P2P, leaving the content creators with nothing.

Does this mean anything for streaming in Nigeria? Probably not in the near future. Unreliable mobile internet and expensive data plans mean that very few people without WiFi modems stream much. Furthermore, given that most of our musicians give most of their music away for free downloads, there is little incentive to explore streaming anyway. So, perhaps the Nigerian market prefers ownership to access and this is all moot for now. But I’m an advocate for long-termism, and mobile internet will work someday and voice/data bundles will become more affordable for the streaming demographic. What then?

The current industry model will probably need to change in a year or two. Right now, the model for success is giving music away for free, hoping it becomes a hit that leads to RBT revenue and, ultimately, live performances. This sort of ties in with Dickins’s breakdown of how revenue streams for successful artists today –

60-65% of their income is going to come from tickets, 15-25% from tour merch, 10-15% from publishing, 2-4% from ancillary and 2-4% from record sales.” (Here’s the link again, just in case; emphasis in the quote mine).

You can see though that it’s significantly different, in that 70-90% of revenue will come from touring (not “shows”!) and tour merchandise. However, publishing revenues aren’t insignificant either. Enter, COSON (and its pursuit of digital royalties).

If RBTs are going to be the way forward here, then the crazy percentages that the telcos take of the gross revenue (60-72%, before VAS companies split the net with the artistes/labels) need to come down significantly. The music industry should lobby as hard as they can for legislation to support this (shouldn’t be too hard, with so many entertainers gunning for office in 2015).

If, on the other hand, the African market is to become as competitive as the foreign market, then the industry needs to support its domestic music streaming companies. Streaming kills piracy, and if the numbers are large enough (hint, hint, artistes and label execs), it will put money directly in their pockets. As Lefsetz says, “tech is all about scale” and “people who put brakes on the future end up screwing themselves.”

In conclusion, everyone knows that digital is here and analogue is gone. For Nigerian musicians to fully maximise  revenue from digital, given that their largest market is local, they may need to approach the issue a little differently.

Music and Lyrics

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Music has always been a time-stamp for me. Most songs that bubble to the surface of my consciousness remind me of very specific places and times. Panam Percy Paul’s Bring Down Your Glory reminds me of the most devout time of my life, in secondary school. When I hear Diana Ross’s Touch Me In the Morning, or Do You Know Where You’re Going To, I see my mum a much younger lady in my mind’s eye. I hear Dynasty’s Holiday or Midnight Star’s No Parking on The Dance Floor, and I see my dad, who’s pushing 70 now, busting moves. Maroon 5’s Songs About Jane was the soundtrack to my NYSC. Missing You, the Puff Daddy tribute to the Notorious BIG puts me firmly in Kuti Hall, UI, when you would hear at least five different rooms blasting different portions of the song at any one time. Michael Buble’s Home reminds me of my bittersweet time as a perpetually broke masters’ degree student in Southampton. And so on.

Perhaps the way I consume music has also contributed to the time-stamping factor. I want to hear the layering of the instruments and vocals and hear how the producer changed the beat at the hook or the bridge. Most of all, however, I want to hear each and every single lyric and try to figure out what was going through the composer’s mind when he wrote the song. Since we got Google, rather than merely looking for the words, I also search for the background to the songs, and you’d be surprised how much history you might come across in that endeavour.

For instance, if you research the song Layla, made popular by Eric Clapton, you will find that it was inspired by his love for Pattie Boyd, who at the time he met her was married to George Harrison of the Beatles. Boyd would later divorce Harrison and subsequently marry Clapton, although the latter union did not last either. Boyd is also said to have inspired another of Clapton’s critically acclaimed hits, Wonderful Tonight. More surprising though, was the fact that she did not really return Clapton’s love, reportedly leading him into the spiral of acute drug and alcohol addiction. With some other songs, like Don’t Look Back In Anger by Oasis, you find that the composer was so spaced out of his mind during writing, he had no idea what the song was about.

And, contrary to what the preface might suggest, older local music also held its allure. Kris Okotie (now Reverend), Felix Liberty, Harry Mosco, Majek Fashek, Sunny Okosuns, all wrote enduring songs. Music was an art, that required dedication, nurture, time and talent.

Advances in technology have democratised everything however. And, armed with nothing more than the same laptop on which I’m publishing this piece to an international audience, anyone can make and publish music much more easily today. It is not certain whether this dilution in production requirementsalso led to the dilution in song writing but Nigerian music is in a song-writing crisis. Of course, it wasn’t always so.

After Nelson Mandela was freed and conscious music died in Nigeria, we all just trudged along for a while. Blackky, Alex O and Alex Zitto flew the flag for a while, Emphasis’s Which One You Dey? and Junior & Pretty’s Monica probably set the tone for indigenous rap around that time. Eedris AbdulKareem of The Remedies then took “rap” to the twilight zone but redemption, for me, came in the persons of Styl Plus. Personally, I don’t believe the story of today’s music in Nigeria can be told without mentioning the absolute game-changers that Styl Plus were. We once again had real lyrics, unprecedented vocal harmony and cutting edge music production. Their Olufunmi remix featuring Da Capo was without doubt the reset button for Nigerian hip-hop and rap.

I’d like to say the rest is history, with all the international superstars we now have but the lyrics lover in me says no. If we had charts in Nigeria today, I don’t think very many songs would be top 10 for more than 2 weeks. The very generic sound of most songs, poor production, similarity in lyrics and gimmickry all make for a very short-term hits market. And, at the end of the day, it seems most artists want to make a hit rather than good music. Now, I’m not naïve enough to think that music should not pay its creators but hit music here is frequently not very good music, and I think this is why most songs have a 2-week top 10 shelf-life or perhaps even less.

The music mostly doesn’t even sound great unless one is intoxicated either by the ambience of a crowd or the infusion of alcohol and I would argue that it isn’t distinctive enough to stamp anyone’s time or memories. Too many artistes are either asking the girl to “whine am down low” or “follow me go” or just stringing words together in unnatural sequences.

I have argued before that this sort of music isn’t the type that will pay artistes into their old age. Music doesn’t always have to make sense but it should sound original and artistes cannot be releasing albums where 7 of 12 tracks sound alike, or 4 tracks out of 11 sound lie you’re recycling your old hits.

Or perhaps the reality is that age brings with it a growing disconnect from the music of the day. I remember my dad not getting the point of expletive-laden rap, with its monotonous basslines, but you try throwing on a few Biggie and Tupac joints at a wedding reception or stag do today and see what happens.

Let’s encourage artists to pay more attention and devote more effort to writing, and let’s support those who make the effort by buying their music. If the legend that is 2face Idibia could finally give in and include a Go-Down-Low line in Go, the opening track to his latest album, I would suggest it’s because we did not reward him enough for Only Me, Rainbow and all the other lyric-laden smash hits on his previous one. There’s no greater incentive than putting our money where our mouths are.

The recorded music market in the US, 2000-2013

Music sales over all are dropping, but digital’s share of the pie is rising…

Music Business Research

The Recording Industry Association of America (RIAA) recently published the sales figures (shipment figures) for the recorded music market in the US for 2013. Accordingly, digital sales increased by 7.6 percent to US$ 4.36bn from 2012 to 2013. Nevertheless, overall sales (digital and physical) slightly decreased by 0.3 percent from US$ 7.016bn to US$ 6.996bn in 2013. Thus, the sales decline of 12.3 percent (US$ -325m) in the physical product (CD, vinyl, DVD, SACD) could not be compensated by the growth of the digital music market. All in all, digital music sales accounted for 64 percent of the overall recorded music sales in 2013.

The strong increase of digital music sales is fueled by the booming music streaming and subscription segment, which grew 39 percent in 2013, generating US$1.4bn in revenue. However, single track download sales shrank by 3.3 percent (US$ -54.6m) in the same period. Digital album sales have slightly…

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Balancing Label – Artist Contracts

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Why aren’t our labels and their artists getting along? Virtually all major labels have had a public spat with an artist, leading many times to the artist attempting to leave without being released from his contract. Expectedly, these matters have got tied up in court, with the artist prevented from working until after the suit has ended. What’s making artists so upset?

In the parallel universe where things work and there is a just reward for artistic creativity, getting a record deal is usually cause for celebration. The artist knows he/she will be paid a lump sum advance by the label, usually in instalments, which the label will try to recoup over the life of the contract, through record sales, touring, etc. In our dimension of the universe, a record deal seldom means more than the artist finding someone willing to pay for styling, studio time and video shoots in exchange for 60-70% of the artist’s net takings. Advances are rare for artists who aren’t yet established; who haven’t, as we say, “blown”, so many new/up-and-coming acts depend entirely on the label for their day-today maintenance.

This arrangement is usually fine until the artist’s first hit. The artist gets a glimpse of his/her potential earning power and, like Adam and Eve after partaking of the forbidden fruit, their eyes open.  A restlessness develops that, if not managed properly, will lead to the sort of confrontations and frustrations that the Nigerian industry has seen of late.

This is not to say that the labels are without blame, however. Most of the contracts in circulation, in addition to there being no advance, have no minimum commitment (financial or otherwise) for the labels. This effectively means there is no legal means of exit for the artist in the event that the label does nothing to promote the artist or unduly delays the release of recorded material.  An artist will be locked in until his/her minimum album requirement, a factor largely under the label’s control, has been discharged. This lack of minimum label commitments is understandable, given that it is the labels that draft the contracts (and will therefore insert the most favourable terms possible) and many artistes are too desperate to even think about getting a professional review before signing the contracts.

Some contracts have a term of X years, with the option to renew for Y additional 1-year periods. For example, a 4-year contract, after which the label is entitled to exercise the option to renew the contract for 2 additional terms of one year. This is potentially a 6-year deal. How does a label keep a Nigerian artist happy for 6 years? Chances are that you’re renewing because the artiste has “blown” by year 3 or 4. The artist’s expectations are likely to have changed with his stature.

But the labels aren’t in it for charity either. At the end of the day, they invest in the artist to reap a profit, like any other businessman. With the dependency on reformed(?) pirates for physical “sales”, digital suffering from the abundance of free music and quality videos costing what they do today, a long contract is probably the best way to hedge against un-recouped investment. And if the vast income spent in years 1 and 2 of a 4-year contract is rewarded with dismal revenues, what’s the incentive to keep spending for years 3 and 4? And why let the artist go after year 4 if your net profit is still a negative sum?

Can a middle ground be found?

The increasing frequency of falling-outs between artists and their labels suggests that a middle ground has  to be found. It may be due to my inherent professional bias, but I think the solution lies in the contracts, drafting them and understanding them. Professionals who draft contracts need to present their principals with pre-emptive solutions to cover the commercial realities they are likely to face, given the industry’s landscape over the past few years. As with any investment, parties need to set parameters for recognising when the investment/partnership/relationship has failed and prescribe how to walk away. In addition to acknowledging that the thrust of a recording/360 contract is not a lifetime of servitude, labels may wish to consider inserting a sliding buyout scale (e.g. un-recouped advances to date + expenses to date + N5m(year 1) or N10m(year 2) or N15m (year 3)) for an artist who wants to walk away even if  the label has met its obligations.

Contracts set out each Party’s expectations of the other, but signing one presumes that each party knows what is reasonable to expect of the other (so it can negotiate) and that each party understands what has been written down (so that it can review). Clearly, the unexposed artist is at the receiving end of this spectrum. Artists who can’t afford lawyers and who can’t get the label to pay for independent advice need to know the right questions to ask. Here are a few suggestions –

  • If the contract is for 5 albums, how frequently do you (the label) have to put one out?
  • If you don’t release an album within agreed time-frames, what is my remedy? How long can you withhold my music or deny me recording support before I can give you notice and walk away?
  • How much of the money you spend on me is a loan (and therefore recoupable) and how much is an expense (your investment)?
  • If it’s all recoupable (i.e. a loan, meaning I, the artist, effectively paid for it) how long after recoupment does ownership of the masters revert to me?

The “DaLevie” Code

“Convert to Digital and then change the entire product.” That’s how my mind summarised it, anyway. That tweet from Aaron Levie is probably one of the most intriguing things I’ve read on Twitter. It seems to me like that will be the recipe for success this century. Find a physical product, switch it to digital, then change the product and “watch the money pile up”.

Coincidentally, a few days after seeing the tweet, I came across UK music sales numbers for 2013. Streaming, the entertainment channel du jour, seems to be coming into its own very nicely. Music streaming is up 33% on 2012’s numbers, significantly outpacing physical sales in year-on-year growth (overview available here). In the US, Netflix, which inspired the Levie tweet, has seen a 4% increase in revenue, with pay-TV channels reporting a 6% decline in subscriptions over the same period.

UK Music Stats

 

Music streaming is going to have to peak sometime soon, though.  This piece compares 15 streaming platforms (including the just-come-online Beats), each with a catalogue of over 20 million songs. That it omits the largest players in the African market can mean any of several (good or bad) things, depending on how you want to slice it. However, if Spotify, the largest (by reputation, if not revenues) reported a net loss of £49.1 million for 2012, is there really going to be gold at the end of this gold rush? It’s not all doom and gloom however, as streaming revenue in the UK this year was over £100m. Unclear how much of this is profit, but as this piece and this one show, Amazon (for example) continues to defy the huge-revenues-no-profits logic.

And even if streaming peaks in the Europe and the US with all their internet saturation, Africa’s numbers suggest that an Africa “Boom” is still possible. PWC’s South African Entertainment and Media Outlook (2013-2017) – which includes Nigeria and Kenya (download links available here) – contains lots of relevant data. The Nigeria report says, amongst other things, that the fastest growth area in consumer spending will be internet access, with a compound annual growth rate of 49%. The 2017 Nigeria internet market is projected to be worth US$5.6bn and mobile is expected to dominate this, with the current 8 million mobile broadband subscriptions estimated to rise to over 40 million in 2017. That’s 40 million potential music streaming customers in Nigeria alone, over the next 3 years. If we use the Spinlet N3,000/month subscription to attempt a layman’s gauge of the market, that’s roughly a potential annual pool of  [Error, Error, Error]. Chuckle.

So, what product will YOU convert to digital and then change entirely?

BON, COSON and MUSIC-SHUNs: 5 THINGS

It has now been widely reported  that IBAN* and BON** (associations of independent television and radio broadcasters) have chosen, in response to lawsuits by COSON, seeking the payment of royalties for its members, to stop playing the music of COSON-registered artists. Here are a few bits and bobs on collecting societies and royalty payments.

  1. What is a Collecting Society?

A collecting society is an organisation that, as the name suggests, collects royalties income on behalf of its members. What income? Well, you’d have to go back to Copyright 102, on who owns the music, for copyright basics. However, to quickly summarise, the music and the process through which it is made confers exploitable rights on different people. If you’re a busy song writer or a touring singer, the chances are that you cannot track all the stores, radio and tv stations, digital platforms, etc. playing or selling your music. Collecting societies do this for their members. Examples of collecting societies outside Nigeria are The Harry Fox Agency, PRS for Music, ASCAP, NORM, SAMRO and so on. In Nigeria, we have COSON – the Copyright Society of Nigeria. COSON is the collecting society for musical works and sound recordings in Nigeria. What are musical works and sound recordings? See Copyright 101.

2.   Does COSON represent only singers/artists?

In theory, no. I reckon COSON would also argue that it doesn’t just represent singers in practice.  In theory, COSON should represent and indeed holds itself out to represent everyone in the music-making process – singers, writers, instrumentalists, producers and so on. However, the nature of copyright is such that if a producer or instrumentalist was hired and paid a one-off fee for their work, it is deemed a work-for-hire and copyright vests in the employer. Which brings me to the “in theory” part, because in Nigeria,  most singers write their own songs and the producer (hired and paid a one-off fee) sequences the music with software. After Cobhams, not too many others hire session bassists, guitarists, percussionists, etc., unless you’re part of a fuji or highlife band, but you get the drift. If a singer who’s written his own music (or his label), hires a producer (on a one-off fee) who lays the beats, who owns the copyright in the work? The artist? That’s right. But I am more than happy to be corrected if my assessment is wrong.

3.   How do Collecting Societies pay their members?

I’m just going to copy and paste the ASCAP formula . You can find the breakdown and explanation on their webpage, here.

Use Weight  X  Licensee Weight  X   “Follow The Dollar Factor”   X   Time of Day Weight   X   General Licensing Allocation

+

Radio Feature Premium Credits
(for radio performances only where applicable)

+

TV Premium Credits
(for performances in highly rated series, where applicable)

=

CREDITS

You can also view BMI’s method here.

How does COSON pay its members? They also describe it on their website and here’s another copy and paste:

“At COSON, there are two categories of distributions: Specific Distribution and General Distribution.

“When a license is issued for a clearly identifiable work or a log is received from which the royalty due to a particular work is clearly discernible (e.g radio & TV promos, road shows, jingles, ringtones, etc), the copyright owner/s is entitled to a royalty based on how much the society has collected on behalf of the owner from the user. The only deduction in this case will be the administrative cost.

On the other hand, a general distribution is made to members across the board, in cases where the royalty collected cannot reasonably be ascribed to any specific work or where the members at an AGM have decided that a token be paid to all members irrespective of the amount of use of their works. General distributions are usually done once in a year.”

4.   Is COSON the only collecting society in Nigeria?

Uhm, yes, although Charlie Boy and his friends at MCSN would probably disagree with me. And this article, here, suggests there should be more than one. However, the Copyright Act says that you cannot officially be a collecting society unless the Copyright Commission licenses you as such. The Act goes further to state that that the Copyright Commission does not need to license more than one collecting society if it is satisfied that a single society can carry out the role adequately. Therefore, as the law currently stands, royalties for the broadcast of musical works and sound recordings in Nigeria are payable to COSON alone.

5. Does COSON’s “International Standards” Argument Fly?

COSON prefaces most of its statements on this matter with a reference to international standards and practices for the industry. If we want a world-class industry, then YES, it certainly makes sense for us to adopt the standards that the very best representatives of the international industry have imbibed. However, our history, both economic and political, has shown (and it’s unclear to me whether this is fortuitous or by malevolent design) that wholesale adoption of international standards has not always worked. In his piece on the matter, industry heavyweight, Efe Omorogbe frowns at the BON/IBAN tack of wanting to develop a system that takes the “peculiarities of the Nigerian industry” into cognisance. Obviously, given how long BON and IBAN have contended with collecting societies (and other, more sinister motives, as alleged by COSON), there are some trust/credibility issues. But there is nothing wrong (if BON/IBAN are sincere) with looking at the roles that culture, environment, etc. played in the evolution of international systems while they were evolving, and see if we need to tweak any parts of what we’re adopting. For instance, is it a factor worth considering that in the royalty regimes practising these international standards, pirates and piracy are not as pervasive as they are here? Is it worth considering that our traditional channels for distribution now involve an Alaba “distributor” negotiating a one-off fee with the artist and  the artist expecting no more sales income from the album (thank God for digital)? These have no direct bearing on radio and television per se, but they underscore the point that our industry is neither American nor British – it is Nigerian.

Clearly, BON and IBAN have to pay for licences to exploit the music, unless they all decide to become 100% talk radio stations. This is more so as they are required to have 80% Nigerian content. If their ban is as a result of not wanting to pay at all, it is unconscionable. If, on the other hand, they want to develop a royalties regime in good faith for the Nigerian industry, then rather than merely complaining about antagonism and harassment, they should be putting out counter-proposals to COSON’s. Eventually, the law suits that have been filed by COSON will reach a conclusion and things will come to a head. It will be interesting to see if the ban will last as long as the lawsuits.

________________________________________________________

**IBAN – Independent Broadcasting Association of Nigeria

**BON – Broadcasting Organisations of Nigeria

Nelson Mandela’s Musical Legacy

English: Nelson Mandela in Johannesburg, Gaute...

English: Nelson Mandela in Johannesburg, Gauteng, on 13 May 1998 (Photo credit: Wikipedia)

How will I remember Nelson Mandela? It will be in the music that was made about him and his role in the struggle to smash apartheid. There are many reasons why. As a child of the 80s in Nigeria, we didn’t have political programmes dedicated to the struggle – it would have been hard and perhaps a bit hypocritical, seeing as we were under the thumb of the military for the greater part of 1980-1990.  There was no CNN/cable television for us until the mid to late 90s, no internet, no news breaking globally in an instant. No. My initial education on South Africa, apartheid and Nelson Mandela was from the music of the day.

I remember Majek Fashek’s Free Mandela, from his album I and I Experience. The song spoke of the man who had been in jail for 27 years, who “left his wife and his children for the sake of Africa”. The song also reminded us that Nigeria had been independent had been independent for 29 years but Nigerians were still dependent. Majek begged Margaret Thatcher, George Bush and Frederik De Klerk to free Mandela; it begged Babangida to free Nigeria and it begged colonial masters to free Africa. During the Fela-rites-of-passage years that all Nigerian men in universities go through, I would later hear Fela Anikulapo-Kuti point out the absurdity in Thatcher and Reagan, who he said were friends of Pieta Botha, go to the United Nations to press for a charter on human rights.

I remember Ras Kimono’s Kill Apartheid. He sang, “Ronald Reagan and Margaret Thatcher, Gorbachev and Pieta Botha/All of them come and join together/They want to be the blacks’ masters/So, kill apartheid, we have to kill apartheid…” I forget the musician’s name now, but I also remember “The whole world is saying: stop this apartheid; Africans are saying free Nelson Mandela! Oh yes! Liberate South Africa Now!

I remember Paul Simon’s Graceland  concert, with which he launched his African-flavoured album of the same name. Hugh Masekela and Miriam Makeba (God rest her soul too) did a duet – Bring back Nelson Mandela, brick him back home to Soweto, I want to see him walking down the streets of South Africa TOMORROW! Bring back Nelson Mandela, bring him back home to Soweto, I want to see him walking hand in hand with Winnie Mandela…” Apart from Masekela’s hypnotic trumpeting, there was something about that simple plea that plucked at my young heart.

I remember Onyeka Onwenu’s tribute to Winnie Mandela. “Winnie Mandela, sould of a nation, crying to be free…they can take away your man, take away your happiness, but they can’t take away your right to be free…”. I remember Nel Oliver, who resurfaced recently with the wedding hit “Baby Girl”, do a song on apartheid as well. “We must refuse segregation, we are born to live together. Open your hearts and sing in harmony, Apartheid in South Africa…” [Update: I’ve since learnt that the song was called “Upheaval”. I also found the video…]

There were so many more songs celebrating Madiba and his struggle. I’m sure I will be reminded of a few. I remember being in boarding school the day he was released from prison. We all gathered round the TV they’d brought into the common room just for the occasion. I suspect that the gravity, the significance, of the occasion was lost on the prepubescent gathering. For me, it was that this man I’d heard so many songs about was finally free.

Rest in peace, Madiba.

NB.

I’ve been told that it was sacrilegious to omit Asimbonanga by Johnny Clegg. I hope the powers that be will forgive me for this oversight, as I’ve sought to correct my error by embedding a keeper. Madiba joins Clegg on stage at this performance of Asimbonanga. Enjoy.