The music ecosystem is vast. It encompasses multiple stakeholders including performing artistes, composers, labels, publishers, distributors, streamers, marketers, talent incubators, A&R bigwigs, and other executives on the industry backend, which makes up a sizeable deal of the value chain.
The music business has also seen major changes in recent years with the advancement of technology and the proliferation of digital platforms, creating new processes, opportunities, and troubles for those invested in it.
Collecting societies, whose roles can overlap with those of publishers, ensure that musicians and their associated rights holders like producers receive fair compensation for their work. They act as intermediaries between creators and users of music by seeing to it that proper licensing fees are paid and collected on behalf of the rights holders.
Music publishing, the very act of licensing the performance and replication of works while collecting and sharing royalties to their right holders, operates through an interconnected network of collecting societies that could exist at either national or regional levels with reciprocity agreements that allow them to collect royalties from such music users as entertainment clubs, event owners, radio stations, and TV companies on behalf of each other’s members.
So a Nigerian whose music composition is gaining massive airplay in Ghana should ordinarily receive the royalties for that from Nigeria’s national collector after the same has been remitted to it from the collecting society in Ghana.
Nigeria’s laws are such that only one collector is recognised to represent one class of copyright owners. So, there would be a collector for cinematography, distinct from that of musical works.
With music, there are performance rights payable to the composers when sound recordings are used via radio, TV, tours, and films. There are also mechanical rights payable by a record label from digital sales or streaming of music.
A peek into Nigeria’s peculiar situation
MCSN (Music Copyright Society of Nigeria) is now Nigeria’s official collector. It was in a protracted court case with COSON (Copyright Society of Nigeria) over who had the legal right to take royalties for publishers and composers.
This stunted the growth of the rights management ecosystem as music users became confused about whom to pay license fees to. The case ended in 2017 into 2018 with the approval of MCSN and COSON’s suspension respectively.
But the distrust there is not over. The music rights ecosystem, in years of the MCSN-COSON legitimacy tussle, lost tons of royalty and couldn’t exploit reciprocity privileges in a turn of events that limited the revenue it could collect.
Sandra Oyewole, an intellectual property lawyer, said COSON kept acting as a collector despite the suspension, bringing to question the validity of any licence issued by it while music users disputed its demand for royalties.
MCSN declared that it distributed over ₦300 million to rights holders in 2022. It raked in ₦618.3 million in mechanical rights licensing and ₦ 1.2 billion in performance rights for 2021. The official collector recorded a total of ₦1.85 billion in licensing and royalty income while distributing ₦16.3 million, a figure that covers only local rights holders. In comparison to COSON, MCSN arguably pales, although it continues to grow its membership.
The global explosion of Nigerian music has made it so that indigenous composers and rights holders in Nigeria are able to sign with foreign collecting societies like BMI or ASCAP in the US and IMRO or PRS in Europe, tapping into the broad network of these international collectors to make the most of their IP.
The limitation, it would emerge, is that not all local composers have the industry clout to sign such deals, causing them to lose a significant portion of their music revenue both in the shorter and longer term.
Beyond the fundamentals, the capacity of local collectors is constantly being questioned as concerns about transparency, accountability, and equitable distribution of collected royalty further push musicians away.
The transparency dilemma
PMAN, a union that is out to represent the interest of musicians in Nigeria, had in 2022 disclosed plans to float a blockchain-based rights administration solution. It said this would tackle the transparency gaps in royalties for the industry as musicians cited paltry and flat-rate payments as the disincentive for registering with the local collectors.
“It was because of this lack of transparency that we asked the Nigerian Copyright Commission, which oversees all copyright matters, to shut down COSON and got musicians to work with MCSN,” said Pretty Okafor, PMAN head, in mid-2022. “But we’ve now seen that these two CMOs are the same. What we now need is to scrap them both.”
In 2021, the PMAN similarly introduced Go Create, a digital monitoring system to aid transparency in royalty collection. The union’s president said he was, however, disappointed that the newly approved collector he had endorsed as the progressive option refused to follow the new system but instead opted for negotiated “under-the-table” rates that neglected actual music usage data which is visible to rights holders on the software’s backend.
“The CMOs weren’t ready to work with it. They wanted to collect money and blow it. COSON doesn’t pay catalogue-specific royalties. That’s one of the issues the A-listers and B-listers had with them. And as for MCSN, it doesn’t pay catalogue-specific rates too. The structure they claim to have is zero,” he noted.
In Okafor’s thinking, it would be in the industry’s best interest if the state regulatory body takes down both collectors and decentralises the rights administration ecosystem so that music owners can collect revenue by themselves. The PMAN president’s idea of decentralised royalty collection argues that it is imperative to eliminate any manual interference and allow money paid by rights users to pass through a digital system that is catalogued.
MCSN scored a court victory in a case against the media conglomerate Multichoice over copyright liabilities owed to it between 2012 and 2020. The collector secured a ₦2.5 billion settlement which it confirmed was fully paid. But the disbursement of these funds became a subject to be debated. Again, Okafor called out a lack of transparency. As of August 2022, the PMAN president further argued that the official collector had yet to disburse up to ₦20 million.
MCSN’s Lagos office, when contacted and physically visited, declined to share data on how the funds were shared.
“I wrote the letter suspending COSON, bringing MCSN to work with NCC. But I can no longer vouch for them,” the PMAN boss said, stressing his willingness to be taped. “Labels are worried. The CMOs are just milking musicians.”
Foza Fawehinmi, a lawyer, noted that transparency failures in MCSN, which has been in existence since 1984, were what prompted the formation of COSON in 2009. The music executive however said COSON has been earning too little in admin fees, preventing it from ramping up its accounting and plugging the transparency gap with software.
“COSON has been legally accountable. But transparency, which is sending me detailed royalty reports whether I asked for it or not, is more valued than accountability in this new age. This is what COSON lacks.”
Technology to the rescue
Pretty Okafor’s idea to evolve music rights management in Nigeria is a Web3-based solution. Alongside artificial intelligence, the blockchain technology behind Web-3 has seen successful applications in predictive analytics and cryptocurrency. These two have the potential to revolutionize music rights management and administration.
Smart contracts can be used to automate the execution of licensing agreements between music rights holders and users, mitigating the risk of human error and increasing transparency by providing a clear and unalterable record of the terms of the agreement.
The decentralised databases in blockchain can store information about rights ownership and usage, making for a tamper-proof record of who owns the rights to a piece of music, as well as how it has been used and by whom.
AI can create digital fingerprints of music tracks, which can be used to spot their usage and ensure that the correct parties are compensated. This can help prevent the unauthorised use of copyrighted material and aid transparency.
Combined with blockchain technology, it can further automate royalty tracking and distribution, providing a more transparent and efficient system for managing and tracking music rights ownership and usage.
Multiple companies are already trying out these emerging technologies and positioning themselves for the future.
State backing needed to enforce solutions
Olamide Olaitan, a talent manager who has worked with local and foreign record labels, points out that adoption has remained the major roadblock to creating progressive technology-based solutions in Nigeria’s music industry.
State backing, he added, will aid industry-wide adoption and attract the needed recognition from foreign collectors.
“The spread of our music attracted global players who have been able to provide selective solutions for talents they have vested interest or investment in,” the music executive said over a voice call. “But this does not solve the industry-wide problem. Local collectors have not advanced with technology which has rendered old systems obsolete, so there’s still a lot of human interference between the revenue being generated and accounting for it.”
Olaitan, who worked in accounts for music brands, said foreign collectors face difficulties remitting to Nigeria and getting those monies to the right people. “A lot of publishing money is just hanging in the air because of distrust.”
In its 2022 report, IFPI, an organisation representing the global recording industry, noted that Sub-Saharan Africa generated $70.1 million in revenues from recorded music within the preceding year. Dataxis, a research firm, also projects Africa’s annual music streaming revenues to grow from $92.9 million in 2021 to $314.6 million by 2026.
It says the majority of revenues come from a five-country minority spanning South Africa, Egypt, Nigeria, Morocco, and Algeria, accounting for an estimated 86 percent. The firm however cites infrastructure as a major roadblock.
Nigeria’s music industry, it is projected, could rake in $44 million by 2023. The music business in Nigeria has come a long way, evolving from when rights owners only earned from performing their intellectual property at shows while gate-keeping industry bottlenecks dominated the marketing chain. An opinion that music executives do share is that there’s still work to be done in building key infrastructure and laying the groundwork for the future.
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