There’s strong incentive to trade music catalogues in Afrobeats, says Chocolate City CEO

Catalogue sales in the US and European music markets, as well as their big-money deals running into hundreds of millions in USD, have made attention-grabbing headlines in the last three years. Afrobeats, a genre dominated by Nigerian talents, has continued to gain global traction. Should rights holders in Afrobeats be selling their catalogues? Abuchi Ugwu, chief executive at leading Nigerian label Chocolate City, shared his thoughts for a 1200-word article exploring the subject.

What does the trend of catalogue sales in US & European markets mean for African music?

The booming catalogue sales trend in the US and European markets signifies a significant opportunity for African music. We have already witnessed this trend in Nigeria, where there is a growing demand for African content. Countries like the US, Europe, and Asia are actively seeking to acquire diverse music catalogues.

Africa is the next frontier for business, and the music industry plays a vital role in this. The cultural richness and artistic talent in Africa make it a prime destination for investment. As the music business continues to flourish, it is essential for stakeholders to seize the opportunity and be part of this exciting growth. Ultimately, people are drawn to value, and African music offers tremendous value in the global market.

Should Afrobeats artists sell their catalogues?

In my view, the ideal approach would be a partnership between artists and industry stakeholders. By collaborating, we can amplify the reach and value of Afrobeats music. While artists may end up owning a smaller share, the goal is to ensure they generate generational wealth.

It’s important to note that ownership percentages don’t always reflect the true value and potential for monetization. For instance, Jeff Bezos owns only about 10% of Amazon, yet it remains a highly valuable company. Similarly, the focus should be on creating quality content and maximizing its monetization potential through strategic partnerships.

In 2021/2022 US, catalogue sales were largely driven by the low cost of capital and a favourable tax window. Do Afrobeats singers have just as much incentive to sell their catalogues?

Absolutely, Afrobeats singers have significant incentives to sell their catalogues. Money and the pursuit of a good life are strong motivators for content owners. However, it’s important to recognise that the internet has levelled the playing field to a great extent.

Afrobeats music is now available on the same platforms and at the same rates as music from other regions. While we may generate fewer streams from Africa, the demand for our music matches up to global standards. This creates an environment where selling catalogues becomes a viable option, especially considering the potential financial gains.

What would valuation look like if so?

Valuation in the music industry is primarily driven by the value and ownership of the content. When requesting a valuation, it is crucial to provide robust data that supports the desired value. Investors are primarily concerned with numbers and ensuring a return on their investment.

Therefore, content owners must demonstrate how the valuation aligns with market demand, revenue potential, and long-term growth prospects. A thorough analysis of the catalogue’s performance, potential future earnings, and market dynamics should be undertaken to arrive at an accurate valuation.

What’s your analysis of the rights management & royalty administration ecosystem as it relates to Afrobeats/Nigeria?

The rights management and royalty administration ecosystem in relation to Afrobeats and Nigeria requires active involvement from the government to establish robust systems and policies.

The music industry in Africa, including Afrobeats, is still relatively young and evolving rapidly. We are in the process of figuring out the best practices and structures to protect the rights of content owners and ensure fair compensation.

It is crucial for the government to work closely with industry stakeholders to develop a supportive framework that fosters growth and safeguards the interests of all parties involved. While challenges persist, the potential for the music business in Africa, particularly in Nigeria, is immense. And with continued growth, we will see improvements in rights management and royalty administration.