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.

coson

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.

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.

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**IBAN – Independent Broadcasting Association of Nigeria

**BON – Broadcasting Organisations of Nigeria