COSON

BON, COSON and MUSIC-SHUNs: 5 THINGS

/ Scribe of the Tword / 2 Comments

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

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Cracking Digital Music in Nigeria

/ Scribe of the Tword / 4 Comments

One of the courses I treated with the greatest disdain in University was GES 101. I can’t  remember the official title of the course now but I do remember that one of the topics was language and how culture and technology affect language. This has been proved true and become more evident as we march forcefully on into the 21st century.  Until about 5 years ago, tablets were medicine, tweets were onomatopoeic sounds, swiping meant stealing and streaming was something only a river or estuary did. The secondary (?) meanings that all these words and many more have acquired, one could argue, are actually close to achieving primary status now.

 

The advances in technology have presented new challenges for distributors of entertainment content. The market is swinging firmly away from scheduled to content to “on demand” or “a la carte”, where the user/consumer merely pays for access and is thereafter able to determine the order in which he will watch or listen to the content.  The consumer could also decide to purchase the content outright, and with purchase comes the ability to move content between storage devices. Delivering content in this manner will require the consumer to have enough space to store his content library. Thus, advances in digital broadcast have also been accompanied by exponential growth in storage technology.

 

A result of all this progress is that while my dad still has a collection of vinyl records occupying roughly twenty cubic feet of space somewhere in my late grandmother’s house, I can carry infinitely larger amounts of music around on a device no larger than my palm. This is good for the honest consumer but it makes piracy a whole lot easier.

 

Forgive me for being Captain Obvious so far, but a context needed to be set.

 

Piracy – in this context, the unauthorised distribution or selling copies of music – has always been with us and will probably always be with us. The problem is worse in many African countries, including Nigeria, where the government’s anti-piracy efforts are extremely feeble where they exist at all. Today, anyone can be a pirate, as is evident with so-called “offline downloads” being the primary concern of many labels and artistes in Nigeria.

 

“Offline downloads” is the copying that goes on, frequently for paltry sums, from laptops or external hard drives to USB storage devices. It has been reported that the “content aggregators” (with sincere apologies to legitimate content aggregators) charge as little as one naira per track copied.  With more and more cars and even portable radios coming with auxiliary USB audio sockets, one can see why members of the Copyright Society of Nigeria (COSON) are alarmed.

 

The Nigerian industry is also peculiar in the way its revenue stream works. Piracy killed record sales decades ago. The industry tried to solve this problem by selling record masters to distributors at the major piracy centres (tragically ironic, right?). Even at that, many emerging artistes are willing to give their music away for free on popular blogs and websites in return, hopefully, for exposure and recognition, which ought to translate into touring and performing income.

 

Thus, music is largely freely available on both the supply and demand sides of the music equilibrium. How then can digital translate to money for the local, large-scale distributors?

 

The challenge before Iroking and Spinlet, Nigeria’s two main digital distributors – the companies adopting the Spotify/Deezer models of monetising content – is to convince a large enough number of people to agree that paying for music is worthwhile.  In a country of 160 million people with a median age of 19, the market is certainly there. Potentially.  However, even Spotify, with its 24 million users (6 million of whom are paying subscribers) is yet to turn a profit, in its 7th year of operation. iTunes, it is claimed, is running barely above break-even (another great infographic here for dataheads), though Deezer claims to be profitable.

 

These companies exist in countries with mature copyright enforcement systems, where music royalties have been a dependable source of livelihood since forever. This means that there already exists a culture for paying for music. In spite of this, however, musicians are complaining that the revenue from streaming isn’t anything to get excited about. According to Zoe Keating (crossover classical musician) these are the different streaming rates that various distributors offered her (very useful table, actually). So, if neither the streamers nor the streamed are making money (though this point is heavily disputed), what’s the point of this business model? What will the point of this business model be in Africa, in Nigeria?

 

To understand profitability in the business, one must first understand how the service is priced. Most digital music distributors, in addition to outright sales, have a free (advert-supported) service, a limited subscription service (ad-free, but limited number of streams), and a premium subscription service (ad-free, unlimited streams). Therefore, first of all, the difference between outright sales and streams must be taken into account.

 

A physical CD in Nigeria is usually priced between N150 and N1,500 (not counting “deluxe” editions).  This pricing model can easily be adopted for digital sales. A stream, on the other hand, occurs when a track (not downloaded) is listened to for at least 30 seconds. The minimum listening period varies (some agreements say 45 seconds) but the first problem streaming has is how you quantify a listen. Do you randomly estimate how many listens can be extracted from a CD before it becomes unplayable? If a 9-track album costs N150, this equates to about N16 to “own” each track for life. How many times should a streamer be able to listen to a track before his use translates to N16 for the artist? Is this even the metric that distributors and artists/collecting societies use?

 

Speaking of collecting societies, one must commend COSON and the efforts they have made thus far in ensuring that music makers receive royalties for the use of their music. It is not clear however, whether they will function as an aggregator in respect of their dealings with digital distributors. Their primary revenue targets to date have been radio and tv stations, hotels, events venues, etc. and this category of people should rightly pay COSON a licence fee. However, should an Iroking or a Spinlet pay COSON a licence fee, given that each artist enters into a licensing agreement with the digital distributors? If yes, would that not effectively be double licensing, as the artists will collect under their individual licensing agreements, regardless of whatever fee COSON extracts. More importantly, was it the intention of the artists when joining COSON that the collecting society would take over all licensing activity? These are the issues that will need to be clarified as digital music expands in Nigeria.

 

The Value Added Service (VAS) companies that collaborate with telcos to sell ring-back and call-back tones are currently the silent winners in this quest to monetise digital music. Personally, I would never willingly activate a ring-back tone but I am a single subscriber in a pool expected to surpass 128million by 2014. The VAS market in Nigeria is currently valued at over N78.5bn and “may actually be moving towards $1bn in the next three years” .

 

In addition  to all that’s been said here, artists should consider ditching the “listen for free” model and start steering their fans towards platforms where listening generates them money. This may mean starving the blogs of some content and some blogs therefore going rogue and becoming pirate broadcasters (lawsuits, yaaay!!) but if physical sales are dead, then digital must reward maximally.

As for who will win the race to crack digital music in Nigeria, Iroking and Spinlet need to take on and subdue Deezer and Amazon first and hope that Spotify doesn’t decide to expand its operations to Nigeria before then. The catalogue is everything!

 

 

 

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The COSON Summit on Digital Licensing

/ Scribe of the Tword / 9 Comments

COSON (the Copyright Society of Nigeria) hosted a summit on digital licensing at the Ikeja Protea, on Monday the 12th of August 2013. The purpose of the summit was to discuss the challenges posed to the industry by digital formats for musical works and sound recordings. In attendance were lawyers, record label owners, recording artists, VAS companies (ringtones, caller tunes, etc.), as well as other stakeholders such as representatives of the Record Label Owners Association and the Audio Video CD Sellers Association of Nigeria (AVSAN).

 

The Chairman of COSON, Chief Tony Okoroji, led a panel of moderators that included Efe Omorogbe (Now Muzik), Audu Maikori (Chocolate City), Mark Redguard (Spinlet), Erelu Keji Okunowo (Industry Veteran), as well as a representative of the Nigerian Copyright Commission.

 

After Chief Okoroji took the gathering through the evolution of recording formats from vinyl to 8-track to cassette to compact disc to MP3 and other digital formats, the discussions very quickly split into 3 strains – skilled lawyers/judges are either small in number or not well-known, contracts are not respected, the industry is too fragmented and “disorganised” and offline downloads. Brief summaries and then my 50 kobo on these key issues.

 

LAWYERS AND THE JUDICIARY

One of the problems facing the industry is that many lawyers drafting and reviewing licensing agreements do not have the requisite specialist knowledge. As Managing Partner of G. O. Shodipo & Co, Mr Femi Fajolu, said, “…if you use the same lawyers for maritime as you use for general corporate work, you will sink in the water.” Or, as Audu Maikori said, “Dentists don’t perform eye surgeries.”

 

The danger in non-specialist lawyers preparing specialist agreements is that you are more likely to have bad agreements – the sort that precipitate litigation. Litigation is also an unattractive proposition because apart from its duration (and lack of assets to satisfy judgment debts, in the case of most artists), there is also the problem of not having a sufficient number of judges versed enough to properly settle IP disputes.

 

The summit proposed training sessions for artists and the judiciary. Industry practitioners were advised to contact the Intellectual Property Lawyers Association of Nigeria (IPLAN) for lawyers with specialist knowledge. It was also advised that IPLAN begin to lobby the National Judicial Commission and the judicial institute on appointing judges with IP expertise.

 

Nothing to add, for me.

 

OFFLINE DOWNLOADS

I was unfamiliar with this term before yesterday, though well aware of the activity it describes. Offline downloads occur when, for example, you hand your phone or tablet memory card to a laptop entrepreneur with a library of several thousand songs, some of which he copies onto your memory card for the paltriest of fees; something like 5 or 10 naira per track. Apparently, these guys have become such an issue that even Alaba marketers are complaining. I repeat, Alaba is complaining!!! AVSAN was especially passionate about this, though someone needs to tell them that their model is in terminal decline anyway.

 

This is an extremely tough nut to crack. Proposals considered for tackling it included licensing and persistent raids. However, as they’re literally everywhere, raiding them, no matter how frequently, would be akin to fighting vermin on a 5-acre farm with only a can of home insecticide – very minimal distortion. Licensing would also be tricky. How would pricing be enforced? What would compel people currently evading “capture” to voluntarily come forward for licensing? Should we even really be considering licensing – will the government also license operators of illegal crude refineries, for example?

 

Perhaps market-place executives need to start being held jointly liable for allowing copyright infringement go on within the markets? That way, the local market unions would be compelled to drive such people away from many public spaces. This would probably require a revision to existing laws, however, as people can only be liable for crimes as defined in existing laws.

 

OVER-FRAGMENTATION

“How do you know the real owner of the copyright in a musical work?” “How do you know you have not obtained your license to distribute digitally from the wrong person?”

 

These questions become more relevant as more and more disgruntled artists leave the labels where they became established, to set up their own companies. Inherent in that is the issue of attitudes within the industry to contracts and whether contracts have been properly terminated. However, there is the practical question, where the artist leaves properly, of ownership of new material.

 

Proposals put forward to solve this included mandatory copyright registration (which is not currently required under the law), the establishment of an authentic industry copyright registry and, most worryingly for me, mandatory registration/identification as an entertainment industry practitioner.

 

I think, in considering “sanitising” the industry, a few issues need to be borne in mind. First of all, registration of intellectual property, even where it is mandatory, is only prima facie evidence of ownership. What this means is that anyone who can demonstrate superior title can rebut the title granted by the government in respect of the intellectual property.

 

Secondly, the trend in Nigeria, once older folk start talking sanitisation or regulation is that financial and regulatory barriers to entry begin to crop up. In some cases, the promoters of regulation push for their body to become “chartered”, after which it usually becomes illegal for unchartered people to work within the trade. Caution must be taken that industry veterans do not stifle the creativity of younger participants with whatever remedial actions are agreed upon.

 

Overall, the summit was a useful meeting, the highlight of which, for me, was meeting Laolu Akins. A committee has now been formed to map out an industry strategy to tackle the digital challenge, and we look forward to its report in the coming weeks.

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