If you have been around for a while, and you have paid attention
to the Nigerian entertainment space, you will notice that the
stickiest issue has been that of ‘structure’ so-called, what is
this structure all about?
In my opinion, the call for structure simply bothers on issues
of a call for corporate governance in the entertainment industry,
especially the music sector.
What is Corporate Governance?
It is the act of creating an organizational culture on issues of
transparency, leadership, accountability, fairness, and most
importantly, responsibility. It deals with the way affairs of an
organization are conducted such that there is fairness, efficiency
and transparent administration to all stakeholders as well as
strives to meet certain well defined and written objectives.
The entrenchment of good corporate governance standards and
practices has continued to gain global relevance and acceptance as
the substratum for which corporate success and business
sustainability are built.
Parties to corporate governance in this context would be the
board of directors of collective management societies/record labels
and other entertainment servicing companies, the board of directors
and shareholders of recording and management companies, the
creative, the consumers of music, the record label employees and
the regulators.
Corporate governance has been elusive in the Nigerian music
business management space, whether on the side of collective
management societies or on the side of the record label company and
artiste management companies.
This piece attempts to proffer the need for a corporate
governance code for the Music Industry.
Over the years, many sectors of our economy have been bedeviled
with crisis and near total failure due to governance missteps;
these sectors are not limited to banking, insurance, aviation, and
communications. And during those difficult times, regulators were
compelled to rescue them from failing, and one of the steps taken
was to come up with codes of corporate governance for the various
industries.
These actions s have birthed the Codes for corporate governance
for banks and other financial institutions, 2019, financial
reporting council code of corporate governance, 2018, the Nigeria
Communications Commission (NCC) code of corporate governance for
the telecommunications industry, 2016 which all seek to enhance
business prosperity and corporate accountability and
responsibility.
Why Corporate Governance in the Entertainment
Industry?
It is no News that the Nigerian entertainment industry is
currently valued at about 7 billion USD to 10 Billion USD, going by
PWC’S Entertainment & Media outlook report in October 2019. With
such a great report on the entertainment industry, one will think
that everyone will hop on the investment wagon but yet the industry
still deals with issues like lack of funding and investment because
no individual or corporate wants to invest where it will lose or
have to fight dirty to get its return on investment.
It’s also no news that this sector is relatively ungoverned and
has full potentials that are largely unharnessed.
First of all, Investors are scared of industries without a
steady structure and to think that the industry has no code of
corporate governance guiding the institutions involved is just a
double scare. Investors usually consider at least four things: (a)
rate of return on invested capital (b) risk associated with
investments, (c) verifiable data on the industry. (d) Legal &
judicial systems these are the same reasons why South Africa has
become more competitive in the African entertainment space,
especially with regards to film & music.
Corporate Governance practice increases responsibility,
transparency, accountability, enforceability which builds
confidence among shareholders and prospective investors. Confidence
in turn breeds long term capital. Good corporate governance
practices also enable management to allocate resources more
efficiently which increases the likelihood that investors will
obtain a higher rate on their investment.
What are the Sticky Issues?
By the provisions of the Copyright Act, C28, Laws of the
Federation of Nigeria, 2004, the NCC is granted powers to make
regulations for the creative industry, and one of such powers is to
license Collective management societies to collect royalties on
behalf of music artiste for the consumption of its intellectual
property.
One of such licensed collective management society is the
Copyright Society of Nigeria, COSON.
COSON which has about 5,000 registered music artistes subscribed
to its collection services has experienced nothing short of a
corporate governance crisis with myriads of accusations against it
for its high handedness, corruption, conflict of interest with all
its roots linked to the failures of corporate governance at the
management level where one man is seen/alleged to be so powerful as
to taking and overriding decisions of the board.
At the other end of royalty management in Nigeria is the music &
artiste management itself, if you will the management of the
recording companies.
The long time clamour for structure in the entertainment
industry also bothers on how these record labels are managed by
record label executives who mostly run it like a one-man show.
In Nigeria, we have seen record label/artiste fight dirty in
public and on the social media space, we have also seen the key
sector regulator, the NCC and the collective management societies
fight it out via litigation, we have also witnessed in-fighting
among board members of the CMO’s.
CURBING THE ISSUE OF COSON WITH THE PROPOSED CODE OF
CORPORATE GOVERNANCE FOR THE ENTERTAINMENT SECTOR.
It can be said that COSON has failed the music and entertainment
industry at large, and the issues with the collective society
varied from lack of transparency, accounting, and auditing. With an
effective Code of Corporate Governance for the Entertainment
Sector, such issues can be curbed.
Looking at the structure of the Code of Governance for Banks &
other financial institutions in Nigeria, the following are
regulated by the code: Responsibilities of the Board of Directors,
Structure & Appointment of the board, Office of the Chairman and
Chief Executive Officer, Proceedings of the Board of Directors,
Director’s Remuneration, Board Performance Assessment, Risk
Management, Financial Disclosure, Relations with shareholders &
Audit Committee.
Having a similar aforementioned structure in the entertainment
industry will settle this issue with COSON and set precedence for
other collecting societies, especially if the code is properly
drafted, with properly laid out plan for breach of compliance.
CONCLUSION/RECOMMENDATION
This article therefore, proposes that all stakeholders in the
entertainment sector, from the artiste, comedians, stage actors,
film practitioners, music consumers, record companies, artiste’s
managers, music publishers, the regulators, all sit on a round
table and draw up a code of governance for the Entertainment
sector. When this is done, all stakeholders will be proud of the
document which they have given to themselves to guide
accountability, transparency, fairness, responsibility and
leadership which are the key pillars of corporate governance.
In conclusion, we do acknowledge that this discourse has been
provoked on the social media space by well-meaning music
practitioners’, particularly Ubi Franklin of triple MG, Audu
Maikori, Amanda Uzoagba and a whole lot of others, these are
the right steps the industry should be taking at this time in
chatting a way forward for the huge money-spinning entertainment
sector.
Written By Ehis Osagiede, Lead Consultant at
Starlion Legal, Abuja, Ehis is a Media & Entertainment
Lawyer. www.starlionlegal.com[1]
Amanda Uzoagba, Managing Consultant
at Goldwhisk Consult, Enugu, Amanda is an Entertainment
& Intellectual Property Practitioner.
If you have been around for a while, and you have paid attention
to the Nigerian entertainment space, you will notice that the
stickiest issue has been that of ‘structure’ so-called, what is
this structure all about?
In my opinion, the call for structure simply bothers on issues
of a call for corporate governance in the entertainment industry,
especially the music sector.
What is Corporate Governance?
It is the act of creating an organizational culture on issues of
transparency, leadership, accountability, fairness, and most
importantly, responsibility. It deals with the way affairs of an
organization are conducted such that there is fairness, efficiency
and transparent administration to all stakeholders as well as
strives to meet certain well defined and written objectives.
The entrenchment of good corporate governance standards and
practices has continued to gain global relevance and acceptance as
the substratum for which corporate success and business
sustainability are built.
Parties to corporate governance in this context would be the
board of directors of collective management societies/record labels
and other entertainment servicing companies, the board of directors
and shareholders of recording and management companies, the
creative, the consumers of music, the record label employees and
the regulators.
Corporate governance has been elusive in the Nigerian music
business management space, whether on the side of collective
management societies or on the side of the record label company and
artiste management companies.
This piece attempts to proffer the need for a corporate
governance code for the Music Industry.
Over the years, many sectors of our economy have been bedeviled
with crisis and near total failure due to governance missteps;
these sectors are not limited to banking, insurance, aviation, and
communications. And during those difficult times, regulators were
compelled to rescue them from failing, and one of the steps taken
was to come up with codes of corporate governance for the various
industries.
These actions s have birthed the Codes for corporate governance
for banks and other financial institutions, 2019, financial
reporting council code of corporate governance, 2018, the Nigeria
Communications Commission (NCC) code of corporate governance for
the telecommunications industry, 2016 which all seek to enhance
business prosperity and corporate accountability and
responsibility.
Why Corporate Governance in the Entertainment
Industry?
It is no News that the Nigerian entertainment industry is
currently valued at about 7 billion USD to 10 Billion USD, going by
PWC’S Entertainment & Media outlook report in October 2019. With
such a great report on the entertainment industry, one will think
that everyone will hop on the investment wagon but yet the industry
still deals with issues like lack of funding and investment because
no individual or corporate wants to invest where it will lose or
have to fight dirty to get its return on investment.
It’s also no news that this sector is relatively ungoverned and
has full potentials that are largely unharnessed.
First of all, Investors are scared of industries without a
steady structure and to think that the industry has no code of
corporate governance guiding the institutions involved is just a
double scare. Investors usually consider at least four things: (a)
rate of return on invested capital (b) risk associated with
investments, (c) verifiable data on the industry. (d) Legal &
judicial systems these are the same reasons why South Africa has
become more competitive in the African entertainment space,
especially with regards to film & music.
Corporate Governance practice increases responsibility,
transparency, accountability, enforceability which builds
confidence among shareholders and prospective investors. Confidence
in turn breeds long term capital. Good corporate governance
practices also enable management to allocate resources more
efficiently which increases the likelihood that investors will
obtain a higher rate on their investment.
What are the Sticky Issues?
By the provisions of the Copyright Act, C28, Laws of the
Federation of Nigeria, 2004, the NCC is granted powers to make
regulations for the creative industry, and one of such powers is to
license Collective management societies to collect royalties on
behalf of music artiste for the consumption of its intellectual
property.
One of such licensed collective management society is the
Copyright Society of Nigeria, COSON.
COSON which has about 5,000 registered music artistes subscribed
to its collection services has experienced nothing short of a
corporate governance crisis with myriads of accusations against it
for its high handedness, corruption, conflict of interest with all
its roots linked to the failures of corporate governance at the
management level where one man is seen/alleged to be so powerful as
to taking and overriding decisions of the board.
At the other end of royalty management in Nigeria is the music &
artiste management itself, if you will the management of the
recording companies.
The long time clamour for structure in the entertainment
industry also bothers on how these record labels are managed by
record label executives who mostly run it like a one-man show.
In Nigeria, we have seen record label/artiste fight dirty in
public and on the social media space, we have also seen the key
sector regulator, the NCC and the collective management societies
fight it out via litigation, we have also witnessed in-fighting
among board members of the CMO’s.
CURBING THE ISSUE OF COSON WITH THE PROPOSED CODE OF
CORPORATE GOVERNANCE FOR THE ENTERTAINMENT SECTOR.
It can be said that COSON has failed the music and entertainment
industry at large, and the issues with the collective society
varied from lack of transparency, accounting, and auditing. With an
effective Code of Corporate Governance for the Entertainment
Sector, such issues can be curbed.
Looking at the structure of the Code of Governance for Banks &
other financial institutions in Nigeria, the following are
regulated by the code: Responsibilities of the Board of Directors,
Structure & Appointment of the board, Office of the Chairman and
Chief Executive Officer, Proceedings of the Board of Directors,
Director’s Remuneration, Board Performance Assessment, Risk
Management, Financial Disclosure, Relations with shareholders &
Audit Committee.
Having a similar aforementioned structure in the entertainment
industry will settle this issue with COSON and set precedence for
other collecting societies, especially if the code is properly
drafted, with properly laid out plan for breach of compliance.
CONCLUSION/RECOMMENDATION
This article therefore, proposes that all stakeholders in the
entertainment sector, from the artiste, comedians, stage actors,
film practitioners, music consumers, record companies, artiste’s
managers, music publishers, the regulators, all sit on a round
table and draw up a code of governance for the Entertainment
sector. When this is done, all stakeholders will be proud of the
document which they have given to themselves to guide
accountability, transparency, fairness, responsibility and
leadership which are the key pillars of corporate governance.
In conclusion, we do acknowledge that this discourse has been
provoked on the social media space by well-meaning music
practitioners’, particularly Ubi Franklin of triple MG, Audu
Maikori, Amanda Uzoagba and a whole lot of others, these are
the right steps the industry should be taking at this time in
chatting a way forward for the huge money-spinning entertainment
sector.
Written By Ehis Osagiede, Lead Consultant at
Starlion Legal, Abuja, Ehis is a Media & Entertainment
Lawyer. www.starlionlegal.com[1]
Amanda Uzoagba, Managing Consultant
at Goldwhisk Consult, Enugu, Amanda is an Entertainment
& Intellectual Property Practitioner.