Nigerian Entertainment Industry Urgently Needs Lawyers

Audu Maikori

The Nigerian entertainment industry has been estimated to be a huge goldmine that is presently under-utilised. The global perception is that the Nigerian entertainment industry is one of the country’s most profitable sectors.  May Agbamuche-Mbu, Jude Igbanoiand Tobi Soniyi sought the views of entertainment and intellectual property law expert, Mr. Audu Maikori, who is the President of the highly successful Chocolate City Group, he gave a holistic overview of the nation’s entertainment industry and intellectual property regime.

The creative industry in Nigeria is one of our greatest exports to the world. How would you evaluate the current legal framework for intellectual property protection in the country? What essential features should the new administration consider in developing a national framework for intellectual property protection?

We have sufficient provisions within the current Copyright Act to adequately protect IP in Nigeria even though there is a fervent need to update and in some cases repeal and enact more specific legislation to cater to the rapid changes in digital and media technology and the creative sector since 1988 when the Copyright Act was first passed. But what has always been missing is the political and coercive will to enforce the protection of copyright in Nigeria. If the protection and enforcement of intellectual property rights was taken half as seriously as that of real property, you would have seen a phenomenal rise in the economic value of the creative sector in Nigeria and a corresponding increase in our GDP as proven by the statistic revealed during the rebasement of our GDP, which indicates that the sector is the fastest growing sector of our economy and contributed about $7 billion to our economy in 2013. 

What is the solution? I would strongly suggest the establishment of an Intellectual Property Police Division under EFCC. This body should have proper funding and legal teeth to bite as what we have seen so far in this area is that the war against piracy is simply a bark. Until and unless pirates, bootleggers and hackers are brought to book, prosecuted, fined and jailed this trend will continue. Sadly what we do not understand is that there is a strong correlation between the strength of IP protection and enforcement with the economic fortunes of the country in question. According to the Global Intellectual Property Center’s 2015 report countries like the US which has some of the strongest copyright, patent and trademark protections in the world, has a total stock of intellectual property valued at around $5.8 trillion!

More than 55 million Americans work in industries that depend heavily on intellectual property rights protection, making it an important job issue as well. So gone are those days that government should keep considering the creative sector as merely a CSR or “youth intervention” initiative – we are talking potentially billions of dollars to the Nigerian economy. Yet you find courts dragging their feet on IP related cases, some of the judges do not even grasp the details of IP and the fact that they are economic crimes akin to money laundering, 419 etc.

Some have argued that litigating intellectual property cases in Nigeria is quite challenging. Given your experience in Afe Babalola & Co and Law Allianz, what would you identify as the major drawbacks in litigating intellectual property cases in Nigeria?

I joined Chief Afe Babalola’s Chambers in 2001 and the very first case I was assigned had still not gone to hearing when I left in 2003.that has always been my frustration with litigation because even if you have diligent counsel(s) and a competent judge, the very technical and procedural nature of civil litigation is such that you can have a matter frustrated by the system itself. 

The courts of first instance for copyright related matters under Nigerian law are the Federal High Courts but I think we need specialised courts that focus solely on IP related matters because my experience shows that very few judges grasp the peculiar nature of this field and matters that should be dispensed off summarily go through the same long winded process which in most cases does not only delay justice, it denies it.

Most people would describe Chocolate City as a Music Label without knowing what you have previously described as your pro bono service beginnings. But at the same time Chocolate City is not the average Music Label. Where does Chocolate City fit in the structure of business organisations? Tell us about your dream to make Chocolate City the “standard”. What is Chocolate City?

Chocolate City (CC) is a 360 entertainment company formed with the aim of bringing happiness through entertainment and this defines and underlies everything we do. You are right Chocolate City is not just a music label, it is a group of companies that also includes Chocolate City Media- (content and media company), Chocolate City Distribution (digital distribution and publishing company) and Chocolate City Music (a record label and management Company) and Chocolate City STM (A marketing agency). But the brand Chocolate City started while I was a law undergraduate in the University of Jos in 1997 or so- as a rave. 

In 2003, the company was formally registered, 2004 we produced the Chocolate City Manifesto which outlined what we aimed to achieve through CC which included TV, Movies, talent management, events coordination, branding. My partners Paul Okeugo, Yahaya Maikori and I started formal business in 2005 with the launch of CC music and for the next 6 years or so combined all those services under CC but in 2011 we decided to restructure the business to ensure we began to put a more cohesive corporate structure that would enable us achieve our dreams of becoming one of the best entertainment companies across Africa. 

That is why I smile when many people compare our brand with the other recording labels because right from the get go we were not designed solely as a record label, we were designed as a 360 service which offers legal, business and career advisory for our clients. In 2012, renowned entrepreneur and lawyer Mr. Hakeem Belo Osagie became the Chairman of the restructured Chocolate City now known as Chocolate City Group and it will be an understatement that his visionary leadership has helped us to become more refined in our business approach and strategy.

A lot of your success as CEO of Chocolate City has been attributed to your good business acumen, strong established structures and to the simple fact that you are a lawyer. Along with that comes the realisation that the creative industries benefit a lot from the structured influence of more functional and less-creative industries such as the law. How will Chocolate City replicate that strong structured framework under new CEO Jude ‘M.I’ Abaga? What does your role as President now entail?

I am especially glad that people always speak about Chocolate City’s structure as the advantage it has over the rest of the competition and because we are focused on longevity of the brand, how we are structured is really key.  In 2013 Price Waterhouse Coopers did some work on our company and helped us recognise certain gaps in our operations which we quickly moved to ameliorate especially in the areas of structuring our businesses right.

So We have a board of directors of CC Group chaired by Mr. Hakeem Belo Osagie, My role as President of the Group in practice is a Group CEO role which puts me in charge of all the subsidiaries under the CC Group and support by the Group COO Paul Okeugo and our board of directors. Each Subsidiary has a CEO which reports to the President. The idea is to ensure that our overall corporate vision, objectives as well revenue targets are met, that the reputation we have built globally across the past 10 years is improved and maintained as well. So in my current role I well be overseeing the development and expansion of our media assets in the areas of TV, Film and event management across Africa. 

The new CEO of Chocolate City Music Jude Abaga aka MI has been part of the CC Music for over 9 years and part of management for the last 4 years in his role of Vice President Music and what we have tried to build is an organisational structure that supports him as well as ANY CEO of any CC company this will no doubt enable him lead the vision for the label but frees him to be creative enough to be an artist in the ilk of the like of JayZ and the rest .

You were the CEO of Chocolate city for 10 years. Generally, what major legal issues do contemporary artists have to contend with and how can these be resolved?

Typically, they are either breach of contract cases or copyright related. A typical one is two artists collaborate on a song together but do not sign any agreements or do not even have a conversation about how the publishing rights are to be apportioned so a few years later the song becomes a hit or is licensed by a big corporation for a few million naira and then you see the battle for percentages- this is largely due to ignorance and also partly due to how technology has made the recording process so informal, so artists just want to put out the song without thinking of the future. The solution is more education and training on emerging trends in the industry on a continuous basis.

In 2012 a number of popular mainstream artistes attended the Nigerian Bar Association’s (NBA’s) Section on Business Law Conference. But in particular Jude ‘M.I’ Abaga, Chocolate City’s new CEO, attended a session on Sports and Entertainment Law which focused on the unprotected interests of artists and sports athletes in Nigeria. This is an area you have often expressed a unique perspective, regarding how legal services can help improve the entertainment industry. Three years on artists are still underrepresented, the need is clearly there but how should lawyers meet this need? What is the Entertainment Lawyers niche in contemporary Nigeria? What has been your experience as a lawyer and label owner?

I am of the view that lawyers have a very important role to play in the society and that if they do play their role proactively it will help improve the quality of life for many Nigerians directly or indirectly but particularly in the creative sector which is the second fastest sector of our economy. Sadly, many of these artists and talented Nigerians may not even know that they require their services. There are two schools of thought with respect to the debate as to how lawyers should conduct their business. Some are of the view that you should not solicit for work they say it is unprofessional, others think we need to take the mountain to Mohammed because Mohammed does not even know that there is a mountain. It will amaze you that many people still think only “real” lawyers go to court while the “fake” ones settle briefs and draft contracts.

I recall back in 2003 when I wanted to launch my career as an Entertainment lawyer I could not find many Nigerian lawyers who had done any real work in that field except for the Late (great) Efere Ozako and Toyin Subair and since they were not accessible I basically studied my fathers legal books on music, film and TV contracts to get the knowledge I sorely needed because even the biggest law firms did not take the sector seriously and each time I engaged in that conversation with some senior lawyers at the firm they scoffed at the very idea of it. Indeed one of my former bosses told me I would be dis barred as the Legal Practitioner Act (LPA) prohibits Lawyers from owning, running record labels!

 So you can imagine that some lawyers still feel it is beneath them to even render services to this area until recently!  This is changing slowly but surely I however think the LPA needs to be reviewed to bring it into the 21st century where technology has changed the game and if lawyers cannot advertise their services properly and market themselves like any other profession, we will have a hungry bunch of lawyers because people can download precedents and amend them at will and yes they will not  get it perfectly right but for many the aim of a legal document is not any longer about having the perfect document but about having some sort of documentation – so we must find a means to meet their needs. 

It is rare to meet people who are capable of creative expression and have a strong structured business base. And as you are privileged to have knowledge of both sides of the Music industry would you take us through the anatomy of a record’s production. Where do the proprietary rights of a songwriter end, where does an artist’s own rights begin and how does a record label recoup its investment in a talent it builds?

Primarily recording contracts are designed to exploit the music produced by the artist/songwriter to the commercial benefit of both parties. However the bundle of rights in the whole process vary from contract to contract and from party to party. Typically there are two types of core rights to a song: the copyright in the sound recording, which is usually controlled by the record label and the copyright to the song itself, which is typically controlled by the singer/songwriter. 

There have been debates about ownership rights as it relates to song, you see in the old days recording contracts were couched such that the artist recorded songs for an album under a work-for-hire type arrangement where the labels owned in totality the rights to all the songs recorded by the artist being a commissioned work, similar to the same principle that guides companies wherein whatever the staff of a company creates, develops and produces while under the employ of the company, remains the property of the company.

So the idea was that the album was the product, which would be promoted, marketed by the label to help boost sales then expenses are recouped and then the balance is split as royalties to the artist. That model has greatly changed now as the MP3’s and digital technology have changed the traditional recoupment model, so the music is not the end anymore from any investment perspective but a means to the end as it leads to other revenue streams related but not purely from sales of the music. So think endorsements, merchandise, streaming of music, ring back tones, licensing for adverts, synchronisation licences for TV and radio jingles adverts and movies. New revenue streams are every increasing and thus the 360 model being implemented around the world has become the new order.

 At Chocolate City we had adopted that model since 2005 so we were able to explore and exploit the music and the artistry since we knew we could never make money from album sales due to piracy far.

Nigeria’s Film Production Industry- Nollywood is reported to be the world’s second largest Film industry and yet it can also boast of the lowest return on investments for major productions. 30 Days in Atlanta is reported to have grossed N50 million but even that movie’s producer Ayo Makun petitioned the Inspector General of Police regarding the spate of wanton piracy of the movie. The market for piracy is alive to the profitability and industry of the Entertainment sector, but what do you believe is a holistic policy approach to deal with piracy at all levels in the sector?

Like I stated earlier, Piracy is a serious and grave economic crime. For us to make any appreciable impact we must create a special police unit focuses solely on the prosecution of IP criminals across board, we must raise the level of entry for companies that wish to engage in CD/DVD duplication and must monitor them closely, we must ensure that each copy made is digitally trackable and traceable –how else can we determine number of copies sold? We must conduct raids on a weekly basis across the hotspots of Nollywood in the East and especially Alaba in Lagos. There is a lot that needs to be done but the three arms of government must work together with the help of us the stakeholders to craft a strategy, which will flow through the whole chain from creation to policy to incentives to protection and finally effective enforcement of Intellectual Property Rights for the economic and creative gain of the producers.

The issue of piracy takes on a new dimension when you consider some offenders operate outside the jurisdiction of the artist. What mechanisms would you suggest for addressing theft of intellectual property rights outside the artist’s jurisdiction?

Well if you are referring to cybercrimes or theft then we will have to revert to the several mutual legal assistance treaties (MLATS) that Nigeria has signed with several other countries as well as the Berne Convention treaties around copyrights enforcement across jurisdictions. Of course there is the role of collective management Organisations such as COSON, SAMRO, PRS, BMI, ASCAP who actually represent artists rights across wide jurisdiction by the cross licensing treaties and agreements they have ensuring they protect their subscribers /members globally. 

Collection Societies play a very important role in the management of intellectual property rights of musicians, however in Nigeria there is only one collection society established by law COSON (Collection Society of Nigeria). Whilst, in other jurisdictions that are multiple collection societies. What is your assessment of the use of one collection society?

I have been asked that question several times and in my view having done an extensive review of the CMO regulations there is nothing that stipulates that Nigeria must have two collecting societies but even more importantly let us review what transpired over 15 years ago. MCSN was the sole collecting rights society in Nigeria even prior to the enactment of the Copyrights Law of 1988 at some point in time, members of MCSN broke off and formed PMRS which brought a lot of bad blood within the sector and eventually neither of the organisations licenses were renewed. So we had a situation where both CMOs were fighting each other both in and out of court to collect royalties from artistes many of which did not either license their catalogue to either or were oblivious that royatlies were actually being collected. This situation carried on for 13 or so years until the Nigerian Copyrights Commission decided to take a bold step and call for new organizations to apply for a CMO license.

Now as to the issue of if we need more than one, I think we should understand that if we had a situation 13 years ago when we had two CMOs which were both dealing in rights of authors/producers without their consent and this was caused by the fact that there was ambiguity as to who actually had the rights, we should do all we can to avoid that situation repeating itself. On the flipside there is the argument that having two will foster competition and improve service delivery but let me refer to a section of the Copyright Act ie. Section 32 (B)(3) of the Copyright Act (amended) states:

(3) The Council shall not approve another Society in respect of any class of copyright owners if it adequately protects the interests of that class of copyright owners.

In other words unless COSON is not able to adequately protect the interest of right owners, the NCC may not be obligated to appoint more than one CMO. But realistically comparing the value of our IP industry in Nigeria to that of other countries you find that most have only one CMO. The UK has the PRS, South Africa has SAMRO even the USA which is three times our size have only two CMO’s and when you understand that it’s a continent not a country its makes sense especially when their IP assets are valued conservatively as $5.8 Trillion.

It is a well-known fact that there has been a bitter dispute between the MCSN and PMRS for many years. You are also on record to have been one of the major forces lobbying the NCC to recognise one collecting body for Nigeria. Many were optimistic that your appointment as a member of COSON would help settle the rift. What efforts have been made to resolve this dispute since you came on board COSON a few years ago?

Well prior to that we had an organisation called the Association of Music Business Professionals, which had mediated between both parties for over two or so years in a bid to settle the rift. Sadly a compromise was never reached. What is clear is that the job of fortifying our Copyrights administration is too important a matter to allow age old vendettas to thwart the steady growth we have already started experiencing in this field

The past administration of Jonathan instituted a $200 million Entertainment Fund, which caused a major disaffection amongst stakeholders in the entertainment industry. In your view, was that fund desirable and to what use has it been put?

I think the fund was well intended but poorly implemented. The truth is any fund that has very onerous terms similar to what commercial banks require will not work for a sector so largely unstructured. Most lending policies are clearly not SME focused if not lending rates should be at low single digit rates not double digits. The issue of collateral also came up and if you are asking for collateral valued at the same amount as the loan, then we might not be talking intervention fund, we are talking pure commercial loans. Now I am not an advocate for interest free loans as people will abuse the fund, I am saying we need to be realistic about our expectations of such an intervention in the context of piracy, poor legal enforcement and protection of Intellectual Property rights and assets in the country among other issues.

Piracy has been identified as one of the major problems in the Nigerian entertainment industry.  Apart from raids at Alaba market by NCC, what else can be done to ensure that our copyrights laws actually are properly enforced? Can you identify any possible challenges being faced by the commission? What are your recommendations for addressing these challenges?

We need an IP police unit which is well funded and organised as I stated earlier, beyond that we need to find a veritable funding source of the copyrights commission and I would say a levy based on receipts of agencies and other regulatory bodies that exploit and/or use content as their main revenue source. I will leave it at that for now.

It was reported that BPE admitted that only 10% out of 400 privatised firms in Nigeria are properly functioning as at today. And there have been complaints over the state of privatisation in several sectors such as, the power sector and the transport sector. How would you assess the privatisation exercise in these sectors and Nigeria as a whole? What possible reforms should be introduced to ensure a successful transition of public assets to private investors?

The idea behind privatisation generally is based on the fact that world-wide governments have been found to be terrible at running commercial concerns for several reasons but let me state two – first the fact that government is focused on processes not results and that capacity wise governments are unable to play the role of regulator and operator- there is an inherent conflict of purpose and interest therein. So lets say that the underlying principal behind privatisation is good, however we have had a lot of interference in the bid processes in the past with too much political interference. Another critical area of failure is improper disclosure when due diligence is carried out on some of these companies that were sold.

 Some of the investors only discovered how bad things were in some of these companies after they had been handed over the companies…The need for transparent processes carried out according to world best practices, which ensure that the people in government do not influence the decision of who gets what to their benefit but remaining neutral referees for the process cannot be overstated. 

The NCP is under the office of the Vice President of the Federal Republic of Nigeria and in my view the new administration can and should revisit some of these transactions that were clearly not above board, and though this may have political and economic implications – that’s the only way we can ensure that public confidence is restored to the process as a pre cursor to future transactions.

How do we ensure that those who buy public assets in the name of privatisation are accountable?

Again this is a function of the regulatory power of government or rather the provisions they stipulate in such sale transactions to be able to review the operations of some of these companies even post sale. The power of review is a very potent tool used by governments worldwide to ensure compliance with the terms of sale. I am aware that some of these clauses are inserted in the contracts but the political will to review, revise and enforce those terms is a function of the seriousness with witch government takes it .

In recent times there has been more reliance on PPPs to meet Nigeria’s infrastructural needs. What role can lawyers play in the successful implementation of PPP projects?

Lawyers have a very crucial role in Public Private Partnership everywhere in the world and more particularly in Nigeria. I think lawyers are key in even defining and recommending the type of PPP structure that should be adopted on a case by case situation. PPPs appear in different forms (service contracts, management contracts, Build Own Operate and Transfer (BOT), Concessionaire, Joint Venture, Franchising, Equity Participation, Leasing etc) and are structured with clear directions, defined roles and responsibilities of all the actors in the project.  The lawyers job is to advise his clients properly and professionally with particular emphasis on contractual safeguards that adequately the client and its investment both short term and futuristically.

Lawyers should typically be engaged throughout PPP transactions life span from conducting due diligence on the other party – due diligence is a crucial first step to any meaningful transaction as it helps to provide the detailed information, statistics and data that will guide not just the decision to engage/partner with a company but also the terms conditional to that. Due diligence reports usually will provide Financial, Legal, Technical, Market details of the institution in question.

Lawyers also help in the evaluation of PPP technical proposals, contract documentations to matters relating to tenders, procurement legal risks and licensing. They also draft the contracts and agreements as well as provide the dispute resolution mechanism by which they are settled (mediation, arbitration to litigation). Without doubt lawyers are the lifeblood of any PPP transaction and the engagement of competent and experienced lawyers largely determine the success of any PPP transaction especially because all the responsibilities and risks the parties have to assume must be adequately and professionally translated into terms of the contract agreement to protect and ensure enforceability in the future.

Former president Goodluck Jonathan appointed you a member of SURE-P in 2012, the youngest member of that elitist committee. In the face of the criticisms SURE-P received under Jonathan, would you say the committee made any appreciable impact? If it did, in what area can you readily point to?

Yes in my opinion it did.  Most of the uproar of course was spurned out of the partial removal of subsidy. In 2012 most Nigerians protested against it because of the heavy dependence of our economy on oil and oil related products. However in that time SURE- P intervened in both critical infrastructure and social safety net projects. Projects executed include the railways rehabilitation, Maternal child healthcare, Vocational training for young people, Youth and women employment through the Graduate Intership Scheme and the Community Service Scheme, Polio intervention, HIV/AIDs, Roads and bridges.

Let me point to two key areas, the Railways rehabilitation is of particular interest to me because while in CPCS Transcom I worked on the privatisation of the Railways from 2006 – 2008 and when the team went around the rail tracks across the country, most of them had been vandalized. The administration then tried to fix the tracks but funding was a key issue.

Since its inception in February 2012 SURE-P has completed the rehabilitation of over 90% of the entire existing narrow gauge lines throughout the country this includes the main Western Lines, Lagos-Kano, (l,124km) is completed and passenger services and haulage of goods along the line were flagged off in December 2012.  The restoration of train services from Port-Harcourt - Gombe - Aba - Umuahia - Enugu, Oturkpo - Makurdi - Lafia via Kafanchan and Bauchi (which is part 1,657 Km of the Port Harcourt -Maiduguri Line) was completed and commissioned in February 2015. Also the construction of Abuja (Idu)-Kaduna Standard Gauge Line is over almost 90% (155km laid out of 187.5km) completed and is expected to be delivered by the end of 2015.

One might ask what the impact of the above are. But when you put in context that our railways have not functioned properly for almost 25 years - this is a big achievement and you must then project what the economic value of a train moving from Lagos to Kano means for not just the average Nigerian but the traders and farmers who can now transport their goods at much cheaper rate as rail transport is cheaper, safer and more affordable.

Another example is in the area of Youth employment- the Graduate Internship Scheme started off with 2,300 plus graduate nationwide but had grown to 24,000 interns as at March 2015. The program places job seeking graduates at reputable public and private companies and institutions to build their skills, mentor and develop them for 12 months under the tutelage of the company. The Government pays them a stipend of N30,000 per month and the companies get free staff which they can help develop. In Sokoto for example one of the GIS interns finished his 12 month apprenticeship, and thereafter started his own company and then hired 10 other GIS interns to work for him. Now if you understand how poor the quality of graduates Nigeria is producing are, you will be thankful for a project that helps to at least home their skills in a scalable manner.

These are just two examples out of several success stories but I must state that some of the misconceptions about SURE-P have worked against its perception – the first is that SURE-P funds were only directed to the Federal Government- what most people do not know is that every state collected SURE P funding for 3years on a monthly basis with some states getting as much as N1 Billion per month (equals to over 36 billion during the period in question) and very few of them even disclosed what they used the funds for. So it’s erroneous to think all the funds came to Federal SURE-P indeed only 41 percent of the funds were appropriated to the Federal SURE-P.

The second point is that SURE-P only intervened in areas prescribed by the Federal government and as such had no autonomous powers to allocate or select projects on its own, so areas where the public would have loved to see us intervene were not within the ambit of our powers.

Presently, Nigerian Universities are producing graduates who cannot meet the challenges of the modern work environment. What should the country be doing to reverse this trend?

We are in need of a desperate educational overhaul and we need to go back to the basics, get the best brains out there train and incentivize them to become teachers, lectures and professors – if the teachers themselves are the rejects of the society what real quality knowledge can they impart? You see in other societies teachers are the cream of the crop of society and are paid and incentivized well so that only the best brains teach our children but where teaching has become a last resort if you cannot get  “proper” job then our system is doomed to keep failing. That’s a good place to start from in my opinion.