PROTECTING THE INTERESTS OF LOCAL ARTISTS IN INTERNATIONAL

RECORD DEALS

A presentation at the 6th section of business law conference of the Nigeria Bar Association – Lagos.

Yahaya MAIKORI

Introduction •  Nigerian music, has become one of the country’s greatest exports in

the past decade.

•  Local Artistes such as Asa, D’banj, Wizkid, P-Square, Nneka and Tiwa Savage have recently been in the news with regards to International record deals.

•  This trend will continue with the entrance of such multinationals as UMG

•  While this is an indication of growth for the artistes and the Nigeria music industry, it is critical that they know what they are getting into in terms of record deals, particularly as they will be going into more sophisticated legal environments.

•  This paper aims to look at how the artiste’s interests may be legally protected in such deals.

THE EXPANDING ROLE OF LAWYERS IN MUSIC BUSINESS

“A music lawyer can often be the first port of call for a U.K. artist, even before he or she obtains a manager or live agent. Many record companies see music lawyers as an unofficial A&R source” - Ken Abdo.

“It is now expected that the transactional entertainment attorney not only have substantive knowledge needed to negotiate contracts but he/she has a complete understanding of the music business in general which includes all business related to licensing matters on new and evolving digital platforms” - Ken Abdo •  General Counsel •  Educate and advocate across new media platforms.

•  Ancillary brand protection

•  Advisory services

THE EXPANDING ROLE OF LAWYERS IN MUSIC BUSINESS CONT’D

•  Non- Entertainment matters ▫  Estate planning, ▫  Prenuptial agreements, ▫  Adoption, ▫  Divorce, ▫  Wealth management, ▫  Real estate ▫  Trustee or personal representative

•  Agent /Manager ▫  bringing deals ▫  income producing and career enhancing opportunities ▫  Shopping for recording deals ▫  packaging an artist ▫  Assist build a team

ATTORNEY’S ROLE

PRELIMNARY PROTECTION MEASURES

•  IP Registration & Notices ▫  branding initiatives

•  Advisory

•  Sample clearances

•  Agreements i.e. ▫  Co – writers/song writers agreement ▫  Confidentiality agreement ▫  Handbook or guidelines

•  Others

UNDERSTANDING TYPES OF RECORD DEALS

1.  Distribution Deals !  Commonly referred to as Pressing & Distribution (P&D)

deals, !  The artiste is responsible for all costs, !  No advance

PROS

!  Greater portion of income !  Ownership of your masters !  Creative control

CONS

!  financial burden and where withal !  Lack of commitment from distributors

UNDERSTANDING TYPES OF RECORD DEALS CONT’D

2.  Production Deal !  Signed to producers that record complete projects for release

under a label. !  Producers usually own the masters or share them with the

label. !  50/50 split

3. Major Label Deals

The record label pays. !  The label usually recoups money spent. !  Record label, almost always owns the masters

UNDERSTANDING TYPES OF RECORD DEALS CONT’D

4.  360 Deals

!  360° deals are premised on 'band as brand' notion !  This is also known as the Multi-rights deal. !  Labels share in the income arising from all artist’s income streams !  The label pays for everything, PROS !  More financial commitment to artist !  Looking after the artist entire career

CONS !  takes from sources of income traditionally reserved for the artist !  loss of control -

UNDERSTANDING TYPES OF RECORD DEALS CONT’D

Income streams -  Record sales -  Merchandizing -  Touring -  Publishing -  Films -  Biography -  live performances -  OTHERS

DOING THE DEAL - BUSINESS CONSIDERATIONS

1.  What you want to achieve or what is your business plan or strategy? 2.  How much creative control does your client want or require over your

career, touring, Merchandising 3.  Your bargaining power 4.  What kind of music or genre are you into 5.  due diligence 6.  capacity (its not enough to say that you want control) 7.  Deliverables/timelines

DOING THE DEAL - THE CONTRACT

Release commitment •  A release commitment obliges the record company to manufacture

and distribute the record for sale within a specified time period

Minimum commitment . minimum commitment •  how it affects your artist Advance/Recoupable expenses "Net Receipts" or "Gross Receipts"

Copyright & Sound Recording •  Assignment of copyright •  License or Distribution deal.

DOING THE DEAL - THE CONTRACT CONT’D

Exclusivity

Suspension clause Territory

Royalty Calculation Cross collateralization

DOING THE DEAL - THE CONTRACT CONT’D

Controlled Compositions Term Name & Likeness Jurisdiction Penalties Arbitration Quality Control Approvals

Rights To Audit

CLOSING THE DEAL - RED FLAGS

•  Something doesn’t have a clear meaning or has

more than one meaning. •  One Page Contracts •  Pressure to quickly sign •  Content of Contract differs from prior verbal

communications •  No “Escape Clause” •  No clear beginning or end to the contract •  Automatic Renewal

Thank You!