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 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, more so, if the code is properly drafted, with properly laid out plan for breach of compliance.
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.
Ehis Osagiede, Lead Consultant at Starlion Legal
Amanda Uzoagba, Managing Consultant at Goldwhisk Consult, Enugu.