UNCOVERING THE INTRICACIES OF MUSIC INDUSTRY CONTRACTS IN NIGERIA

Background

The Nigerian Music Industry has witnessed a remarkable transformation over the years as a vibrant ecosystem where creative brilliance intertwines with commercial aspirations. However, this vibrant industry is not immune to issues such as commercial exploitation, often fueled by ignorance and the irrevocable position of law that a contract is a contract[1].

While emerging music artists seeking fame and stardom sign the dotted lines of recording contracts with little or no comprehension of the legal ramifications, record labels on the other hand, painstakingly embed contractual provisions in the contract with the aim of maximizing returns on investment. Nonetheless, it is settled that agreements between parties, provided they are lawful and free from fraud, must be upheld and respected. This is because the law frowns at approbation and reprobation, as sanctioning such behavior could render agreements uncertain and meaningless. Therefore, no Court will allow itself to be used as an instrument of bad faith and breach of contractual obligations voluntarily entered by parties before it.

This article shall proceed in three parts. Part I shall give a historical background of one of Nigeria's earliest records of a music contract dispute. Part II shall address the business aspect of the music industry. Part III shall delve into the sanctity of recording contracts.

Part I

African Songs Limited (ASL) v. King Sunny Ade[2]

The legal dispute between King Sunny Ade (“KSA”) and Chief Bolarinwa Abioro, the Chairman of African Songs Limited (“ASL”) highlights the intricacies of music industry contracts in Nigeria.

The initial contract, spanning five years, marked the beginning of KSA's journey with ASL. However, before this contract's expiration, KSA had already become a household name, with his album "Challenge Cup" selling over 500,000 copies. ASL recognized KSA’s potential and did not wait for the expiration of the initial contract before offering a new one, which KSA duly executed in ignorance.

The new agreement, carefully worded, required KSA and his band to perform and record exclusively for ASL for another five years. It also granted ASL full copyrights to all KSA's compositions and recordings, along with exclusive rights to his performances worldwide. Furthermore, KSA was prohibited from performing for himself or any other group during the contract's duration. ASL also held the option to renew the agreement for an additional two years or longer, without granting KSA the same right.

The new agreement stated that KSA and his band were to receive 20 kobo (a fraction of the album's sale price) for each album sold. However, when it came time for payment, this figure was reduced to 15 kobo after ASL factored in the cost for promotion costs. Dissatisfied with the contractual terms, KSA decided to request a raise from Chief Abioro. Chief Abioro, however, insisted on the sanctity of the contract and its binding nature.

KSA attempted to release a new record with another company while his contract with ASL subsisted and he was immediately sued. He engaged the services of prominent lawyer Gani Fawehinmi to represent him in court. The ensuing legal battle delved into the intricacies of contract law, restraint of trade, and intellectual property. Justice L. J. Dosunmu upheld the validity of the contract between ASL and KSA. He also ruled that KSA was not to release any new albums during the contract. However, he adjudged that KSA could continue performing live for fees, ensuring he could provide for himself and his family during this period.

The legal dispute between King Sunny Ade and Chief Bolarinwa Abioro underscores the importance of artists safeguarding their creative and financial interests and the need for transparency and fairness in contractual agreements.

PART II

Rhythms and Revenues: The Music Industry Business

The Nigerian music industry is a sector that prioritizes commercial success and several monetizable rights in the industry secure this. Music contracts assign industry professionals such as producers, record label companies, songwriters, musicians, etc. with certain rights. The extent of these rights and obligations are centered around key aspects of the music business such as ownership of master rights, merchandising, royalties, licensing, publishing, mechanical licensing, distributions, and promotions. These rights are then recreated as terms in music contracts. We shall proceed to briefly discuss some of the key aspects of any music contract below.

Masters Right

A master in the music world is the highest quality version of a musical recording. It is the final version of a music composition. All copies of the audio to be distributed come from the master.[4] The mastering process ensures that those copies can be optimally played back whether they end up on streaming services, CDs, or a vinyl record. Whoever owns the right to the master recording has the right to the royalties to be made from the sales, reproduction, licensing, and streaming of the master.

The instant a music recording is recorded, a copyright is created.[5] However, a music contract may determine who owns the copyright, particularly as it relates to the ownership of the masters’ rights.[6] Where an artiste is an independent artist, the ownership of masters rights may not be a challenge. On the other hand, determining the extent of the ownership of masters right comes into play when the music composition embodies the copyrights of other contributors such as songwriters, music producers, and record label companies.

Therefore, it is not unusual to find record labels inserting clauses in their contract with a signed artist, laying absolute claim over the masters rights for some time. Within the stipulated period, the record label may share the profit with all the entitled parties by a sharing formula stipulated in the contract.

Mechanical Rights

Mechanical rights, in the context of music contracts, refer to the rights granted to the owner of a musical composition (usually a songwriter or music publisher) to control the reproduction and distribution of that composition in a recorded form. These rights are typically associated with the sale and distribution of physical or digital copies of music, such as CDs, vinyl records, digital downloads, and streaming.

Mechanical rights give the owner of a musical composition the exclusive right to reproduce and distribute that composition. In most music contracts, it is not unusual for parties to determine what percentage derivable from mechanical rights goes to what party. This is because, in exchange for granting mechanical rights to anyone who wishes to reproduce and distribute the composition, the owner is entitled to receive royalties.

Territory Rights

In every music contract, parties often determine the territory where the agreed terms of the music contract would be operational. The territory may be a region, state, country, or a group of countries where parties would exclusively or on-exclusively enjoy their assigned rights.

In other words, territory refers to the geographic area or region in which the contract's provisions and rights are applicable. The concept of territory is important in the music industry because it helps determine how and where a music artist's work can be distributed, performed, and exploited. For example, an artist may grant distribution rights for their music to a record label in a specific country, region, or even globally. These territorial rights can vary depending on the negotiations and the scope of the contract.

Furthermore, territory rights may also include territorial restrictions, specifying regions where the artist retains certain rights or where the record label or publisher is not allowed to exploit the work. These restrictions can be used to protect the artist's rights in certain markets or for specific purposes.

PART III

The Sanctity of Music Contracts

The fundamental legal principle of the sanctity of contracts exists even in music contracts. Nigerian courts typically adhere to this principle, emphasizing that the parties involved were, or should have been, fully aware of the terms and obligations they were undertaking when they signed the contract. This is reiterated by the Courts in the case of Texaco (Nig) Plc v. Kehinde[6] thus:

“Our law recognizes and respects the sanctity of contracts. Where parties have reduced the terms and conditions of service into an agreement, the conditions must be observed.”

This steadfast adherence to contract sanctity means that the provisions within a contract are expected to be upheld, and parties are held accountable for meeting their contractual obligations. Therefore, the Courts would not make a new contract for the parties.[7]

However, like any rule, there are exceptions. In certain cases, the courts have chosen to intervene, guided by the principle of fairness and equity. The Courts have underscored that when parties agree willingly and without any evidence of fraud, mistake, deception, or misrepresentation, they are legally obligated to uphold the terms and provisions of that contract.[8] The enforceability of a contract is contingent on the absence of certain vitiating elements that could render the contract void or voidable. These elements include:

a.???? Fraud: If a party can demonstrate that they were induced into the contract through fraudulent misrepresentations or concealment of material facts, the contract may be voided.

b.???? Mistake: In cases where there is a mutual mistake, a fundamental misunderstanding about the contract's subject matter, or unilateral mistakes of a party that the other party was aware of, the contract may be voidable

c.????? Duress: If a party were coerced or threatened into the contract, it could be voided on the grounds of duress

d.???? Undue Influence: Contracts formed under undue influence, where one party had significant power over the other, may be considered voidable

e.???? Illegality: If the contract's purpose or performance involves illegal activities or violates public policy, it might be deemed unenforceable.

f.????? Lack of Capacity: If one of the parties lacked the legal capacity to enter into a contract, such as a minor or someone with mental incapacity, the contract may be voidable.

A prime example of when contract terms might be questioned is when there is evidence of undue influence exerted by the record label on the artist. In such situations, where an artist can show that they were under significant physical or emotional pressure, manipulation, or coercion from the record label, it may be sufficient legal grounds for challenging or altering the terms of the recording contract. Where the court finds that undue physical or psychological influence or pressure was exerted it shall deem the contract to be void or unenforceable due to the inequitable influence that unfairly favored one party over the other.

Conclusion

Numerous disputes that have arisen from record label contracts serve as a stark reminder of the complexities inherent in such contracts within the Nigerian music industry. Legal counsel, informed negotiations and equitable agreements are essential for the industry's growth and the protection of artists' interests. By fostering an environment of mutual respect and understanding, artists and record labels can create contracts that foster creativity and ensure a sustainable and prosperous future for all parties involved.

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Contributors:

Ndidi Osaemedike-Okeke (Senior Associate)

Tobi Bankole (Associate)

'Damilola Obaro (Associate)

Tomiwa Ajiboye (NYSC?Associate)

Samson-Umeh Anno Domini (NYSC?Associate)

[1] African Songs Limited & Anor V. King Sunny Ade (2018) LPELR-46184 (CA

[2] A. - G., Rivers State v. A. - G., Akwa Ibom State. (2011) 8 NWLR (Pt. 1248) p.31. At pgs. 83, paras. 8 - 11 and 84

[3] https://www.landr.com/what-is-mastering/#:~:text=Mastering%20is%20the%20final%20polish,audio%20come%20from%20the%20master. Last retrieved October 4, 2023

[4] See Section 28 of the Copyrights Act 2023

[5] See Section 29 of the Copyrights Act 2023

[6] (2000) LPELR-10000(CA)

[7] Gurara Sec. Fin. Ltd. v. T.I.C. Ltd. (1999) 2 NWLR (Pt. 589) 29

[8] A.G. Rivers State v. A.G. Akwa Ibom State (2011) 8 NWLR (Pt. 1248) 31

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