Skales & Baseline – Understanding Your Recording Contract by Tola Sarumi

By now, you’ve read the Baseline v Skales fallout. You might have a few questions and comments regarding the issues, we’ve tried to break it down for you below.

Labels.

There are no major labels in Nigeria as such. In the traditional sense of the music industry, Nigerian ‘labels’ are ‘indie’, Chocolate City Music and Mavin Records are probably the only two outfits who have structures in place that one would expect from a record label, albeit a small one.  You’d do well to avoid a record label that no fixed addressed, whose oga/chairman/investor has the final say on everything – this is a massive red flag.

The standard typical Nigerian label recording contract doesn’t believe in the longevity of an artist’s career, rare is the artist that lasts beyond the first couple of hits and or an album. Deals are signed for x years as opposed to albums. Ensure that your label’s obligations to you are very clear – Baseline did not publicise its own obligations to Skales in its press release. Traditionally, a label pays for everything associated with the production of an album, i.e., producers, studio sessions, flights, hotels etc. These expenses are either taken care of from the advance the artist is given to make the record or they are invoiced to the label as expenses to be recouped from the artist’s record sales or show bookings, in the Nigerian sense.

Payments.

Because the Naija music industry is still mostly based on lump sum payments – for shows and or endorsements, this is the easiest avenue for the label to get its money back. 70/30 is the standard remuneration rate for an untried act (re the artist’s share from record sales), it’s a way for the record label to peel off as much of its initial outlay on you, as quickly as possible. It’s not unheard of for an artist who does better than the label expects to ask for his contract to be renegotiated, so ensure that there’s a clause in your contract that allows for this. For example:

“The Contract further provided that the Company shall be entitled to 70% (seventy percent) of the gross receipts received by Skales from performance and tours and brand endorsements during the term of the Contract.” – Baseline Records’ public petition on 31/05/2016.

Skales performs a show for N100k – Baseline immediately claims N70k of the N100k.

“The procedure implemented at the beginning of the Contract was the payment of all monies received in pursuance of performances and endorsements into the Baseline account, whereupon the 30% due to Skales would be transferred to his (Skales’) account after the deduction of expenses” – Baseline Records’ public petition on 31/05/2016.

Then, out of the outstanding N30k, Skales will be paid 30% of whatever is left AFTER Baseline deducts its expenses.  It’s entirely possible that Skales could end up with nothing of the N100k.

Skales also signed a five million Naira endorsement deal with a telco, for which he was paid N5m, Baseline has also asserted its right to N3.5m (70%) of that payment. Of course, this situation is not tenable for the artist and sooner or later, as opposed to renegotiating his legally binding contract with the label, he unilaterally decides that the terms no longer suits him and acts contrary to contractual agreement. This isn’t advised! If you feel a contract you’ve signed is unfair, contact a lawyer. The law frowns on anyone dishonouring contracts, even if you have a valid claim, you’ll only make it that much harder for yourself.

Negotiating a contract.

360 deals are the norm in Nigeria now, since publishing barely pays, more receipts are derived from show bookings and lump sum endorsement payment. In the last ten years, western major labels have fashioned a means by which they get a percentage of all revenue generated from an artist; merchandise, concert tour. You can and should negotiate your 360 deal, the first one offered by EMI to Robbie Williams guaranteed Williams $20m upfront before EMI was allowed to take a cut of his tour and merchandising receipts. This isn’t out of place as such. If you think, a label invests, traditionally, time and money into making the artist a brand. The artists can only sell out shows and or sign endorsement deals in part because of the label’s work, so if the label takes a cut of revenue from either, so long as the artist is appropriately remunerated, there should be no complaints.

In Skales’ case, it’s difficult for Baseline to claim that it make him into a household brand, that work was done by EME, his erstwhile label. This fact should have formed part of Skales’ contractual negotiations.

You must avoid cross collateralisation, i.e. your contract should allow you get a final bill for a record; promo, marketing etc – ensure these are applied to a particular record at a time. So, the costs for making and promoting Man of The Year for example was x, these costs will be recoupable from year one to year  x –  This way, you stop costs from rolling on forever by preventing the expenses applicable to one project from being applied to the next.

Break clause; If you break the terms of the contract, there’ll be a monetary penalty to pay. In Skales’ case, it was ten million Pounds the idea of an exit clause is to make it as unattractive as possible because the label presumably believes that you’re a valuable asset. How to protect yourself;

Advice for the artist

Be smart, if a record label offers you a deal, they already think you’re a marketable act.

Before signing a contract; discuss what you’d like for your career. Do not accept advances from the label that you don’t need!  If you do need a place, ask how much the rent is to be – ask that this is documented, ask that any monthly budget you’ll get (for groceries and such is also documented). Don’t accept anything you don’t need from the label – Don’t be blinded by the flat in Lekki and the car ( in which you’re only going to be a lessee and will probably be kicked out if things go sour with the label), if you blow all that will come later.

Understand the basic rudiments of a contract! Ensure any advance is agreed and negotiated. It is the norm for a record label to take out a chunk of receipts before an artist sees a penny in returns – however, the label will also provide an advance on which the artist lives for the duration of album/record production process. Make sure your lawyer negotiates this with your label! Do not short-change yourself by limiting your lump sum payment to a signing on bonus.

Do not unilaterally decide to break the terms you agreed to. No matter how unfair a contract it, it’s best to head to court first! Performance of the duties assigned under a contract is very important to the courts, as trust (to perform) underpins contractual relationships. If you can show that given the industry norm, circumstances etc., your contract is particularly unfair, or that the record label has failed to perform its duties under the contract, then your case looks a whole lot better. You cannot just rip up a contract because you feel it’s unfair; the last thing you want to do is to stop your own earnings. Take the recent US injunction granted against Runtown, stopping him from performing in the US as a result his walk out on EricManny, his label.

Lastly, keep your eyes open, don’t let your desperation push you into make a decision that you’ll regret as your career takes off. As a new act and unproven act, you don’t have the clout to negotiate to own your contract but definitely look to ensure that your masters are back in your possession after a number of years.

Good luck to you. Read up and educate yourself, don’t be a mug.

SOURCE: notjustok.com