Music services are the largest part of Nigeria's mVAS. Litigations fly, local copyright owners suffer, an industry sub-sector is at risk. A step back review indicates that the rules - designed for vinyl and CD - have not been upgraded in an environment where OTT players have taken off. This is a call to revisit first principles.

1. DIGITAL LICENSING COMMITTEE
RECOMMENDATIONS
Simon Aderinlola
Sept 28 & 29, 2015

2. Committee composition & mandate
• Better understand the new
technologies driving present digital
exploitation of music.
• Explore/comprehend the business
models behind these platforms and
reward structures for value chain
components/elements/members
• Identify key players to engage with in
the digital realm so all parties in music
get recognized & transit to the digitized
• Identify aspects of the present rules of
engagement that need be upgraded to
better address remuneration of rights
owners – make recommendations

3. A need to engage & jointly reboot

4. Background
• The key players and rights involved in licensing music in Nigeria closely mirror
those of other major markets: no wheel reinvented.
• Licensing done right ensures that rights holders, including authors/ composers
& artistes who create the music offered through digital channels, are fairly
compensated. Copyright management & enforcement is a specialized task – a
dedicated, skilled, full-time job.
• Depending on the digital service, the rights may be licensed directly from rights
holders or, where tariffs apply, from a collecting society like COSON, under pre-
defined terms. Tariffs are certified by the Nigerian Copyright Commission.
• Strong institutions make all players avoid ‘business as usual’ & sit up
• The CMO model brought sanity to our confusing rights management regime.
Next, we need to give voice to any identified pent-up demands and make the
industry welcoming by usable rules of engagement and a listenership culture.

5. Copyright considerations: downloads
Services that provide permanent music downloads
Example: Full track downloads to mobile
• Copyrights: Musical Work & Sound Recording
• Rights: Mechanical Rights, Communications to the
Public by Making Available
(Performing Right), Distribution Rights
• Rights Holders: Author/Composer, Publisher, Artiste,
Record label & COSON (CMO)
• Split of the Rights: Musical Work - Author/Composer,
Publisher & COSON (CMO)
Sound Recording - Artiste, Record label &
COSON (CMO)

6. Copyright considerations: streaming
Can be non-interactive, semi-interactive or fully online/mobile on-
demand streaming where playlists are created and users have part
or full control over selection and timing of the tracks streamed.
• Copyrights: Musical Work & Sound Recording
• Rights: Mechanical Rights, Communications to the Public
by Making-Available (Performing Right)
• Rights Holders: Author/Composer, Publisher, Artiste, Record
label & COSON (CMO)
• Split of the Rights: Musical Work - Author/Composer, Publisher &
COSON (CMO)
Sound Recording - Artiste, Record label &
COSON(CMO)

7. Business models
(1) Subscription (2) Advert-Supported [“FREE is not a business model”]
Unique business models have emerged with the advent of convergence.
There are elements of performing rights in digital transmission of
works even when the end result is a permanent download and there is
also an element of mechanical rights in a streaming service.
Rights Split recommendations:
• Streaming on-Demand - 70% Performing Rights
- 30% Mechanical Rights
• Download - 70% Mechanical Rights
- 30% Performing Rights
Vending & access platforms
• Mobile Devices
• Broadband Subscription
• Cloud Services
• Social Media
Webcasting
12.5% of gross revenue subject to a
minimum of N0.485 per track streamed

8. Non-negotiable parties at the table
Whose Rights may be affected?
• Author
• Composer
• Publisher
• Performer/Artiste
• Phono-record (bearer medium) producer
What kind of permission/authorization may be required?
• Reproduction/Mechanical License
• Public Performance/Communication-to-the-public Licence
• Digital Distribution License
• Making-Available Licence
• Direct Licensing
• Collective Management Organization
IGNORANCE - illiteracy/alliteracy -
is no excuse

9. Further excerpts from the
recommendations document [to be made public]
• The primary parties – Author, Composer, Publisher – to get 10% of gross. COSON
should help collect, except for members who specifically ask in writing that COSON not
cover/fight for/protect its interests locally/internationally. The Telco, aggregator, label &
performer/artiste then share the balance
• Gross Revenue – means End-user price or all revenue received by the licensee either
directly from its users (via subscription fees or paid-for activities) or other revenue streams,
including, but not limited to, advertising, sponsorship, and commissions.
• Accounting and Reporting – verifiable accounting reports are best submitted & deemed
due quarterly, within 31 days after the quarter’s end. Licensee is required to keep and make
available a signed quarterly statement showing transactions on the use of music.
• Licensing: Licensee (to exploit musical work) to pay an advance of N500, 000. 00 (Five
Hundred Thousand Naira) only before commencement of any of the services. Terms could be
discussed with COSON.
• For the sound/master recording right, it is proposed that this right will be
negotiated separately from the publishing right by the artiste/performer (as the
first owner of the rights) &/or phonogram producer /record label (where the right has
been transferred).

10. What have we learnt? What can we use?

11. A functional Nigerian analogy via CBN
The Banking and Payment
ecosystem is a reasonable analogy
of what works.
Benefits of a framework: Once
a new banking/payment product
is launched without proper
weighting & inclusion of a
Financial institution’s
contribution, it becomes a failure
point & you can’t hold that partner
to any standard expectations or
SLAs if your transactions aren’t
passed.
Learnings:
(1) Scope any service end-2-end
(2) Make relevant parties, their
contributions and rewards visible
ISSUER
ACQUIRER
SWITCH
PROCESSOR
TERMINAL
OWNER
SCHEME
MANAGER
AGENT
AGGREGATOR
AGENT
SUPERVISOR
CUSTOMER
TOUCHPOINT
…impossible is nothing. Just adapt what works already in-country!

12. So what should be happening?
• Education: Users/exploiters of digital music should first be aware of the governing
rules around music they use, lest litigations fly. Get tool-schooled!
• Parties in the ecosystem must be ready to shift to rightly accommodate all efforts
behind musical works – past & present. Status-quo is short-term myopia for all
• This is no anti-Telco vendetta. They pay taxes & employ. Regulator in 2001
collected 285 million USD, with no backbone & no mVAS visibility = today’s impasse
• Again, The NCC (Comms) hasn’t yet a clear model to capture what happens in the
OTT space. It’s licensing doesn’t yet embrace that new alive & kicking eco-system.
Once Telco data/ISP Wi-Fi gets affordable, that industry again takes off!
• Global platforms like iTunes (Apple), Ovi (then Nokia), Play store, SONY had/have
good reason for taking circa 30% of gross revenues or less
• Engage professionals/experts – local and international – or we plan to fail!
….LET’S BENCHMARK, START THE DISCUSSION & TOGETHER SET THE NEEDLE

13. What else should be happening?
• Mobile music needs strong institutions: This event’s first two welcome
remarks were assigned to the two relevant regulators (both NCCs)…not in error.
They are the ones to meet, assess recommendations & then invite parties to the
table [IP-blacklisting very possible & commercials could be treated like PORN]
• Imbibe transparency: data I request on the use of my work is not a privilege!
• Just as the CBN engaged the NCC (Comms) profitably, NCC (Copyright) can do
likewise, as the Nigerian digital space is mostly Telco and OTT platform – driven
• FREE/FREEMIUM is not illegal, but someone has to pay if licensed content is
used to drive early or mid-term sales - except the legitimate owners of the work
together agree it’s free for a period or purpose
What
should be
done?
Who
should do
it?
How
should it
be done?
How shall we
measure
progress?

14. Yes we can reboot…starting today