What We Expect from our Royalty Collecting Societies

By Justin Ige
The battles between Music Collecting Society of Nigeria (MCSN) and Performing and Mechanical Rights Society (PMRS) have been going on for decades. The battles, the details of which I would not be going into, have been more than a serious setback to the development of our creative industries. This is because these two organizations who should have been collecting royalties on behalf of our musicians and performers used the energy they ought to have used in doing this to battle each other. The result is a lack of effective royalty collecting system in Nigeria. This has been a serious pain in wheel of progress of the entertainment and creative industries. We are waiting for the time when all the battles will stop completely and progress will be all to talk about. We really hope that that time was right now and not a single moment later.
A new breath has however been ushered into the industry and with this, new hope. This is the registration of new collecting societies in Nigeria; and of which the collapse of PMRS into Copyright Society of Nigeria (COSON) is indeed a major and a strong new breath that has brought new hope. We really hope that they, working with MSCN, can create a royalty system which the artistes and musicians; and all other creative people and stake holders in Nigeria and beyond have been waiting for.
It is important that these collecting societies know that the industry has lots of expectations of them; in fact the expectations are so huge that some artistes see them as the Jesus Christ they have been waiting for, the long awaited messiah. As such, this is a project that cannot be allowed to fail. We believe that their staff has been trained effectively and that they fully understand the role they are expected to play. We also believe that the Societies have the top technology and methods for operating in a way that will meet all the expectations we have of them; we cannot accommodate any doubts as to the capacity or the ability of these collecting Societies to fulfill these expectations. These expectations include that they be immediately operational, transparent, visible, dedicated, efficient, honest and accountable. These expectations are all clear yet vague. I will attempt to make these expectations clearer and more to the point in terms of tangible indices against which their performance, in respect of how they are to meet our expectations, may be measured.
The first of these is that we need to know their plan of accounting and distribution. They need to inform us as to when they will distribute royalties. Would it be twice a year or four times a year; on or before the 30th of January and on or before the 30th of June? Some certainty in this respect will definitely help to meet the expectation of accountability and efficient distribution. In the United Kingdom, the MCPS says they will, and indeed does distribute: At least once during each calendar month; MCPS remits to the Member such royalties fees and other monies as have then been processed and computed due to their members. This they do provided that the aggregate of such sums is not below the relevant minimum distribution value referred to in the Terms and Conditions of Business. The meaning of this is that in UK, members of MCPS are entitled to receive royalty from the Society at least one a month as long as the money due to the member is not lower than a specified minimum. We would also expect this kind of efficiency from our collecting societies. It may not be as frequent as every month but I would consider that quarterly payment is efficient enough.
Now to the second question of this particular expectation what if they don’t pay as at when due for one reason or the other? What happens? As a sign of responsibility, they should let us know what they intend to do. We may take cue once again from UK, where MCPS pays interests on any monies held over. This is what they say: where MCPS through its neglect or fault fails to distribute sums to the Member by the date when they should have been distributed in which event the rate of interest shall be 3% over the base rate of National Westminster Bank plc. I don’t think it will be too much to expect of our collecting societies the same level of accountability. We also expect that the Nigerian collecting societies pay interest on any monies held over as it will go a long way to meet the expectations of entertainment practitioners and creative people in the country. We expect this degree of accountability and sincerity.
There is no gain repeating over and over again why the success of these organizations are so important but it does no harm to emphasize that they are indeed very important to the development of our creative industries and the economy of our dear nation at large. The success or failure of these organizations will not only be felt be musicians, authors and creative people generally, but will also be felt by the entire Nigerian populace. Hence, all should be interested in their success.
We expect a high degree of accountability, responsibility and transparency. Despite the fact that these virtues are more often than not (to put it lightly) elusive in Nigerian institutions and organization, we maintain that they are very desirable and indeed very achievable. The attitude with which our dear legislators have handled the freedom of information bill only goes to demonstrate just how much accountability, responsibility and transparency is dreaded within government circles and this is about matters that concern the general public. Nevertheless, we expect that our royalty collecting societies will not demonstrate a feeling of dread but rather, an expression of appreciation and acceptance towards these very important virtues. We therefore urge that if they have not already done so, they should develop, maintain and administer procedures and policies that exude the said virtues.
An example of such procedures or policies is to put in place a system for investigating any accounting irregularity. Of course this can only be of use if regular accounts are given to members. Giving of regular accounts should be a matter of ordinary business for these societies as they play the role of agents in the entertainment industry, whereas the members serve as principals. It is therefore ridiculous to imagine a situation whereby the agent fails to give account to his principal. We therefore will welcome a situation whereby proper accounts are given regularly but we will be dissatisfied if procedures are not put in place for investigating any accounting irregularity. Allowance should also be given to members to do an independent audit of accounts of the societies as it relates to their own works even if such audit will be allowed only on the satisfaction of terms such as these:

  1. Member may, at members own expense, directly audit the society’s books and records relating to relationship.
  2. Member many make such audit only for the purpose of verifying the accuracy of statements sent to member by the society.
  3. Member shall have the right to audit said books by notice to the society at least thirty (30)) days prior to the date the member intends to commence audit.
  4. The said audit shall be conducted by a reputable independent certified public accountant and shall be completed promptly.
  5. Member may take such an examination for a particular statement only once and only within one year after the date any such statement is due.
  6. Any such audit shall be conducted only during the society’s usual business hours and at the place where it keeps the books and records to be examined.

As an example, MCPS undertakes to investigate as soon as practicable, any accounting irregularity notified by a member to MCPS arising out of any distribution to the member or any failure to distribute to the member. The member must however notify any such irregularity as soon as practicable after the member discovers it.
In conclusion therefore, by doing the following, our music royalty collecting societies would have gone a long way in meeting our expectations of them:

  1. Immediately operational.
  2. Informing us as to when they will distribute royalties.
  3. Pay interest on any monies held over.
  4. Giving of regular accounts to members.
  5. They should develop, maintain and administer procedures and systems for investigating any accounting irregularity.
  6. They should allow members to do an independent audit of accounts of the societies as it relates to their own works.

Justin Ige can also be reached via justin@creativelegal.com.ng or 08023897112. This article contains general information only and is not intended to replace legal counsel. First written and published online on21April 2010.

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