In Nigeria, the entertainment industry is one of the most profitable and glamorous industries that draws a lot of investors such as artists, labels, producers, etc. However, where and when it is not properly navigated, it has led to conflicts and the exploitation of numerous people. To navigate the entertainment industry and protect your interest, a properly constituted entertainment contract is required.
An entertainment contract is a legally enforceable agreement that specifies the terms and conditions of a relationship between an individual or company and an artist. The agreement is expected to specify each party’s expectations, and rights, and to ensure that their interests are safeguarded. Different forms of entertainment contracts exist and parties to each agreement must understand the uniqueness of each contract to fully protect their interest and enjoy their rights. They are:
- A Recording Contract: Usually referred to as a record deal, it is an official agreement that an artist or group and a record label enter into when the recording act produces an audio recording (or set of recordings) that the label will market and sell.
- Licensing Agreement: This is a legal contract that gives one party, known as the licensee, the authority to utilize the intellectual property of another, known as the licensor.
- Performance Contracts: This is an agreement that is made between an artist and the promoter or venue owner who is in charge of setting up the show and the artist.
- Management Agreements: This is an agreement between an artist and the individual or organization they select to manage their career.
Lawyers and other parties involved in entertainment contract negotiations must make sure that all parties complete their due diligence and that the entertainment contract accurately reflects this. Due diligence is an essential step in contract negotiation since it allows parties to evaluate the deal’s risks, rewards, and viability.[i] Information regarding the opposing party, the market, the legal and regulatory landscape, and the possible effects of the agreement on the parties must be gathered and examined. Parties should take into account due diligence considerations such as:
- Intellectual property rights: Intellectual property rights are the rights that people are granted over their creative works. The inventor is granted the sole right to use his or her creation for a set amount of time. When it comes to entertainment contracts, intellectual property terms are essential since they cover the licensing, ownership, and use of creative works.[ii] Intellectual property in Nigeria is governed by three main legislations and they are; the Copyright Act 2022, the Patents Act 2022, and the Trade Marks Act, 2004. The Copyright Act deals with the governance and protection of the rights in musical and artistic works while the Trade Marks Act protects rights in marks, signs, or other such combinationss that is peculiar to a particular owner for identification of the owner’s design and differentiating it from other products, especially competitors. With this being said, it is therefore imperative that parties must ensure that the people they deal with actually own the creative work that is the subject of the agreement. This will save them from needless legal battles in the future with the legitimate owners of any creative work that they may have inadvertently violated.
- Ownership of Creative Works: In order to prevent exploitation, parties should be cognizant of the other party’s practices regarding ownership of artistic works created during the term of the contract. It has been revealed that, despite the glamorous lifestyles of many Nigerian artists, many do not own the songs that the public finds appealing, and it is the record label that receives the majority of the profits. To prevent this, they ought to expressly state terms that are advantageous to them in the agreements signed in relation to the works created.
- Payment terms: These terms are important since they specify the method of paying for works created. They include information about the profit-sharing ratio, bonuses, royalties, payment schedule, and amount from created works.[iii] It is very common in recording contracts for artists who accept whatever terms thrown at them in desperation for a chance at their dreams to usually realize a few years later that it has not been worth it, especially when their finances do not correspond to the work done or the fame gained from their songs.
In order to prevent future disputes and regrets, lawyers drafting entertainment contracts must ensure that they fully grasp the payment structure and appropriately observe payment trends to make sure the vulnerable receive their money’s worth for their creative work, especially in the music industry given the rate at which music is profitable in this day and age.
- Exclusivity and non-compete clauses: In recording agreements, the inclusion of this clause will translate to a situation where the party who creates the artistic work “the artist” is unable to work on similar works with a third party without the approval of the hiring party typically a record label or publisher.[iv] The hiring party is the only person with access to the works made by the artist. These terms serve to guarantee the artist’s commitment to the project and safeguard the interests of the employing party. Its purpose is to stop the artist from working with other parties and competing in hiring party competitions. In a nutshell, this translates to the party forfeiting some of his copyright and control over his work.
- Termination clauses: Entertainment contracts contain clauses that describe the steps involved in terminating the agreement between the parties. It outlines the circumstances, notice period, and mode of termination. However, the situation experienced by artists is usually different when such an artist wants to exit a contract. Oftentimes, these artists are usually held back by unjust conditions which they had inadvertently subscribed which invariably prevents them from doing so, most especially where the partnership is no longer beneficial.
In conclusion, it is important to make sure that the processes for ending employment contracts are just and equitable. Parties should not be in a disadvantageous position when attempting to terminate their employment.
[i] https://www.contractscounsel.com/t/us/artist-management-agreement accessed on 20/04/2024
[ii] https://threshold-attorneys.com/wp-content/uploads/2020/10/DEMAND-NOTICE.pdf accessed on 18/04/2024
[iii] https://corpbiz.io/learning/contractual-agreements-in-the-entertainment-industry/ accessed on 19/04/2024
[iv] https://corpbiz.io/learning/contractual-agreements-in-the-entertainment-industry/ accessed on 19/04/2024
Written by Olalekan O. Elizabeth for The Trusted Advisors
Email us: info@cms.trustedadvisorslaw.com
Telephone Number: +234 810 159 9159
