A Must Read: EFE OMOROGBE vs KENNY OGUNGBE (Nigerian Music Industry)

Efe Omorogbe of Now Muzik has challenged Kenny Ogungbe of Kennis Music to an open session. According to the details from a rejoinder written by the former, there was an ‘inconsistency between between what Mr. Ogungbe’s written speech conveyed and what his spontaneous comments/outbursts communicated’ .
The Now Muzik boss also mentioned that Kenny Ogungbe has not done enough to fight the problems bedevilling the Nigerian music industry and significantly weakened others who were hell bent on taking on the problems. Find the full rejoinder below.
*** RE: THERE SHOULD NOT BE PIRATES IN THE NAME OF COLLECTING SOCIETIES – A REJOINDER TO KENNY OGUNGBE’s NEC SPEECH BY EFE OMOROGBE
When I learnt that Mr. Keke Ogungbe, founder/CEO of Kennis Music was billed to speak on the topic: Are Record Labels Endangered Species?” at the inaugural Nigeria Entertainment Conference, I wasn’t exactly sure what to expect and it made all a bit more exciting.
I obviously had my opinion on the subject matter. Working with artistes in management capacity and providing label support services to the indie artist had made it quite clear that the label is a necessity even with the advent of the digital era. To me, it was simply a question of adaptability for the labels, the traditional need remains, it was just the modus operandi that needed tweaking.
I was curious to find out Mr. Ogungbe’s perspective and recommendations as to how the label can ensure its survival and profitability. The speech, though highly informative and interesting didn’t adequately address the topic in my opinion. More ink was dedicated to an engaging historical exposition and general music/entertainment industry issues than the meat of the session which to me, was more about the status of the record label in a changing music business environment.

For me, some of the core issues are thus:

a, If an artist can record, mix and master a track on his laptop, produce a viral vid on the same device, publish the audio and visual materials on youtube, promote via social media and secure iTunes and Spinlet distribution by sending 3 emails and possibly become a star, of what use is a label to such an artiste?

b, As digital distribution gradually becomes the primary source of label revenue, how sustainable is a system where a telco insists on an 80/20 rev share ratio with a VAS company/aggregator which in turn, takes about half and leaves the label with a paltry 10% to further split with the artiste?

c, If 60% of the current hit-makers are independent, what are the prospects for traditional labels? etc…

These and other questions were neither directly raised nor addressed by Mr. Ogungbe’s paper but interestingly, that is not even the reason for this rejoinder.  My concern stems not from the issues that weren’t treated but from some of the pious positions taken and controversial comments made by Mr. Ogungbe during the session.
Mr. Ogungbe and I have had conversations on these industry issues for the better part of 9 long years and we know each other’s perspective and antecedents well enough. As I stated during the business session, I have a different side to many of the stories and assertions made by him during the music session. In deference to the speaker and panelists of the business session, the guests and the organizers, I elected to not address his positions there and then but it would be disservice to the industry in particular and the nation in general if these grievous misrepresentations are allowed to be documented unchallenged.
Mr. Ogungbe and Kennis Music did not create many of the problems bedeviling the music industry but in my opinion, didn’t do enough to fight them either. If anything, his actions and inactions, inadvertently but significantly weakened others who were hell bent on taking on the problems. Let me explain.
Joey Ukpong of Styl Plus Music reached out to me early 2006 in a bid to secure Now Muzik’s support for their price re-adjustment move for “Expressions”, the group’s forthcoming sophomore CD. About a year earlier, they had pushed Styl Plus’ debut 4 track, 1 remix EP, “Olufunmi” on jewel cases at N500.00 per unit retail price and it had been hugely successful. Here they were, planning a March 2006 release of an 11 track full length album that market forces a.k.a Alaba pirates dictate cannot be sold for a penny more than N250 retail. It was a bitter pill to swallow so Joey met up with me at our Maryland office to sell a proposition. He said they wanted to insist on a N400 per CD position but reckoned the chances of success would be higher if other top artistes agreed to push their products at the same price. He said he came to us first because Now Muzik represented at that time, a crop of heavy hitters on the scene. And we did. 2face, Sunny Neji, African China and Ruggedman were clients of ours but there was a limitation. Some of these artistes recorded under other labels and the power to make such decision resided with the labels. 2face was on Kennis Music and Kennis was the most influential label at the time so naturally, Baba Keke’s, as we fondly call him, was our first port of call.
Ever blunt and firm, Mr. Ogungbe told Don T, my partner and I that the move was doomed for failure. He posited that the only solution to the piracy scourge was for us to toe the line of the marketers and allow the ones who have been duly licensed by the labels to distribute the music, sell at a price that’s competitive with what the pirates offered. His belief was that the focus should be on pushing volume. Just as the likes of T-Joe and Obaino had argued, if we crashed the price to a point where the margin is narrowed down to about N10 – N25, pirates would be significantly discouraged from the trade. Then the label will be “allowed” to push units in the millions in peace and everyone would be fine. Really? We left downcast and terrified.
After deep analysis of the discussion, we concluded that for a label with the media might that Kennis possessed at the time, it probably was logical for them to adopt that approach and depend on huge volume to break even and make profit. For the rest of the industry however, it portended doom. Promotion is expensive worldwide. Nigeria isn’t an exception. Mass electronic media push budget for the regular label would easily exceed recording and packaging cost many times over and make it increasingly difficult to break even on a N25 per CD – or less- income. For Kennis, they were in heaven. They had access to an obscene amount of airtime on radio and television and made damned good use of it. Their music and talent were engaging content for their television and radio gigs which earned them good money and in turn, served as marketing and promo platforms for their music and artistes. Genius! More so, when for a good while, the competition was subpar and the ratings were in their favour. They ran the roost. A lot of industry guys cowered and sucked up to them for a bit of shine time so it was VERY CONVENIENT to adopt the “crash the price and push for volume” philosophy. Keke Ogungbe and Kennis Music did what no one could knock them for – look out for themselves – ONLY.
Of course, Styl Plus Music and Ahbu Ventures put out “Expressions” in March 2006, sold their CDs at N400 for the first 10 days or so and then- BANG! The pirates unleashed their cheaper alternative. The rest of us didn’t actively support their brave move, and they failed. But the failure was really ours as a collective. Soon afterwards the retail price dropped to N200 and then to N150. The marketers put pressure on the replicating plants to crash production price per unit to N25. Sleeves were pegged at N5 and wholesale pricing sashayed between N45-N50 leaving a N20 maximum mark up for marketer, label and artiste to share. The replicating plants were quick to realize that the boom was effectively over. The cost of operations wasn’t going to be sustainable at N25 per CD and some watched their operations shrink weekly. Some closed shop in no time. We had started selling the plastic sound carrier and paper jacket with a tiny mark up. The music, the content had lost all value. The industry was on a free fall to implosion. We cried out and started work towards some form of organized resistance.
I gave an interview and posited that the music business would implode in 18 months if we didn’t rise up to the threat posed by piracy and improper packaging and pricing. If I was the one Mr. Ogungbe was referring to when he talked about “somebody who said the industry was dead in a bid to seek relevance” and proudly added “and I told people who asked me that it was their industry that was dead, not mine”, it is indeed unfortunate.
Some of us didn’t agree with his approach. We didn’t think it was feasible to build a business model that depended on moving units in the millions for sustainability. We knew that five hundred thousand units was a difficult mark to hit even in the US, one million was special. That’s why they awarded a platinum plaque for such achievement. We recognized that records moved 100,000 units in places like SA and the label bosses pop champagne. We reckoned that 100,000 units to the Nigerian label at that rate was N1,500,000 max – less maybe 40/50 royalty to the artiste – less than half the cost or recording the album in the first place not to mention additional costs to package, shoot videos and promote. We didn’t just agree with Mr. Ogungbe. Kennis Music may have been satisfied with cheap products, low budget packaging and heavy hype to sustain its business but not everyone agreed. To the likes of O’Jez, Storm Records and emerging forces like Square Records and Mo” Hits, quality packaging must match hype. They invested in quality photography, styling, videos and the industry responded in appreciation. People wanted their products to look appealing. They wanted multiple paged packaging to allow space for detailed credits, lyrics, pictures and the like. N5 per jacket wasn’t going to deliver that. So you can understand my sense of alarm when part of Mr. Ogungbe’s paper stated thus:
“As a people, we deserve the best and quality product. We should never compromise quality on the alter of cheapness. Pirated works can never stand the test of time because the quality is ever and embarrassingly poor”
We came together and started the resistance conversions under the aegis of Music Business Forum at Sweet Sensation, Isaac John, Ikeja. MBF became AM.B-Pro and would later close ranks with eight other industry associations to form the Nigerian Music Industry Coalition. We engaged the NCC, the office of the AGF, the presidency, one another and worked tirelessly towards tackling the piracy problem and resolving the long-drawn collective management imbroglio. We have been in the trenches working with the government, the NCC to fight piracy at great personal cost and risk. The hitherto impregnable Alaba was demystified. They have been a series of raids and arrests. The historic prosecution of the Alaba king of pirates sent a strong warning to the criminals that the NCC and the industry were no longer taking things lying down. Mr. Ogungbe has made little or no contribution that I am aware of, to the fight. Instead, he has continued to stand by an illegal organization that has continually displayed contempt for the law and attacked the same NCC that has worked with stake-holders to fight back the piracy he protests thus:
“Record label owners today see music as bad investment due to the monstrous problem of piracy. It is time that practitioners of the industry should rise up to the challenge posed by piracy as it is killing the Artist, the Record Label owners, the Investors and the Economy”
I want to believe that I am not the only one who noticed the inconsistency between what Mr. Ogungbe’s written speech conveyed and what his spontaneous comments/outbursts communicated: How else does one connect the statement:
“I am encouraged by the recent development in the music industry as it relates to royalty. The tempo should be sustained. When a musician knows that the more airtime his works gets, the more income he earns which is timeless as music content utilization by broadcast stations and some recreational centres; use works that have mass appeal. Artistes and producers based on this are challenged to produce good works to have that followership”.
with the call thus:
“There should not be pirates in the name of collecting societies”
In an obvious attempt to discredit COSON, Mr. Ogungbe advanced the dangerous argument that broadcast stations should have the right to choose which body to license music from based on the repertoire and the power to do competitive bargaining for same. For a long time, some of us disagreed with proponents of a sole CMO situation in Nigeria and this was one of the main arguments advanced by the likes of Mr. Laolu Akins, Mr. Toju Ejueyitchie and Chief Tony Okoroji. They were resolute in their belief that multiple CMOs will breed chaos and become a powerful tool in the hands of users who are unwilling to pay. They maintained that at the end of the day desperate rights owners or their reps will make it impossible to establish and sustain reasonable standards and that multiple system will consequently not deliver the expected dividends to right owners in general. For a gesture of support for his position, he turned to Mr. Chris Obosi whose Megalectrics brand has indeed signed a licensing agreement with COSON and can’t be said to be in agreement with Mr. Ogungbe’s position. To all those who have remained unconvinced that multiple CMOs for Nigeria will work against rights owners, Mr. Ogungbe just presented proof that government made the right choice by approving only one CMO for a category of works!
I need answers. How can the industry, COSON, the broadcast stations “sustain the tempo” when Mr. Ogungbe functions as a top executive in a media empire that have so far refused to pay royalties? How can we entrench the culture of royalty payments when he continues to serve on the board of an illegal organization whose sole claim to legitimacy is a PRS affiliation that has been nullified for over two years? Maybe Mr. Mayo Ayilaran has not thought it expedient to inform the rest of the board and the members that MCSN does not have any affiliation with PRS anymore. But then again, maybe they know but don’t think it is of any consequence.
I have a bunch of other issues yet to address and I am sure Mr. Ogungbe has a different side to my different side of the story so far. Here’s my suggestion. Let’s have an open session, on live radio or television. Let’s have an open debate and settle these issues once and for all. Pick the date, time and venue sir. Just two hours of your time. The industry would be the better for it. I am waiting!
Efe Omorogbe
Read Kenny Ogungbe speech on NETng.net.