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Entertainment Industry in Nigeria
Nigeria has a strong entertainment industry which has spread beyond its borders into the African region and African diaspora markets in the UK and the US. The industry is comprised of both music and film production. The film industry alone is worth an estimated US$250 million a year and the third largest film industry in the world after Hollywood and Bollywood. Nollywood, as it known, produces more films per week (40) than Hollywood or Bollywood.
Most of these are low budget productions with a short shelf-life due to high production levels which turn out an average of 6 films per day.

The music industry produces an average of 550 albums of different types of music annually. Record sales have more than tripled in the past 5 years, averaging 10 million in 2005 and rising to an estimated 30 million in 2008. There is revenue from musical shows and concerts held in Nigeria. An estimated 1200 concerts and musical shows take place every year and account for a combined annual turnover of US$105.5 million.

The entertainment industry in Nigeria offers potential for growth and value addition for the Nigerian economy. Although in the context of GDP contribution, the sector is not large, there are other factors to support its inclusion in the strategy plan. The popularity of the industry makes it worth exploring. However, it faces some challenges. The biggest of these is piracy in both the film and music industries. Estimates indicate that for every single copy of film sold legitimately, there are 5 to 10 copies sold by pirates. Other challenges include poor production standards and poor marketing and distribution linkages. These challenges have discouraged financial investment in the industry. Although the quality of production is poor, estimates of the scale of consumption of pirated copies throughout the region and the diaspora prove that there is a volume of sales that Nigeria could capture that is currently lost to piracy.

The International Music Marketplace
The recorded music industry has traditionally derived the majority of its revenues through the sales of physical recordings. However, the rise of digital music has resulted in substantial changes to the industry’s structure as shown in the table below. Recording companies have adapted their approach to respond to new trends in how music is distributed and consumed. There is still a market for physical recordings such as albums, single sound recordings and music videos. Digital distribution refers to distribution of music to mobile phones and music downloads through the internet. There has been an increasing shift from CDs to music downloads. Global digital music sales reached US$7.6 billion in 2008 and are projected to increase to US$14.8 billion in 20…, an annual increase of 14.2%.

Local Capability and Competitiveness of the Music Industry
Exports of Music
Nigeria has fashioned an African Hip Hop style of music which appeals to international audiences. A number of its musicians are internationally recognised and have received international recognition through awards such as the MTV Europe Music Award, Channel O Music awards and Kora Music awards. These awards have been received for various musical talent categories as well as other areas such as best video and special effects.

In 2008, the industry had 30 million legal record sales with a value of just over US$9.3 million4 while concerts and music shows generated an annual turnover of US$105.5 million. Pirated music sales are estimated at 10 million but the impact of these sales in lost revenue to the industry is difficult to estimate because no one knows the price at which pirated music is sold to the regional and diaspora market. It is not certain how many people are employed in the music industry because it is fragmented and mostly informal.
Production houses fall into two categories: professional studios and home studios. In the music hub of Lagos, 16% of production studios are professional and 84% are home studios. There are other players in the industry including music video production companies, record label/artiste management companies and marketers but they tend to be small outfits and in the majority of cases, they are a one-person business.

Revenue received from concerts and musical shows is a clear indication of the success of the music industry. There is potential for market growth and increased revenue from recorded music based on the high number of pirated music sales. Changes need to take place to bring together the fragmented industry into an efficient group and develop a strategy it can implement. The World Bank’s Growth, Employment and Markets in States (GEMS) project which has been created to enhance competitiveness, growth, employment and business opportunities in the music industry.

Music Industry Constraints
A diagnosis of the music industry in Nigeria has revealed a number of constraints which are outlined below.

Copyright and Piracy (Regulation and enforcement)
Illegal sales of music CDs are the greatest threat to the music industry in Nigeria. Part of the problem is that many music producers operate informally and therefore their music is not copyrighted. Estimates indicate the rate of piracy towards the end of 2008 was 58%5. The loss of revenue means musicians are not receiving all of the monies that are due to them and production houses are not able to recoup their costs. The entire value chain in the music industry is being short-changed. As a result, there is little financial investment going into the industry to improve production quality and reduce production costs.


Nigeria has the associations and legal frameworks for regulation and enforcement of intellectual property rights. The Nigerian Copyrights Commission (NCC), the Nigerian Customs Service (NCS) and the Standards Organisation of Nigeria (SON) are crucial to fighting piracy. However, there is no cohesion in their approach to protection of intellectual property and the application of legal frameworks that exist. This is further compounded by the fact that the majority of the music industry is not registered and therefore copyrights are difficult to recognize in the first place. There is also the element of public awareness to consider. The public should be educated on intellectual property rights as part of the solution, though such efforts are unlikely to result in much progress for some time.
Some countries have successfully centralised the royalty collection process through the use of copyright collection societies who collectively administer rights and facilitate access to musicians’ works. This reduces the insurmountable task of individually enforcing rights. This would work better in Nigeria if all music products had recognisable, authenticated marks or holograms to help the public distinguish between pirated and legal copies. An authenticated process for registering and protecting IPR would be the first step towards this. The Nigerian diaspora market is flooded with pirated copies which would be reduced if Nigeria had a reciprocity of enforcement arrangement with other countries. The World Bank GEMS project is working with all stakeholders to create an enabling business environment to counter piracy.

Production

Music is usually produced in a one-person, home-based recording studios which form the majority of production studios. They are not equipped to produce high quality music and are expensive. They have the most basic equipment required for sound production and lack the technical expertise required to produce music of sufficient high quality for the international market. The high end of the music production industry in Nigeria charges US$‚ per recording session while the lower end charges US$65. The music video production industry is equally ill-equipped and expensive. Musicians spend an average of US$330 to produce one song. A music video costs US$33,000 to record. There are few studios with state-of-the-art or even modern video equipment. Most Nigeria musicians who 11
can afford to prefer to shoot their music videos in South Africa where there is modern video editing equipment.
Production of physical recordings is not able to meet demand. Consequently, music is not released throughout the country at the same time. This creates a window for pirates to flood the market with illegal copies. These are sold on within the country and also make their way to the diaspora market in Africa, Europe and the US. It is difficult to monitor CD sales in the existing environment.

Distribution and Marketing

The distribution of music in Nigeria is handled by marketers. They purchase the distribution rights for music from individual musicians or from record labels/artiste management companies. It is the marketers who then launch a marketing campaign. They replicate the master copy of music and distribute it through their networks to retailers. There is no way for musicians to know how many copies are sold and who is involved in the value chain further down the line once the marketers have made a one-off payment to buy the music. This makes it difficult for musicians to claim royalties. Less established artists who do not have a record label or artiste management company have no option except to sell their music rights to marketers for a one-off payment. It would be beneficial to artists if there was an overall promotion agency that works directly with musicians to assist with both packaging, marketing and distribution of their music abroad.


Training

The music industry lacks technical skills to produce high quality music and music videos. This has prompted musicians who can afford it to travel abroad to access skilled music and video producers and sound technicians.

The Opportunity in Music
The sheer volume of pirated copies of music being sold is a clear indication of the opportunity that exists for the music industry. The demand exists despite the poor quality of the product and the lack of proper marketing and distribution channels. The talent required to make Nigeria’s music industry a success already exists and is evidenced by regional and international awards for some musicians. On its own, the recorded music industry achieved revenues of US$9.3 million, while concerts achieved revenues of US$105.5 million.
The opportunities for the Nigerian music industry lie in the following areas:

Attracting tourists (mostly diaspora Nigerians visiting family and friends) and music fans from outside Nigeria to local concerts.

Staging concerts outside Nigeria, in the region and for the diaspora markets in the UK and the US. Staging concerts abroad should also create demand for recorded sales.


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