Fast Company Feature: IROKO’s Jason Njoku Accuses AFRINOLLY of “Illegally Building (its) Business on (IROKO) Content”

In Film Business, Law & Policy, Legal Drama by Africa Music Law™Leave a Comment

Afrinolly Short Film CompetitionThis is a very interesting article by Fast Company about Jason Njoku and his company IROKO Partners. A pleasant surprise to see Njoku’s company featured on fastcompany.com. However, more interesting to me are the legal issues raised in the article, many of which I have raised from the onset on AML.

The legal issues, at this point, are not unique to Jason’s company. The legal issues raised will affect all content distributors in Nigeria/Africa’s digital distribution space. It is worth paying attention to whether you are the licensor or licensee.

Indeed I have said and predict lawsuits among these companies fighting over allegedly acquired legal rights to distribute content. I have also said I predict and see content creators themselves instituting lawsuits against these companies for use without permission from the content creator. Think of a Paul Play v. ULTIMA LTD, MTN and COSON scenario as what to expect in the future.

Afrinolly continues to grow at full speed and is slowly but surely making a strong name for itself, across the continent and in the diaspora. Let’s see what lies ahead.

-Read the excerpt that I found interesting below.

-Uduak

“Not everyone in Lagos sees Iroko’s strategy as benevolent. “They bleed us white!” shouts Paul Obazele, a veteran actor and producer, when I ask him about Njoku’s website. Like many on the creative side of Nollywood, he equates all video streaming with piracy. And while Obazele speaks in Nollywood-style hyperbole, he points out a real conflict. Nigerian law is ambiguous about who retains ownership of a movie’s copyright–the producers who created the film or the marketers who financed it–though as a practical matter the financiers usually end up holding the master copy and thus control of the film. Most Nigerian movie deals are oral agreements anyway; an academic described the industry to me as “Hollywood without contracts.” As a result, producers and financiers can, and often do, make competing claims on the same intellectual property, with little chance for legal redress.

Many Nollywood tycoons started out by selling black-market copies of Hollywood releases; shooting their own movies was simply an inexpensive way to acquire fresh content. Legitimate marketers also produce a continual flood of new titles in an attempt to outmaneuver pirates. But though original fare now represents the lion’s share of Alaba’s business, the legal and illegal markets still coexist.

Within Nigeria, disputes about rights are usually handled informally, through cash payments or muscle, but in the developed world, legitimacy, ironically enough, brings legal hassles. So before it acquires a movie, Iroko requires the seller to produce proof that he owns the copyright, and it videotapes the transaction, just in case things end up in court. “We try as much as possible to document as much as possible,” says Tope Lucas, Iroko’s Lagos-based attorney. She recalls one impostor who went so far as to splice his name into a movie’s opening credits as executive producer. The company busted him, and Lucas contends that Iroko has dealt with only a handful of infringement claims.

Nollywood insiders are skeptical that Njoku can catch every fraudulent assertion of ownership, given the industry’s careless standards and the country’s endemic corruption. “They take the cash, and they sign something,” says one entertainment industry investor. “But where’s the chain of title?” Njoku says his rights are unassailable, and he has been aggressive in defending them. He began by trying to remove unauthorized clips from YouTube and other sites, filing notices under the Digital Millennium Copyright Act (DMCA). When a competitor started a copycat website called irokotvmovies.com, Njoku filed a complaint with the UN’s World Intellectual Property Organization, which shut down the site for trademark infringement. And last year, he brought a suit in U.S. federal court alleging that a Nigerian living in Georgia was illegally streaming movies owned by Iroko. (The competitor claims he had obtained rights to the content.) Njoku says that his targets have retaliated with dirty tricks, such as filing spurious DMCA notices, causing problems with his web hosts and occasionally disabling Iroko’s ads.

At the same time, Njoku was struggling with YouTube, his distribution partner. Although his site generated 150 million views in 2011 and $1.3 million in advertising, Njoku felt that YouTube executives treated him with indifference, and he was annoyed by the heightened scrutiny of any transaction involving a Nigerian IP address. So last year, he decided to build his own platform. The move was daring. Going it alone meant Iroko would have to give up YouTube’s built-in audience and replace infrastructure that Google had provided for free. The company refuses to disclose its page views or revenue as a stand-alone site, but Gotter does say that storing movies in the cloud brought new back-end costs of more than $1 million a year.

Still, the gamble could pay off if Njoku can expand his reach in Africa. Around 90% of Iroko’s traffic today comes from the estimated 30 million African emigrants spread throughout the world. Njoku aims to reverse that proportion. The obstacle, as usual, is infrastructure. Only a tiny fraction of consumers in Africa have broadband connections, or their own computers, for that matter; many rely on Internet cafes. And the pipes to carry the video streams back to Africa from overseas, where Iroko has its servers, aren’t yet robust enough for heavy traffic.

Yet the history of the Internet in the developed world suggests the rewards go to companies that position themselves when the technology is still impractical. And Njoku feels the trends are in his favor. A study by McKinsey & Co. estimates that the number of Internet users in sub-Saharan Africa has more than doubled since 2008, to 118 million. Telecom companies are also investing billions to bring undersea fiber-optic cables ashore, with capacity expected to triple or quadruple soon, so streaming videos stored abroad should become more feasible.

Along with the move toward self-reliance, Iroko has shifted from a free-content business model to a subscription-based hybrid. “The industry cannot be built on free. People need to pay,” Njoku tells me, sounding every bit the content entrepreneur, as we have lunch on the Lower East Side in New York. His new site still has thousands of free titles but offers a Netflix-style premium option for $5 a month, giving users access to first-run movies. The company has opened offices in Johannesburg, New York, and London; for the moment, at least, the developed world is where the money is–Iroko’s venture capital and customer base alike.

Njoku is now hurrying to adapt to new channels. Just as Africans leapfrogged landlines–65% are mobile subscribers–most experts expect them to skip over PCs and consume video exclusively via mobile. Last April, Nigeria’s dominant cell phone service, the South African giant MTN, began promoting an Android app called Afrinolly, which directs users to free movie streams on YouTube and other sites. Njoku says Afrinolly has infuriated his partners, the marketers, who make nothing from the arrangement and are discovering that their consumers are loath to pay for content that they can find for free.

His response? The threat of another lawsuit. He accuses Afrinolly of “illegally building their business on our content.” (Afrinolly declined to comment on the claim.) Njoku says he is only protecting the interests of the industry, which cannot continue to produce the content he relies on without the revenue it generates primarily from physical sales. That sentiment hasn’t kept him from experimenting with iPhone and iPad apps, which are still in development, as well as launching a platform for Nokia devices. If Iroko’s future is in Africa, it’s also in mobile, meaning that someday soon Njoku, too, will be competing with the anarchic marketplace of Alaba. . .”

Fast Company has the full story.

 

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