Douglas Jack Agu aka Runtown has just been hit with an injunction from his record label, through a Federal high court in Nigeria, preventing him from recording, performing or using his stage name in furtherance of his career as a recording artist; without their permission.
What are the alleged facts?
Runtown signed a record deal with a record company called Ericmany Entertainment Label. As part of that deal; and in exchange for receiving an advance payment on royalties from the label, he assigned his copyrights in his sound recordings (masters) to his label. After a few hit singles, the relationship deteriorated. The label claims this is because Runtown materially breached his record contract by providing his services, which are exclusive to the label, to third parties and without the knowledge of the label.
Runtown, in turn, accuses the label of a material breach of the contract. Specifically, he claims that there were royalty payments he never received and that remain unaccounted for. These payments are from live entertainment income (live performances) and recorded royalty income (MTN Music Plus, caller ring back tunes). He also alleges death threats were made to him.
Instead of Runtown addressing the threats via the police, obtaining a restraining order against whomever was allegedly threatening his life, filing the proper petition in court i.e. an injunction or breach of contract claim, or renegotiating the contract (including a buyout), since the term of the record contract is yet to expire, he just declared he is no longer in a contractual relationship with the label.
Folks, we’ve been here with the Brymo v. Chocolate City case. Making a declaration on what you will or will not do has no bearing on the contract relationship you signed. It is that simple. We’ve moved from a time where record companies like Kenny Ogungbe’s Kennis Music or Obi Asika’s Storm 360 Music let artists walk out, took a huge loss and did not sue. For Kennis, they actually alerted all third parties and media not to do business with their artist Kelly Hansome or face lawsuits. Today, Nigerian record companies are holding the feet of their artists to the fire. The label feels and believes, as they should, that after all the investment (usually millions) they have put into an artist, they can’t just incur such substantial loss without fighting back. If the contract has expired, it is a different story. An advance is not a loan payment but during the term of the contract, the label expects to recoup the advance i.e. the money it paid you in advance to cover your new house, car, recording costs, your producers etc. If after the term of the contract, the label is unable to recoup its advance, the label absorbs that loss.
However in this case, the contract is yet to expire. So Runtown’s label simply said, “it ain’t that kind of party. You need to deliver on your recording commitment and stop cutting us out of the exclusive deal we have with you.” They sued him and for the time being, made an emergency motion in court (filed emergency papers) to halt his music business activities.
What this means is if you are a third party interested in doing business with Runtown, you can’t and shouldn’t unless you have the permission of his record label, or he can show you legal documentation that the situation has been resolved. You don’t need the drama and by the way, for third parties in the west, you should comply because it is far easier to sue on western soil and recover than even in Africa.
The label obtained the injunction on May 25, 2016. Runtown responded the same day through his lawyers by writing a letter to his label. There is also yet another letter from the artist written on May 20, 2016. However, the letters have no weight. The case is now in a court of law. Therefore, any action Runtown wants to take needs to occur in a court room, absent a clear showing/negotiation to resolve this, privately on their own or through the legal justice system.
By the way, as a trial lawyer, from a practical standpoint, before I send a demand letter, I like to pick up the phone and talk to the other side. It lets me get a feel for what I’m working with, among other things I am listening/paying attention to for negotiation purposes. So, it seems like Runtown’s attorneys need to pick up the phone.
Finally, this case brings up so many issues. Of significance though is that AML artists you must understand what you are getting into. You need to understand the terms of your record deals, understand the recording commitment, advance clauses, how the music business works and so much more. It seems from Runtown’s response, that he also expects to be generating a profit with a label he just signed with two years ago. Has the label recouped the advance yet? Typically, industry standard, that takes a while. Even with established global artists, it takes years given the investment costs a record company puts into an artist, for the label to recoup its advance. Also, as you all know or should know, Nigerian music business monetizes primarily through live entertainment income. That means, royalties are typically not coming from the publishing and recording side of the business. For an emerging artist like Runtown, how many performances has he done to allow the label to recoup the advance it gave him? For the licensing deal with MTN plus, when did he sign that deal? What’s the number with his digital sales?
Both the label and artist need to look at their record contract in this case, understand it and work it out.
Best wishes to all.
Rundown’s Response via his lawyers