A MUST READ!! Here Are 7 Reasons Why Most Nigeria Record Label Fails

You have heard all their stories, of artists (Kizz Daniel , Reekado Banks, Ycee, Brymo, Runtown….) leaving labels and that has been dealt with extensively in the media.
I rather take a look at the real reason why all Nigerian record labels fail. I choose to see the fall outs with artists and label as a symptom of the failure of the record label.
However, the natural question to ask at this point is why do all Nigerian record labels fail despite the opportunities for a thriving business?
So here are some of my ideas from my study of the Nigerian music industry and personal experience from running Social media influencing and Talent management.

CAPITAL INTENSIVE

It is difficult for financial institutions to fund record labels because of their structure, especially at startup phase, as revenues are lean and their isn’t really an insured plan for recouping working capital lent other than emplacing a physical asset collateral for the debt.
The equipment required is relatively cheap. Today, you can make music with a laptop, a microphone, a keyboard and some software. Everything else is an extra.
Some of the best classic albums that sparked the rebirth of the Nigerian music scene in Nigeria today were made that way. It will be hard getting anybody to confess to that though.

EGOs

Every successful Nigerian artist is eventually going to be bigger than the record label sooner than later when endorsement money starts rolling in.
It becomes obvious to the artist that he is actually bankrolling the record label’s operations as well as the costs of new projects. Anybody half smart will recognize that you can take your destiny into your hands and boycott the label.
The moment you, a label owner has a winner, get that artist to start an imprint under you, seek fresh talent to replenish the old, renegotiate the contract, take a lesser piece of the pie, use your clout to provide the new imprint distribution deals and other support services for a fee or a piece of every new talent signed.

LEAN ROASTER

You have seen them all, those one or two artist record labels. When one artist walks, the label closes shop. It is called a key man insurance risk. Keep your label on top of its game.
Keep a sizeable roster and keep all signed satisfied to your business structure.

EXPENSIVE RECORD CONTRACTS

The art of negotiating the advance is a compulsory course for all new label execs. For those who don’t know the advance is what a record label gives an artist he hopes to sign and promote.
Maybe you have heard of a record label buying the artist an house, car, paying some bills, giving them salaries, wardrobe allowance, pocket money, club privileges etc. that is the advance.
One opinion (W Tyler Allen) says this is a major way to set an artist up for failure — by giving them illusions that they’re on the road to success, when their brand still hasn’t matured.
My philosophy for most of these Nigerian record labels is don’t box yourself in for the talent, regardless how talented he or she is, especially when the talent is fresh and has no record of attracting revenue streams to you or previous label.
What a label owes an artist most is a structure or plan on how to succeed in their joint venture. Plus all that money spent on buying cars and picking tabs at the club will be of better use in finding good music producers, video directors, publicists etc.

EXPENSIVE SUPPLIERS

I believe there is a bubble somewhere in here. Everybody agrees they need to have the best suppliers; stylist, video directors, publicists to succeed in this business but at what cost should be the driving question.
Most of these artists will be indebted for the rest of their lives if they can’t deliver a smash hit or sizeable performance or endorsement fee.
My candid suggestion is tie everybody into a percentage share as against pay for hire. Give them a piece of the pie, i.e. the contract, you all can play together for the long run and for even better returns.
That however, means they have to believe in your ability to deliver on the envisaged future. In the medium to the long term, it will be nice to see record labels finance their own support teams, create needed alliances or buy equity into these other businesses.
It is also because of this, that A & R Chris Randing suggests that labels should really be a partnership of at least four people or entities a music producer, a business affairs person, a radio person and a marketing person.

PRODUCTION CAPACITY

It is called a record label because it is supposed to produce records. A label should have production capacity or should have sourced that capacity on the outside.
That capacity can not be negotiated on a song basis. It is better on a term basis. A producer that will work for you for a term, say 3/6/9/12/months. This way your rooster can always be busy creating music.

TECHNICAL/BUSINESS STRUCTURE

Like every startup, music or otherwise, hungry for success but with slow or no revenue build up.
It is important that start is equipped to fulfill administrative tasks, sign, draw, read legal agreements, engage bankers for the lowest cost structure possibly.
The End!!
Thank you for reading.