From successfully running Freeme Digital Limited, a premier record label, label services and distribution company in Nigeria with a growing assemblage of artistes and labels across West Africa; Freeme Space, a digital production studio and sound stage in Lagos, among other businesses, Michael Ugwu, founder/CEO, Freeme Digital Group, is truly an investor and entrepreneur with experience in Nigeria’s music and entertainment industry.
In this interview, Ugwu, the pioneer general manager for Sony Music Entertainment West Africa, one of the largest record labels in the world, speaks to Obinna Emelike on his passion for entertainment business, opportunities for all players, local labels, impact of streaming on music business, among others.
You have really done well for yourself since returning to Nigeria. What has been your drive for these achievements?
Well, I guess you could say so, and thank you for saying that because it is not as easy as it looks. The thing is that Nigeria is a developing economy. From my perspective, developing economies are wide open with opportunities. I came back to Nigeria ready to build and make an impact. That north star has guided my every move from 2009 to date. The various companies I have worked with and the platforms I have built have all been with that in mind. I continue to strive to build things that will outlast me and that will make an indelible impact on the sectors I work in. At one time that was the financial sector, at another time that was the agricultural sector, today that is the entertainment sector tomorrow that may well be the blockchain/technology sector!
Every African Diaspora that returns from abroad always has a story to tell for taking such a decision. What is yours, for leaving the UK?
I felt I hit a glass ceiling in the UK. I was a senior team member in the Strategy and Analytics Unit of The Royal Bank of Scotland. I was aware that Nigeria was opening up. At the time I was an avid reader of All Africa and an engaged member of Nairaland, the popular forum. I was extremely current with all things in Nigeria, so when I became aware that various Nigerian banks were running recruitment fairs in London, I didn’t hesitate to attend. I attended several fairs and met with several prospective employees in London over the course of three years before I found the right opportunity. A big issue at the time was that I did not have my NYSC certificate. I was fortunate enough to find an employer that was willing to relocate me and then take me on in a fully paid consultancy capacity whilst I did my youth service. I was offered a job in both Diamond Bank and Access Bank (both retail banks) but decided to hone in on investment banking with FutureView Capital. So, with a job offer in hand, I packed my bags and relocated to Lagos, Nigeria almost 13 years ago.
Your background seems to be Economics, how did you pick interest in music and why?
After deciding to leave the financial services industry I actually traversed the agricultural industry as well as the political sector before I found myself in music. I had a successful fish farm located in Lekki in 2010 that I left in the care of a management team when an opportunity arose to serve my constituents in the Enugu State House of Assembly. I had had a long term interest in politics so decided to stand for the election. I lost the election but learnt a lot about politics. It’s not for the faint hearted! On returning to Lagos I found that my farm had been pretty much abandoned by the management team. I shut things down and decided I had had it with Nigeria. I travelled abroad first to the UK then to the US. It was on a visit back to Nigeria that I met with an old friend who introduced me to the founder of iROKO Partners. He was aware that I had invested in some Nollywood films in the past and that I had a keen interest in the movie space, from more of a consumption perspective over production. I had an amazing collection of Nollywood movies. Anyway, we had a chat about all things entertainment. Next thing the conversation was about all the opportunities in the entertainment space and the work iROKO was doing. I had managed my younger brother who was an artiste in the UK when I was much younger and I had also run a nightclub in Victoria Island. So, I had quite an input into the conversations. After much back and forth, I agreed I would take a shot at this Nigerian entertainment industry thing and the rest is clearly history.
From record labels, music distribution, production studios, among others, you have proven yourself an entertainment entrepreneur. How do you manage to run all these segments of your business successfully?
Strategy is at the core of what I do. I knew I wanted to build a state-of-the art production studio in Lekki three years before I actually did. I knew we needed to expand into a hybrid label two years before we actually did. As far as music distribution, I saw the growth of digital over physical and knew that was where the industry was heading. When it comes to day to day management it is all about the team. Daily, it is about doing my best to put square pegs in square holes. Doing my best to train and equip and motivate my team to deliver for our clients and the company. It is also about doing my best to set the direction and overarching strategy for the company in order to drive sustainability. With regards to the various business units, some additions to the business have been natural add ons, whilst others have been due to competitive forces.
Many young people are now focusing on entertainment for a career break. How much of a career and business is entertainment, particularly music?
Building a career in the entertainment space is much easier today. Many thought I was mad 10 years ago to leave the finance space and delve into the entertainment industry. I think we have done a lot to professionalise the sector. I brought Sony Music to Nigeria, which definitely validated all the hard work our artistes and executives had done to excite the bigger corporates to enter the foray. Now, all three major labels exist in Nigeria with a large number of other international music companies setting up in Lagos. The growth of our local labels coupled with the entrance of international players has created an environment where young people can strive to be music business professionals. We are now even seeing Music Business schools pop up to attend to the gap in professional ongoing music biz executive education. So, yes there is definitely a career path in music now, most importantly if money is not your main concern! Not to say, you can’t make decent money from being a music professional, but it takes time, patience, perseverance and resilience. So, do it because you love it and when it is your time, it will pay off.
As a record label owner, is music streaming taking business away from you and are the many Nigerian streaming outfits out there really making it when compared with their foreign counterparts like Spotify, Apple Music among others?
Read also: Nigeria’s streaming industry booms but data cost slows growth
I ran a music streaming service. It is hard work and expensive. Kudos to any local player that is still in that game. The service I ran shuttered simply because the company ran out of cash. We were VC backed but it was still an expensive game. I honestly believe that long term international streaming platforms will do better simply because they have access to longer term cheaper capital than any local player. Music streaming is such a low margin game that scale is an absolute necessity. Spotify and Apple are well capitalized global businesses. It is hard to beat that. They pose no threat to us, us as in Freeme, they are actually our collaborators, without streaming platforms we probably would not exist. So, to answer your question, no, streaming does not take business away from us, streaming has helped all labels globalise their business as they are no longer restricted to local physical markets.
Many industry experts said the entertainment industry was booming during the pandemic when other sectors were down, is that really true and what is the state of the industry today (post-covid)?
It is true. Everyone was stuck at home watching Youtube. We saw a marked increase in video views. Streaming growth was much less than video view growth. The same way Netflix benefited from stay at home movie watching, artistes benefited from people watching lots and lots of Youtube. Are we really post covid? I mean, we are definitely more “outside.” However, with the shift to remote working some companies have decided to adopt that moving forward. As long as people are home more they will definitely consume more video content. Audio streaming is definitely more of a commuter consumption event, so with reduced commuting, I feel audio streaming has not grown as much as video. Overall, we are definitely seeing natural streaming platform user growth as players expand geographically. Spotify officially came into Nigeria this year with targeted youth campaigns. Apple Music Africa has grown its team and is quite aggressive with promoting African music on its service. I feel we are in a good state. The services are growing. The artistes are growing and the labels/hybrid labels are becoming more ambitious.
Who are the artistes signed to your record label and what determines who to sign?
Our most recent marquee projects were The Cavemen, “ROOTS”, which has done over 30 million audio streams to date and Basketmouth’s “Yabasi”, which was his debut project and has done over 20 million streams to date. We distribute music for a wide range of artistes from Kizz Daniel to Wande Coal to Burna Boy and many others. We have an artiste we signed last year that we feel will be very big in the near future. His name is Ninety. We released his debut single “Touch and Follow” in March this year. The track has garnered over two million streams to date. We generally look for artistes who we feel have the right work ethic. Talent is one thing and there is a lot of talent in Nigeria. You really have to have a patient and yet determined work ethic. It is a real hustle for an artiste to blow up. So, a strong work ethic is paramount.
How has it been playing in the Lagos Angel investment space and what platforms have you invested in so far?
No artiste or music executive has made a fortune in music. I have done well but I also know there is a limit to what can be achieved. Jay-Z, Kanye and Rihanna count music as a small portion of their wealth. I promised myself I would branch out after about 10 years in the game. I am still very much in the music business. However, I have angel/equity interests across various sectors now. I have investments in the following companies at present – Shecluded LTD, a female focused loans and financial services company that operates from my space in Lekki, Coin Profile, a Crypto remittance platform and merchant exchange, Buycoins Africa, a crypto currency exchange that processed $141million in crypto transactions in 2020. Atide Studios, a creative marketing agency based in Lagos, and Spendify, a mobile expense tracker application. I am also probably one of the biggest, if not the biggest, NFT collectors in Nigeria. I got into NFTs in 2020 and have been able to acquire quite a large diverse collection of world class NFTs including Super Rare one of one art pieces, Crypto Punks, Bored Apes, Meebits, Art Blocks, Curated works and other highly innovative futuristic pieces.
You were also at Sony Music as GM of its West Africa region. How was the experience with Sony and how did it impact what you are doing in the music space today?
It was a great experience. I got to see the inner workings of a major music company, which was pretty insightful and still guides some of my strategic decision making to date. I was the pioneer GM, so I really had to lay a foundation. I was able to sign Wizkid, Davido as well as a huge first of its kind deal with MTN Nigeria, whilst I was GM. My favourite project however, was probably bringing Jidenna to Nigeria and taking him to Enugu where we found out we actually grew up on the same street in Independence Layout called Pioneer Avenue. The whole thing was kismet and I guess we are both pioneers in some way. Sony Music is a great company and I am sure there will be collaborational opportunities in future if the money is right. We are all part of a big ecosystem and we honestly all need each other in one shape or another.
You also run a foundation. What are the highlight projects so far?
Definitely, it is by giving back to widows in my mother’s village in Awka, Anambra State through the Thirsty Well Foundation. My grandmother was a widow, so life was not easy for her without a husband in the East back in the day. Times have changed but widows still face challenges as we are still such an orthodox society. Youth and women are my focus and I constantly strive to do more.
What is it like sitting on the Merlin Board?
It is very interesting. Merlin is viewed as the 4th major label, so it is pretty high profile, especially in the independent music sector. I am the first Nigerian to sit on the board. We represent a diverse set of music rights from across the world accounting for approximately 12% of the global music business. We have distributed over $2 billion to 900 label members since 2008. I learn a lot from the more experienced board members. It is actually the first international board I have sat on and I am actually the youngest CEO on the board.
How is technology impacting today’s entertainment business?
Positively! Technology has honestly changed everything. Freeme Digital Group is the name of my group of companies with Freeme Music being just one business within it. Digital is in the title because I believe so much in digital transformation and where it can take us as a nation. Technology has created a level of accessibility globally that did not exist for music companies in the past. We will continue to leverage on new technologies such as blockchain to continue to drive the business forward. I am excited about the future.
