Recession hits Nollywood, music industry

Latest GDP figures for the three months ending September 2016 show that Nigeria’s movie industry, Nollywood and the music industry are not immune to the recession that has hit the country.

Economic activities in the motion picture, sound recording and music production business contracted by 3.69 percent in the three months ending September, while the arts and entertainment sector grew by 1.99 percent. Related hospitality business, accommodation and food services also declined by 4.88 percent, indicating that the whole sector is suffering from the downturn visiting the Nigerian economy.

  Ayeni Adekunle, founder and CEO, BlackHouseMedia, said, “This is not the best of times for the creative sector. The reason is simple; this is not the best of times for any sector at all.

“As you may be aware, the music industry is mostly supported by corporate Nigeria; telecommunications, financial services, brewing, among others. And most of the big spenders have had to cut budget in some ways, because of the current economic situation.

“All the telecommunication firms, for example, have had to reconsider their strategy for brand endorsements and events. Budgets have been cut, where not erased totally. The music industry does not control its own distribution and monetisation so when the corporate brands sneeze, most musicians and labels must catch a cold.

“It is the same for Nollywood and allied industries, although it is glaring that Nollywood is taking the distribution challenge head on and they appear able to access better funding and potential infrastructure, more than their counterparts in music, comedy, media, etc.” he added.

The situation is such that comedians and musicians are taking a cut in order to get jobs. “I believe any businessman will cut his fees when business is low. Most labels I am aware of have had to review fees and even adopt cost saving measures to survive this period. But it is a phase. The world is embracing the sounds of Nigeria and it is only a matter of time before things take shape. That however, is assuming we put round pegs in round holes. Assuming we put structures in place and actually build a sustainable industry,” he stated.

  “Every area is being affected. Unfortunately we may not be able to access any data to show where it pinches most. Part of the issues we have is that we do not gather nor use data. We cannot continue to do things haphazardly and expect to build an industry that will outperform oil and gas, telecoms and banking. It requires the kind of investment those in entertainment have yet to make.”

From N10 million annually, the four major telecommunication companies have reduced their artistes endorsement fees to merely N3-N4 million, and also reduced the number of their brand ambassadors and are cutting down on event sponsorships to only those already signed before the economic downturn set in. As well, cinema goers are beginning to look for cheaper entertainment, as recession keeps reducing their purchasing power everyday, while piracy is growing with cheap entertainment options.

Responding on behalf of Dare Art Alade, an ace musician, Segun Maximus, artiste manager, noted that the entertainment industry is not immune to recession and that the industry is facing hard times because multinationals who are major sponsors of big shows across the country are affected by recession. “Most multinationals are cutting cost to stay afloat in business. The costs are mainly those that do not impact their bottom-line, such areas as sponsorships and CSR, and entertainment fall into this category”, he explained.

He noted that due to recession, a number of big music shows, reality shows, TV and movie productions were called off because multinationals; the usual sponsors declined. Evaluating the revenue loss, Maximus noted that the artistes, production crews, logistics companies, hotels, security firms, event organizers and street hawkers have all lost money, which negatively impacts the contribution of the industry to gross domestic product (GDP) in the long run.

In the same vein, Sycamore Roots, a production and artiste management company, noted that artistes under their management are having a tough time, as most corporate organisations, especially telecom companies have cut down their endorsement value. “I was called to represent one of my artistes who a telecom company is offering N3 million for renewal of an endorsement deal that was worth N10 million about a year ago. I protested and the company said the option is to stop the endorsement. But I encouraged my artiste to sign because he was lucky to have been among those whose deals were renewed, though for far less the initial value”, Bamidele Oyekunle, content manager of the company said.

Mike Odion of Premier Records observed that in recent times, his company has recorded some music album release cancellations by musicians who were scared of the current economic reality.

“Ultimately, the fans are the major consumers of any entertainment product, but their purchasing power is down, they are prioritising their needs with entertainment being last on their list. So, the industry is facing challenges as a result of the economic downturn, it is not recession proof”, Odion explained.

Chuka Nwokeji, senior partner, CNL Legal, sponsors of the annual Lagos Music Festival, noted that the current economic reality in the country is affecting every sector, including the entertainment industry because entertainment   depends on people to thrive. But with the low purchasing power, Nwokeji said the appreciation and patronage of the industry is seriously affected because people now spend money on their primary needs.

Obinna Emelike & Mabel Dimma