For the past couple of weeks, entertainment lawyers have watched in frustration as everybody and their mother dissected Skales’ and Runtown’s recording contracts like we knew what the *expletive* we were talking about.

Recording contracts are incredibly complex agreements, I know, I’ve been (un)fortunate enough to have entered into one. It’s a lawyer’s job to translate the legalese for us laymen, that’s the reason they spent all that time and money in law school. Perhaps that’s the reason why the details of such contracts are supposed to remain confidential but leaks happen. When a private agreement enters the public domain, we are all entitled to our personal opinions about it. On FilterFree, we just try to make ours’ informed opinions.

When it was announced that Afro-pop singer Ayo Jay had put pen to paper on a reported 7-figure record deal at RCA/Sony, we had our questions immediately –

  • What’s in that $1m + contract?
  • How long is the contract for?
  • Why Ayo Jay?
  • Where will his music be pushed?

The Afro-pop singer has done a couple of interviews since then and he’s gone a long way to answer some of those questions –

To quote Ayo –

We signed a singles deal for “Your number” and it triggers into an album deal – four albums. We’re making four albums, however long it takes to make four albums, let’s say 8 years. So we’re going to be with them for a long while, it’s a long relationship.

They’re going to take care of everything from the marketing, they’re going to provide us wit recording funds, they’ve giving us an advance. Pretty much, they’re saying go and make dope music and we’ll take it around the world for you. (Source)

5

8 years? You mean he’ll still be signed to RCA after PMB has left office, if PMB does 2 terms? The way things are looking now, that second term doesn’t look as straightforward as it did a year ago, but I digress. Before you go on to start shouting new slave alert, remember 3 things –

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First, Ayo Jay’s entire deal is said to be worth a pretty penny, so the company is putting itself in the best position to recoup by giving the unknown singer a long time to break into the market. Ayo says he was given an advance, I tried to break down what that meant as best as I could in this article. However, one more thing I want to add is the concept of cross-collateralization.

In a multiple-album deal, Ayo’s advances could be broken down per album. Let’s hypothesize again and say Ayo is given $50,000 to record album 1 but album 1 only makes the company $20,000 back in royalties. When it comes time for album 2, the label releases another $50,000 and album 2 makes $50,000 this time around. Nirvana! Yes, they’ve broken even but no, not really – Ayo Jay still has a $30,000 gbese to clear from album 1 and two more albums to do so. But remember that this is a loan, so there are all sorts of interest rates, clauses, thresholds and levers in between. Also remember that this is money that Ayo Jay would have otherwise had no access to to further his career.

Secondly, Ayo says that RCA isn’t dipping into his performance revenues, but he also says he’s already written a hook for a song for one of Sony’s most-prized acts Pitbull. I suspect that in addition to his recording contract, Ayo could be signed to a publishing deal with Sony’s publishing division that would allow the company exploit his future catalog as, not just a singer, but as a songwriter for himself and others. So, yes they’ve relinquished performance revenues but there could be clauses that allow Sony to move their fork and plate from the music sales table to the publishing table and benefit from their investment in either one from either one. This is a possibility.

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Just imagine that song becomes a single on Pitbull’s new album Climate Change and Ayo is given writing credit and it ends up going gold or platinum like most of the rapper’s singles do. Ayo could continue to earn a steady paycheck off of that one song for the rest of his life! What is 8 years? Now imagine Ayo Jay is able to get multiple placements of this kind within an 8 year span – guess who’ll be smiling all the way from Wells Fargo to GTBank? I’ll delve into this publishing conversation in depth later because companies such as 5 Music are doing important work on this in Nigeria and I want to help shine the light.

Lastly, if you want to take a pessimistic view, you can always see a long term contract with any employer and call it “slavery” or you could take an optimistic view and see it as a strong show of faith from an investor. Globally and locally, physical album sales has nosedived. Globally since 2000, locally since the proliferation of smartphones and the emergence of large, inexpensive digital distribution networks. Streaming, digital albums and single sales have been up but nowhere near high enough to make up for the shortfall.

RIAA Year-End Industry Shipment and Revenue Statistics (2000-2014)

RIAA’s Year-End Industry Shipment and Revenue Statistics for the USA (2000-2014)

It’s either a brave man or a man who believes that his investment will be worth it in the end that will see this trend and put their money behind 1 album in 2016, never mind 4 albums till 2024. RCA sees something special in Ayo Jay, that isn’t immediately apparent, but the label has a reputation for nurturing talent through long term relationships, so once again, there’s no need to worry. I just hope they show that their world famous patience with the rising singer as well.

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*This is part of our Ojoro Counsel series – the series features a bunch of legal illiterates dissecting music law and debating intellectual property in a way the common man will understand.*