Editorial

Skales’s contract termination clause really worth N5 Billion (£10 million)?

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A recording contract might seem like the Holy Grail, but record labels are not charity concerns and their contracts are not set up with your interests in mind.

When was signed to Baseline Music in 2014, there was an air of triumph emanating from his camp. The reasons were not far to see. The rapper had just navigated one of the most difficult time of his life; he had had to make a comeback after his release by Banky W-led Empire Mates Entertainment (EME).

had reached the doldrums of his existence. Armed with no plan, and no where to go, he was housed by Timaya, who took him in, and poured belief and strength into him, while he worked on his music. The blessing came like a miracle. His first post-EME single, ‘Shake Body’ became a worldwide hit, and launched the singer into a new phase of his career. The feeling was ecstatic. Nigerians who had sobbed with him joined in the praise, Banky W was called out in some circles for dropping and the celebrations went on for weeks on end.

But while was growing in popularity with the ‘Shake body’ single, behind the scenes, the money was tight. In the music industry, popularity does not immediately translate into monetary gain, and was cash-strapped, needing to release his music video for the song. A budget-video was shot by Stanz Visuals, and was forced to live with it.

On the business front, the rapper had created his imprint, OHK Entertainment, with all the branding possible. He had signed up budding producer, Dreybeatz, and the promotional photos flowed through with abandon. The entire project was under the stern eye of his manager, Osagie Osarenkhoe, who had earlier managed Wizkid, and now worked with Skales.

But then came Baseline. The label managed by industry veterans, Howie T and Dipo Abdul, launched into the market, and signed Saeon as her first artiste. Skales was up next, as he put pen to paper on a deal which was reportedly worth nearly N200 million. The rapper was unveiled by the label on July 22, 2014, at a press conference held at The Wheatbaker Hotel, Ikoyi, Lagos. That deal came with perks which included a brand new car, a house, cash advance, and upkeep allowance, all summing up to about N200m. Skales was also given the freedom to run his label independently. All of these happened in July, a mere 5 months after he was cut loose by EME.

“I cannot give you any specific figure because we don’t want other artistes to start running to us”, Howie T said at the time, “However what I can tell you is that the deal is worth hundreds of millions. It includes his new car, new house and total lifestyle package. We are changing his whole lifestyle. We don’t want to create any form of distraction by revealing any figures, but trust me it’s a huge deal, it’s about the biggest deal in the industry at the moment”.

Skales was ecstatic, revealing to NET at that time, his happiness about the deal. ‘It’s great signing with Baseline, I can definitely get to work around a bigger budget and make sure all of my projects are top notch. OHK will however run independently. I’ve got my team and we all want the same thing – success‘, He said.

Two years and an album later, details of that deal have begun to hit the internet. On April Fool’s day, 2016, I had a brief conversation with Skales over the deal. He shared some insights.

“The reason why I even signed with Baseline was because it was a bigger record label, and they were paying money. They wanted me to still be in charge of my career. That’s the deal I had with them, if not I wouldn’t have signed,” Skales reveals.

“It’s been normal, every normal business issues. There’s never gonna be smooth sailing for every business, there’s always gonna be constructive arguments, back and forth. But we are good, the label is still running, I’m doing my thing and living my own part of the contract until when it’s time.”

But now, there’s trouble in the house, Skales and Osagie have been accused of fraud, and remanded in a Police Station. The details of the deal have shown that Skales will have to relinquish 70% of his profit earned from everything.

The contract read: “Under the terms of the Contract, Skales assigned to the company all copyright and other rights or interests throughout the world in all sound recordings made by Skales prior to or during the term of the Contract. The Contract further provided that the Company shall be entitled to 70% (seventy percent) of the gross receipts received by Skales from performance and tours and brand endorsements during the term of the Contract.”

The most shocking part of the deal, although not confirmed from official sources, stated that the termination of the deal is worth £10 million. A snapshot of the clause reads: “The artiste many terminate this Agreement prior to the expiration of the Contract Period by paying the Company the sum of £10,000,000 (ten million pound sterling).”

This has cause an outcry on social media, with many weighing in on the deal. The general cause for concern is the notion that the termination fee is too expensive, and outrageously unreasonable. But what they don’t know is this:

A recording contract might seem like the Holy Grail, but record labels are not charity concerns and their contracts are not set up with your interests in mind. A record label recognized his talent and offered him what seems like the deal of a lifetime. It is left for him to be smart about the affair, take his time to understand what he is signing so his dreams don’t turn into a nightmare.

The main argument about Skales’ situation is that Baseline Music abandoned the singer to fend for himself. The most popular check and balance against this is that he should have gotten a release commitment. Without a release commitment from the record label, there will be no guarantees that the label will actually do the work finance his projects. A typical release commitment is a promise from the record label that it will release at least one album during your initial contract term. If you record the necessary tracks for a record and the label fails to release the record, you should then be allowed to walk away from the contract.

In addition, you should think about negotiating a minimum marketing spend as a part of your release commitment. This gives the record label some “skin in the game” when working with you, forcing them to actually spend money to market your creativity, making your hard work pay off.

Sources I have spoken to, have failed to confirm the existence of such clauses, to protect against stagnancy.

Right now, with silence from both camps, everything is up in the air and a resolution is in the works. Skales and Baseline will have work to do to get him out of the contract, or get an amendment that helps both parties stay accountable to each other.

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