Entertainment industry at large is generally conceived of as a luxury product industry and thus believed to be vulnerable to economic recession.
We Nigerians live in financially unstable times. The crisis in the Nigerian Economy seem to be worsening progressively since the crash in Oil prices from a high of about $115.09(Brent crude spot price) on June 19, 2014 to today’s opening spot price of $34.83 (Brent crude). This is despite a barrage of monetary and administrative policies introduced by the Central Bank to stabilize the exchange rate and restart economic growth.
Nigeria’s economy is in crisis. The naira has fallen over 50% in the last year alone. Oil revenues, the mainstay of Nigeria’s foreign earnings are at their lowest in the last two decades, and it is taking its toll on many industries, with the Nigerian entertainment industry being a part of it.
Entertainment industry at large is generally conceived of as a luxury product industry and thus believed to be vulnerable to economic recession. Being a luxury industry means that people can get by without engaging the players of the industry, or they can exist ‘comfortably’ and survive without consuming the products of this industry. When this happens, there’s supply of product initially, with little demand. When supply grossly exceeds demand, what follows is the reduction of prices to create competition, and with the law of natural selection, the stronger guys kill of the weaker guys and the market attempts to balance itself.
Let’s throw this model into the Nigerian entertainment industry. Although, there are no numbers to support or prove any of this model in the Nigerian entertainment industry which is not data driven, hence this cannot be scientifically verified. But we sampled information gotten from numerous musicians, DJ and event organisers, and they all have led to the scenario below.
With the fall in the circulation of cash, and the weakening of the Naira value against the dollar, people are reluctant to invest in entertainers and their services. The average Nigerian artistes makes over 70% of their revenue via performance fees alone, with the money gotten from show promoters and event organizers who bring in the acts, get corporate sponsorships and sell tickets, they are able to pay for shows. But with the economic difficulty, people are more likely to channel their limited funds to ‘surviving’, instead of buying ‘luxury’ event tickets. Who cares about a live performance by Orezi when they are yet to buy petrol for their cars? This reduced ticket sales will affect the cash flow within the industry, creating competition.
Here’s how competition works. Due to the limited funding, event organisers are more likely to book stars with a larger fan base, who have a more crowd-pulling power, than the acts with less. Wizkid, Davido, Psquare, 2face Idibia and a few more others are these stars. The less popular ones will either get left out, or will have to reduce their fees to get in on the show and make money. The competition deeply affects the ‘weaker’ artistes, while the big acts thrive.
Away from revenue, we look at investment. A huge percentage of acts do not generate enough revenue to fund their projects, pay for the expensive lifestyle and fulfill financial obligations. They therefore rely on an investor to channel funds into their career. With the financial situation not favoring the investor, there’s reduced funding in the career of an artiste, leading to a halt in production and promotion of content.
Although there are numerous exceptions to the rule, the above scenario details perfectly how Nigerian entertainers suffer from the economic instability. Many of the industry players have had to adapt, with more push and stimulation of other money-generating aspects of their craft. Many others have also reduced their performance fee rates, with some collecting as low as N300, 000 for a performance.
There’s currently a pervading hope that the situation would experience change, and the previous financial models and cash flow can be reinstated, and the entertainment world can go back to ‘normal’.