Compiler error - cannot determine absolute directory name of`%prefix/lib'

[hostmaster <alpot mylinuxsite com>]

Hi, 

I encountered this error while compiling a program at 

gnome/gst-plugins/work/main.d/gst-plugins-0.6.3/ext/mikmod

What I did to get past this is to modify the Makefile in that directory
and change %prefix to ${prefix} in two locations, namely:

1) LIBMIKMOD_LIBS = -L/usr/lib -lmikmod -lpthread -ldl -L${prefix}/lib
-L/usr/lib -lm

2) MIKMOD_LIBS = -L/usr/lib -lmikmod -lpthread -ldl -L${prefix}/lib
-L/usr/lib -lm

What I wanted to know is if I did the right thing, and what is the
reason for the error.  

Machine:

Distribution:  RedHat 7.0, but not a vanilla version.  
Kernel: 2.4.20
mikmod: 3.1.6
gcc: 3.0.4
glibc: 2.2.4

Thanks.