SAMPRA financials under review

SAMPRA is a relatively new organisation, collecting approximately R300m per year and distributing 60-70%. SAMPRA are currently sitting on R554m undistributed funds.

The way SAMPRA works is they pull in 100% of the money. 50% is allocated to the publisher or the label. 40% of the other 50% goes to the featured artist, usually the lead singer. And the balance gets paid to the rest of the performers. If they don’t know the information how do they know who to pay?

The difficulty lies in the fact that SAMPRA are misleading their members. They are using a clause in the regulations that says they must pay as soon as possible but no later than three years. They are rolling those royalties for three years and are pretending in their presentations that they are distributing everything that they are receiving.

And, this is why organisations such as PAIN are around to ask these questions. SAMPRA indicated that of the R554M unpaid, the money belongs to both performers and rightsholders on a 50/50 basis. However if the reason for non-payment is lack of information – it is likely that this is incorrect.

The three major record labels Sony, Universal and Warner would not allow the fact that SAMPRA does not know which artists to pay to affect their payments. The major labels are taking their money. They control the board of SAMPRA.

Therefore most of that R554m belongs to performers. A small amount belongs to independent record labels that they are unable to identify.

SAMPRA recently published their annual report and we asked Pfanani Lishiva the CEO some questions and here they are with his answers:

SAMPRA has distributed R600m over the past few years. Could you explain, in simple terms, how this money is distributed?

SAMPRA royalties are split 50/50 between the record company that owns the sound recording and the performers featured in the track. Royalties are distributed directly to right holders, in the case of South African right holders, or their representative CMOs in the case of international right holders.

What percentage of this money is paid to the three major record labels, (Sony Warners and Universal) and what percentage is paid to the 5000 independent record labels that are your members?

Payments to right holders are private and confidential.

What percentage of the performers share is paid to South African artists and how much is paid to international artists?

Percentages vary from one distribution to another and they depend on usage by licensed music users.

Does SAMPRA pay the international artists directly, or is this money paid to other collection societies, or is it paid to the performers record labels?

Our annual reports since 2017 clearly indicate that we have bilateral agreements with neighbouring rights around the world and that royalties due to international performers are paid to their respective CMOs. There are no performer royalties paid to record companies.

You received only about R100K from overseas collection societies, how much did you pay these collecting societies in return? Is this money due to performers or record labels or both.

The money is for performers whose tracks were performed in the relevant territories.

The largest number on your balance sheet is cash at R554M. Why has this money not been distributed?

The largest number on your balance sheet is cash at R554M. Why has this money not been distributed? Of this R554m is 50% due to performers and 50% due to record companies? This money has been accumulating for some time in short term deposits, why not use longer term investments that could offer a higher return.

Every little cent that is declared as distributable amount is split 50/50 between the record company that owns the sound recording and the performer(s) featured in the tracks. As indicated to you before, SAMPRA had a backlog of distributions for the period 2014 to 2018. The backlog was cleared in 2019. Long-term investments have been made.

According to your database you have 25000 members. Are these all FICA compliant? If not how are you sure that you are in fact paying the correct party?

The FICA process is applied at the time of application for membership and when right holders change their banking details.

Many of your tracks listed on your repertoire database do not have ISRC codes listed. How are you able to ensure that the correct usage is reported and allocated to the correct rightsowners?

ISRCs are one of the many identifiers CMOs use to ensure accuracy with regards to music usage and payment. You have transferred R45M into a development fund which was approved in 2019. Who apart from the CIPC approved this, ie was it a board or a general members decision?

This was done in terms of Regulation 8(5)(c) of the Regulations on the Establishment of Collecting Societies in the Music Industry, 2006, which states that ‘a collecting society may provide in its distribution plan that, with the approval of the highest executive organ of the society, a portion of the1 proceeds may be set aside for the promotion of the creative arts, and culture and for welfare purposes (including pension benefits) of performing artists. Such portion shalt not exceed 10% ofthe amount to be distributed in any one year’. Right holders have also, in AGMs, been also requesting that this should be done.

Struan Douglas

Struan Douglas is a freelance writer and author based in South Africa.