South Africa was one of the early implementors of Needletime rights, but in 1964 these rights were withdrawn and were not re-established until 2002, after a battle that began in the early 1990s. It took more than another decade before rates were agreed with broadcasters and to this day record labels and musicians have been paid a small percentage of what is owed to them historically.
This deferment of payment has had a devastating impact on the music industry. Not only are artists and their families not being paid what they are due, but record labels and in particular independent labels have been denied revenue that would have been reinvested.
In the UK Neighbouring rights are collected be PPL and VPL and in the USA by AARC and Sound Exchange.In South Africa these rights are administered by four collection societies. SAMPRA and IMPRA collect license fees from radio stations for broadcast and from retailers, gyms etc for recorded music played in public. RAV and AIRCO collects mainly from TV stations for the use of music videos.
There is a collection society that collects for the majors and some independents and one that collects for independents in all cases.The vast majority of revenue they collect are paid to overseas rights holders – primarily the three multi-nationals: Universal, Sony and Warner. The South African offices of these companies would retain the money that was earned on their local content only and the rest would be collected abroad. In addition, more than 50% of South African music content is owned by foreign companies.
The accuracy of the distributions is also under dispute. The SABC playlists are duplicate across the databases of the two collection societies. The databases are non-compliant and don’t have ISRC codes. And,there are faulty algorhythms.
“There is a lot of money lying around which is unclaimed. This will disappear at some point quite soon, on market share with 90% to the multinationals. We must guard against that. SAMPRA is planning on distributing another R300-m this year. This doesn’t even include the SABC money. The SABC has made amounts available to SAMPRA and IMPRA to distribute. It is not clear at this point what the distribution rules are. The sooner people get on board and understand the better,” Clive Hardwick.
Impra were buoyed in 2016 by SABC CEO, Hlaudi Motsoeneng (ex CEO) who upped the radio quota system to 90% local music as part of what was termed his “rage against White Monopoly Capital.” In 2017 SABC made the first ever needle-time payment of R16.5 million, calculated at a 75% share of R22 million. It included licencing fees across eighteen radio stations for the financial year 2014/5 only. There are possibly another fifteen years of overdue payments still on offer. SAMPRA received no payment as they have been contesting the proposed arbitrary SABCs splits proposed by Motsoeneng of 70/30 in favour of Independent Music Performance Rights Association (IMPRA), an organ of the Association of Independent Record Companies (AIRCO) with no known members at the time.
SAMPRA claims a 90 – 95% market share. The difference between these organisations goes beyond the major-indie split. SAMPRA has managed to licence their repertoire far more broadly than IMPRA who rely upon the SABC for almost all of their income. SAMPRA collects a significant portion of their revenue from an impressive range of public performance licenses which IMPRA does not have.
It is the collection of these non-broadcast royalties which best illustrates the commercial drawbacks having two collection organisations. From a practical point of view, independent labels must decide on one or the other. Again, because of the lack of transparency, it is not possible to predict which one will give you the most profitable outcome but if you register with neither, you will not get paid at all.
A meeting with the SABC on Friday, 8th May 2020 made it very clear that the SAMPRA-SABC dispute will be referred back to arbitration. In the interim, the SABC will make an advance payment of a very minimal amount to assist the two CMOs in mitigating against the effects of the lockdown.
After arbitration, the SABC will release amounts for the periods 2015/16 to 2019/20. The outcome of the arbitration will also resolve the long-standing dispute on the payment of the 2014/15 licence fees. Thereafter the settlement of pre-2014 licence fees will be discussed.
Hopefully, the outcome of the arbitration will deal with the underlying transparency deficiencies. After all, if the CMOs repertoire databases are clean and accurate and they are made available as required by the collection society rules, there would be no copyright ownership disputes which would be difficult to resolve.; and if these databases are compared to clean and accurate playlists from the SABC then there would fewer payment errors and distribution practices which are much fairer. This is how it is now done is most territories around the world. There is no reason why Africa should lag so far behind.