AIRCO under fire from the independents

AIRCO was established in 2005 through funding from two large independent labels at the time, Coolspot and Bula Records. Later funding and support came from the Department of Arts and Culture (DAC). AIRCO became affiliated tothe Worldwide International Network (WIN). Many members believed that a single CMO should be established for the entire country.The reason for this is that the resultant duplication of effort comes at a cost to the record labels and their artists and that the possibility of fraud and double payments has increased. There is no transparency and no definitive database of rightsholders.

This lack of transparency has led to some of the independent labels being denied their royalties and have had to resort to litigation.

Airco were receiving at least R4.8 million rand per year by the SABC due to a 2011 agreement structured and brokered by current CEO at RiSA Nhlanhla Sibisi in his capacity then as an independent consultant. He earned a reduced commission of 8% on a monthly agreement with no fixed term of R400 000 for the licence of music videos.

Sibisi explained, “When the agreement was done in 2011, I was no longer working for SABC. When SABC became one of my clients, I disclosed to SABC in writing that AIRCO was one of my clients. I terminated the contract between Airco and my company effective 20 February 2015 and I joined RiSA on the 15th September 2015.”

“The money started to be paid to Airco. We received one payment in the course of four years, but previously we were being paid annually.” Harvey Roberts.

Independents take action against AIRCO

Even though Airco claim they have distributed 71% of all collections for the years 2010-2013, these payments are strongly disputed by a collection of the top independent record labels. In 2015, the biggest copyright holder of South African music, Gallo together with founding members of Airco including Cool Spot, Ghetto Ruff, Bula Records, David Gresham and Soul Candi are leading the fight to uncover these distributions. They initially consulted Jeff Boulton, Gallo legal council. The file was then handed over to Ross Munro and in 2016 media lawyer David Dison was mandated to resolve the matter.

They approached the SABC in an attempt to have the money paid into escrow or trust until the issues had been resolved and the proper flow of royalties to the proper rights holders had resumed. SABC payments on the contract were stopped in April 2017. “Airco still has to provide the SABC with specific documentation as required by Treasury Regulations necessary to continue payment in terms of the 2011 Agreement,” explained SABC spokesperson Kaizer Kganyago.

Dison made a submission to the Companies and Intellectual Property Commission (CIPC). The submission stated: “AIRCO is a mismanaged entity, that is failing to conduct its business in compliance with the Companies Act, lacks transparency and accountability, has failed to account to its members, failed to pay royalties due to its members, does not uphold its own constitution and policies and has generally mismanaged the funds that it holds in a fiduciary capacity on behalf of the copyright owners.”

In May 2017 the submission was received by Kadi Petje who is responsible for the regulation of the Collecting Societies. The submission was buried. Petje’s direct senior, Nomonde Maimela, Executive Manager at CIPC responded: “The Department of Arts and Culture may be better placed to assist. “

Mandla Maseko rose through the ranks of Airco to chairperson in June 2016 when Moses ‘Dodo’ Monamedi moved over to Chairman at Impra. Maseko’s video production company Black Eagle Media Group (BEMG) is allegedly a beneficiary of Airco’s funding from DAC. His produces music videos in the independent sector in what Roberts’ describes as “a serious conflict of interest to say the least.”

Maseko responded: “This is a narrative actuated by malice and for no purpose other than the desire to scandalize our organization and the noble work it’s doing to benefit its members.”

One of the pre-requisites of Airco membership is being a record company. The new Airco board includes Lucky Machethe, Tlaba Makoeba, Margaret Maserumule, Muriel Mokgathi, Leonard Movenda and Poobie Pillay. Roberts explained, “AIRCO does not have a credible membership. The near on 2000 record companies they claim to represent, there may be twenty or thirty that are legitimate. They have used that fictitious membership list to leverage funding from DAC and DTI and secure their contract with SABC. It will be interesting to know whether the members of AIRCO are also members of IMPRA. It that an automatic joining right?”

At the time, Roberts was confident that the time for change was ripe. He said, “The industry as a whole should be working together to address these issues and create proper transparent streams of reporting and accounting so this type of situation never occurs again.” WIN has suspended Airco’s membership and according to Dison, “is anxious to assist in finding a way forward. WIN is completely supportive of empowerment and transformation.”

Gallo met with WIN at the International Music Market (MIDEM) to address the crisis at Airco. According to Roberts, one solution would be the establishment of a “new bona fide organization under the auspices of WIN to represent the legitimate players in the independent sector”.
That was two years ago, Gallo didn't report back on their meeting at Midem, and the indies in South Africa are still isolated from the rest of the world. But there may be light at the end of the tunnel. AIRCO has agreed to look into concerns that some indies have over the distribution of video royalties.

Struan Douglas

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