The country’s nearly 30 commercial radio stations have been flouting the law since 2002 – refusing to pay royalty fees, amounting to hundreds of millions of rands, because they do not agree with needletime laws that were reintroduced into legislation after an absence of 37 years. Sharlene Sharim, from The Media magazine, investigates.
The battle lines have been drawn. Collecting societies, responsible for implementing and administering needletime (paying royalties for playing recorded music), find themselves in one corner, with the National Association of Broadcasters (NAB), representing the vast majority of commercial radio stations, in the other.
Collecting societies, the Southern African Music Rights Organisation (SAMRO) and the South African Music Performance Rights Association (SAMPRA), insist that commercial broadcasters do the legal thing and pay them a percentage of their advertising revenue for the use of sound recordings.
SAMPRA suggests that commercial stations who, for example, play music 75% of the time, should hand over 7.5% of their advertising revenue. The broadcasters are contesting this fee, saying it is too expensive. They have only recently indicated their proposed tariff, but SAMPRA’s chief executive officer, David du Plessis, says their suggestions “cannot be realistically calculated or enforced”.
While the matter is in dispute, broadcasters are legally supposed to pay the proposed licence fee into a holding account. However, this isn’t happening, because they say they fear “it will prejudice their position if they do”, according to Du Plessis.
Although legally the stations are in the wrong, they are already paying fortunes to the collecting agencies for using musical compositions on air. In fact, 3.25% of their gross income is already being paid to composers and lyricists. So this battle is about the stations paying more so that the performing artists and record companies also get their cut.
Needletime was removed from South African copyright legislation in 1965, and many theories exist as to why. One theory claims that the “apartheid government did not want money to go to the Beatles in the UK”, says Pfanani Lishivha, executive general manager of the Performers’ Organisation of South Africa (POSA) Trust. Throughout the years, though, composers and lyricists were still receiving remuneration for the use of their musical works.
Former Minister of Arts, Culture, Science and Technology, Dr Ben Ngubane, appointed a Music Industry Task Team (MITT), comprising artists and industry representatives, to investigate the problems facing the music industry. It was the team’s recommendation that led to the royalty being reintroduced on June 26, 2002.
This, according to SAMPRA, is when the broadcasters’ obligation to pay began. Du Plessis is adamant that broadcasters must backdate payments to 2002. “We agree it can only be payable once the amount is quantified,” he says. The NAB, however, has a totally different opinion on this matter. According to Du Plessis, the NAB insists that payment only becomes due once the tariff is agreed. The difference amounts to hundreds of millions of rands. “I would not ever want to agree if I knew that my liability would only start at the point of agreement,” says du Plessis.
In an attempt to force matters to a head, SAMPRA referred the matter to the Copyright Tribunal in December 2008. The Tribunal hasn’t been in session for nearly 30 years.
Both parties had a meeting before the commissioner in 2009 to discuss preliminary procedural issues, but the NAB questioned the commissioner’s ability to make certain rulings and referred the matter to the High Court. It went all the way to the Supreme Court of Appeal in Bloemfontein, before being rejected in May last year. Both parties are now again before the Copyright Tribunal, finalising procedural issues, and the hearing is said to begin this year.
“I think that we’re optimistic that during the course of the year it could be finalised, unless the party takes whatever ruling has been made on appeal,” says du Plessis.
Michelle Mynhardt, financial executive at United Stations, says: “From the media industry, we acknowledge that the artists should be compensated. That has never been in question.” She refused to comment further, saying she couldn’t because the matter was before the Tribunal. The NAB’s executive director, Johann Koster, also refused to discuss the matter, saying he was “not in a position to discuss anything related to this matter at the moment”. And Primedia Broadcasting and Jacaranda 94.2 referred The Media to the NAB.
However, despite the broadcasters not being willing to discuss this, what is clear is their expenses are huge and they can ill-afford to add to this. They also have to factor in ICASA’s annual licence fee, which amounts to 1.5% of their gross profits.
In light of these expenses, could it be that perhaps music rights organisations are squeezing the margins of radio media owners? “Not if you look at the profit margins declared by commercial broadcasters. Not even close,” says Du Plessis.
This story was originally published in The Media magazine.