Pay back the royalties!

It has widely been reported in recent months that the SABC collectively owes approximately R 250 million in unpaid royalties to musicians and other artists.

If you are an active user of any of the various popular social media platforms, you may have encountered posts by David Scott, an artist and founder of the electronic act known as ‘The Kiffness’, emanating from Cape Town. Apart from producing music, David is a master at creating amusing satirical videos often linked to current affairs in South Africa. If you review David’s social media pages, however, you will notice that there is one topic that has no humour attached to it, namely, royalty payments to musicians and other artists.

When one hears the term royalties, the general understanding is that it refers to a sum of money owed to an individual for the commercial exploitation of a type of work that they have created. While this understanding is correct, what follows is a brief explanation of the law pertaining to royalty payments.

Firstly, it is noteworthy that royalties emanate from, inter alia, the laws regulating Copyright. In South Africa, the Copyright Act 98 of 1978, which is currently being amended (controversially), provides certain requirements that have to be met for copyright to vest in a work. They are:

  • The work must be original meaning it has not been copied;
  • It must be reduced to material form; and
  • Authored by a qualified person. In the case of a natural person the word ‘qualified’ refers to a South African citizen or someone who is domiciled or resident in South Africa.

Once these requirements are met, the general rule is that the author of the work becomes the owner of the copyright. In the case of musical works, the author is the person who first makes or creates the work. In the case of sound recordings (which embody musical works), the author is considered to be the person who arranges for the recording to be made. Therefore, there is no formal registration procedure that needs to be followed, as is the case with other forms of Intellectual Property such as patents, designs and trade marks.

The owner of the copyright in both musical works and sound recordings have the exclusive rights to authorise the broadcasting thereof, which is known as the “needletime right”. It is illegal to broadcast a musical work or a sound recording without the copyright owner’s permission, or without payment of a royalty to the owner of the copyright in the relevant work. The royalty amount payable should be determined by agreement between the user of the musical work or the sound recording, and the owner of the copyright or their particular collecting society. There are a number of collecting societies in South Africa such as the South African Music Rights Organisation (SAMRO) and the South African Music Performance Rights Association (SAMPRA) to name a few.

In the event that there is no agreement as to the amount of royalties payable, either party has the right to approach the Copyright Tribunal for a determination of the applicable royalty rate. 

In the case of National Association of Broadcasters v South African Music performance Rights Association [2014] ZASCA 10 the Supreme Court of Appeal found that in context of radio broadcasting, royalties should be calculated taking the broadcasters revenue into account. This case dealt with the rate of royalties payable by radio stations to the South African Music Performance Rights Association (SAMPRA) for playing sound recordings belonging to members of SAMPRA. The court provided the following formula as a means to calculate royalties: AB X C X 3100. The description of each of the variables in the formula is as follows:

  • A = the amount of time used by a radio station in any period to broadcast the sound recordings administered by SAMPRA;
  • B = the total amount of time used by a radio station in that period to broadcast editorial content (all content except for advertisements); and
  • C = a radio station’s net broadcasting revenue based on what is certified by its accountants and confirmed in its financial statements.

The legal framework surrounding royalty payments is sound. However, to a large extent, musicians still find themselves in a position where they are underpaid and undervalued. The work David has done in alerting South Africans to the injustice that artists experience is admirable, to say the least. As a result of his efforts, the SABC has, albeit slowly, commenced the process of paying outstanding royalties to artists. This small victory may pave the way for the injustice being corrected entirely in the near future.