Copyright Amendment Bill; Performers%u2019 Protections Amendment Bill: hearings

Meeting report

TRADE AND INDUSTRY PORTFOLIOCOMMITTEE
9 October 2001

Dr R H Davies

Documents Handed Out:
Copyright Amendment Bill [B73– 2001]
Performers’ Protections Amendment Bill [B74–2001]
Submission by Southern African Music Rights Organisation, on the Copyright Amendment Bill
Submission by National Association of Broadcasters on the Copyright Amendment Bill and the Performers Protection Amendment Bill
Presentation by National Association of Broadcaster

SUMMARY
The amendments amount to the introduction of what is popularly termed ‘needletime’. Needletime refers to the payment of a royalty for the broadcast of a sound recording to a performer and the owner of copyright in a sound recording. The majority of the presenters mitigated in favour of the reintroduction of needletime. The major arguments for the reintroduction were that South African artists had only one form of revenue, that being records sales. Those mitigating against were those who would have to bear the costs of the amendment. The National Association of Broadcasters argued that the broadcasting industry would be unable to withstand the impact of needletime. Those arguing against submitted that needletime would not be able to remedy the problems and that there were instead other solutions that would provide for better aid to artists that would benefit a wider range of artists.

MINUTES
South African Music Rights Organisation (SAMRO)
SAMRO said they would support the claim by producers of and performers on sound recordings for needle time. They however stressed that they could not do this at the expense of their own livelihood. SAMRO also proposed that the amendments should ensure that a new right should be budgeted for separately and not at the expense of the value of existing rights. They submitted that there were more effective ways to deal with the problem.

Discussion
Dr Davies asked whether the legislation as it stood provided for regulations relating to the collection of royalties.
Prof Roosenschoon told the Committee that there were presently regulations which governed the collection of royalties but South Africa was comparatively under regulated.

Dr J Benjamin (ANC) asked how SAMRO divided the money it collected and how it was determined how much each respective artist would receive.
Prof Roosenschoon explained that in the past SAMRO used to process data on paper. Radio stations used to have forms on which they filled in the names and artists of the music that was played. These forms were then processed by SAMRO through a painstaking process. However today this was all automated and some of the systems are quite sophisticated. The determination of what each radio station would pay was determined on a sampling basis. The money collected is then divided amongst SAMRO’s members in terms of a set of rules of distribution which have been ratified by all the members

Ms B M Ntuli (ANC) noted that there were several players in the music industry. At present none of them were benefiting. She asked what could be done to remedy the situation and what could be done to level the playing field.
Prof Roosenschoon said it was important to remember that this right existed in the past. Bringing it back would indeed balance the playing field to an extent. However the concern here was to what degree the reintroduced right would be permitted to impinge on the rights of others.

Mr N M Duma (ANC) reasoned that while it took technical skill to be a composer, being a performer did not require such skill, in that you could be born a natural performer. In light of this he asked whether it was hard for composers from disadvantaged backgrounds to become recognised and recorded composers.
Prof Roosenschoon indicated that in this area SAMRO had made substantial investments in South Africa’s musical future. They had conducted numerous grassroots projects and sponsored many community music schools. Through this practice SAMRO had discovered that the important factor was not technical skills but whether or not the individual was composer or performance literate. This was the important factor rather that background and technical skill.

National Association of Broadcasters (NAB)
The presentation by NAB outlined the direct impact that the imposition of needle time would have upon the broadcasting industry. NAB focussed on the problems with needle time and focussed on the fact that there was a solution to the problem. They proposed that there were other ways in which to address the plight of the musician. Specifically, a workable solution that would help where needle time would, in their opinion, not.

Discussion
Dr Davies asked whether it was true that in terms of the needle time legislation, American artists would be able to claim their needle time proceeds here in South Africa. But because America does not provide for needle time, South African artists would not be able to claim needle time in the States.
Mr Peter Grealy, legal counsel for the NAB, said that if American artists were able to claim needle time in South Africa then there would be a net outflow of money. This would be the case unless reciprocity was a possibility.

Dr Davies asked if the NAB could indicate how much radio stations were presently paying for royalties and by how much this would increase if needle time were introduced.
Ms Laura Kantor said that at present radio stations were collectively paying in excess of R90 million in royalties. She added that it would not be easy to calculate what the figure would be after the imposition of needle time.

Ms B M Ntuli (ANC) asked whether it would not benefit South African musicians if the Government and industry engaged in a campaign to get South Africans to buy South African music. She also asked why radio stations were only playing 20% local music as she felt that the minimum was far too low.
Mr R Abrahams said that there was a possibility that the local content minimum would increase in the near future. However, the problem with playing higher quantities of local music was that the quantity of music that would be needed did not exist. ICASA had approached a radio station the previous week because that radio station had failed to meet the quota. In their defence that radio station submitted that there was not enough music for it to play and to meet its quota it would have to repeatedly play the same music. This repetition of music would result in the immediate reduction in listenership and would culminate in the failure of the radio station. On the promotion of South African music the NAB said it would do anything necessary to bring about a South African music week.

Dr J Benjamin (ANC) asked how the fund suggested by NAB would benefit artists and how the money would be divided. Mr Abrahams submitted that the NAB was not trying to dictate the way in which the collecting fund should be established or how the money it collected be distributed. What the NAB was trying to do however, was to suggest an alternative way of addressing the issue. A way that would see consultation between all the players concerned and would avoid the polarisation of the issue that has taken place.

Ms Ntuli told the NAB that when going overseas one seldom heard South African music on the radios of foreigners. However, when at home we constantly hear foreign music on our radios. She asked what was being done to help performers, to give them the capacity to make a living through music. How are artists supposed to keep making music if they do not see any benefits from making the music?

Ms Kantor told the Committee that it was indeed in the interest of radio stations to play local music. She added that some radio stations easily met their quota with some radio stations playing up to 60% local music. Others however struggled to make even the 20% benchmark. The reason for this was that some radio stations were not being supplied enough local music. In some genres, radio stations struggled to make the minimum quota because they just did not have enough music to play. This was a problem because when radios were granted licenses they were granted licenses to broadcast in a specific format or genre. A radio station could then play only 15% out of its genre. That is to say that 15% of the music that the station plays can come from outside the genre within which it was given its license.
Mr Abrahams added that up to 40% of local music played on radio was played by people who had not been recorded. Only after playing their music on radio do they get discovered and sign with a record company. There is a broader picture that needs close consideration. He also mentioned that in some genres radio stations played in excess of 60% local content whereas with other radio stations, less than 1% of the music they were being supplied with was of South African origin.

Recording Industry of South Africa (RISA)
RISA was in favor of the introduction of needletime as it would provide much needed revenue where there was presently an unjustifiable lack thereof.

Dr E A Conroy (NNP/NCOP) asked whether he was to understand that American artists would not get needle time proceeds from music played in South Africa.
Dr Davies also asked this question, saying that he was confused because he had heard earlier that American artists would be able to claim such money.
Mr K Luster submitted with respect that Mr Grealy who had spoken for the NAB was incorrect. Mr Luster told the Committee that American artists would not be able to collect such money here. This was because there was no international treaty that required needle time. Instead there were two treaties saying that needle time could be provided for in the member country as wanted. Once a member country chooses to institute needle time, it could do in whatever manner it felt like. This would include the principle of reciprocity. Reciprocity could be provided for by member countries if they wanted to. This was the key issue.

Mr Luster explained that if any country decided to institute neighboring rights then it would negotiate with each other country on an individual basis. The nature and content of the reciprocal agreements between South Africa and other countries will therefore all be different. In none of these instances will another jurisdiction be able to impose any needle time agreements on South Africa. Mr Luster then stated categorically that no money would flow to American artists, instead money that would be payable to these artists in terms of needle time is collected and then placed in a fund. The money in this fund is then ploughed back into the local music industry to foster its growth.

Mr D Lockey (ANC) asked if he was correct in understanding that money payable to American artists, and any other artist from a country not party to a reciprocal agreement with South Africa, would be collected and then used to advance the South African music industry. Mr Luster nodded saying that this was necessary because if it was not done then radio stations would simply play music for which they knew they would not have to pay needle time.

Mr Conroy felt that this practice was tantamount to stealing. He asked how it was possible that we could just appropriate this money unilaterally, he asked where the authority to do this came from. Mr Luster explained that this was a standard practice all over the world. In doing so South Africa was not infringing or breaking any international law.

Mr Lockey recalled a comment by NAB that 89% of needle time revenue would be going overseas. If this figure was compared with the fact that South Africa makes less than one percent of the worlds music, was implementing needle time really worth it.
Mr Luster submitted with respect that the NAB’s figures were wrong. By their own estimations this was completely wrong. According to Mr Luster 30% of the music played in South Africa was locally made. This would mean that 70% would be of foreign origin. And estimated half of this would be from the United States. The conclusion is that 30% of needle time revenue goes directly into the distribution system to be distributed amongst artists while 35% goes into the fund made up of the US based artists. This money is to be distributed for the advancement of South African music. The other 35% would be made up of needle time revenue that would be payable to countries with which South Africa has a reciprocal agreement. The outflow of this 35% would be more than compensated for by the money that would be flowing in from all those countries. Based on these estimations Mr Luster said he was positive that more money would come in than would go out.

Mr Lockey asked how this could be in light of the fact that South Africa produced less than one percent of the world’s music. Mr Luster explained that this percentage was skewed because it was based on value and not quantity. The obvious reason for the skewing would be the poor exchange rate. Another reason however was the fact that South Africa was a small country with a market of only 40 million people. However, when looking at the globe there was a market consisting of billions of people. Mr Luster said that it was not an estimation but a verifiable fact that for every one domestic play of a South African band like the Soweto String Quartet, there was a thousand plays in the rest of the world.

Dr Benjamin then asked who they felt should bear the cost of needle time, was it the record company, the consumer or the broadcasters?
Mr Sedibe, from BMI records, said that broadcasters should bear this cost. This was because radio stations had created a business model based on content and that content was music.

Melody Music
Mr Kgomosto More: owner and founder, Melody Music, has recorded 25 albums since its inception. Only a few of these albums had sold well and many of them had failed even to break even. He attributed this misfortune to a lack of resources to market the product.

He told the Committee that independent record companies relied on sales to keep afloat with 90% of their revenue coming from the sale of cassettes. This needed to be viewed keeping in mind that the price of cassettes had not been increased in many years. The result of all these factors means that independent record companies are under immense pressure to just to keep afloat. In Mr More’s opinion needle time would provide a much needed source of income. Mr More stressed that presently independent record companies had only one source of income and that was record sales. Needle time would then provide an additional, welcome source of income.

Mr More made a point, illustrating it through analogy. He reminded the Committee that water was free and that anybody could get it at no cost provided they could draw it from the river themselves or catch it as it fell from the heavens. However, once another had exerted effort in laying pipes to your home so that you could get it from your tap, you then have to pay for it. It much the same way once a musician had made an effort and expended his own energy in creating a piece of music, he was entitled to remuneration for the use or enjoyment of his works by others, especially when they used it in generating money for themselves. Mr More submitted that needle time needed to be viewed in this vein.

Mr More then made the point that independent recording companies were owned by previously disadvantaged members of society. Despite their apparent good fortune, the industry is still dominated and controlled by the big record companies who subsidize the marketing of local music with the revenue the make through their foreign repertoire. Mr More submitted that the money derived from the needle time right would make available valuable resources that will enable the more effective marketing of local music by independent recording companies in South Africa.

Mr S M Rasmeni (ANC) told Mr More that there were those who felt the consultation process was not good enough and that there needed to be a lot more consultation. Mr More reminded that the present debate had been on the table for quite some time and if those who objected had concerns then they should have raised them before now.

Mr N M Duma (ANC) asked Mr More if growth of the local recording industry, and the local music industry as a whole, would be possible without needle time. Mr More said the industry had experienced very slow growth in the past, but added that needle time would allow for some additional resources, thereby alleviating some of the pressure felt by the industry.

Joyous Celebration
Ms Mngoma and Mr Hlongwane, both artists, came before the Committee not as representatives of Joyous Celebration but as representatives of all performers. Mr Hlongwane, a gospel singer, said that they supported the Bill as it would bring much needed income to performers and artists.

Mr Hlongwane told the Committee that in South Africa a performer’s only source of income was record sales. In South Africa the reality of the situation is that not much money gets generated in this way. In addition to this, when a record company has a number of artists, only a handful ‘make it’ in terms of record sales. Mr Hlongwane said he had spoken to an artist who told him that she had seen her music video on the television all the time, that she heard her music being played on the radio all the time, yet she made no money. The solution to this problem would be to pass the Bill because the position it would create would result in radio-play being a testimony to popularity and popularity will translate into an income for the artist.
Mr Hlongwane then mentioned the problem of piracy, a practice that was tantamount to theft. The problem of piracy was taking hard-earned money right out of the pockets of performers.

Mr Hlongwane then said that besides records sales there was also the live performance which offered another potential source of income for the performer. But the money offered for a performance was not nearly enough. The artist has to pay a number of members in his band, and the six thousand rand on offer is not nearly enough for the eight people in the band. This price is non-negotiable most of the time because if one performer did not accept then there was likely to be another, even more hard up for cash, that would accept. In this way artists are forced to decide between accepting an unreasonable offer or starving.

Another problem was illustrated by Mr Hlongwane. He said that often an artists music is not that popular when it is released. However, it enjoys meager radio-play and even more scant record sales. However, a number of years down the line the record is played and becomes very popular. At this stage the record is no longer available in the record stores. Either way however, the artist receives no compensation or remuneration for the use of his works.

Ms Mngoma then made the point that a lot of radio-play could also negatively affect record sales. This was because if an individual knew they would hear a song they liked ten times a day on the radio, then they would feel that they did not need to buy the record.
She also made the point that broadcasters were able to make their money because of the music that they played and that music was created by the artists. The parties were involved in fighting for money rather than protecting the source of their income.

Mr M J Bhengu (IFP/ NCOP) asked whether enough local music was being played and whether the 20% percent minimum was high enough. Mr Hlongwane’s answer was an emphatic ‘no’. He said he was disgusted that people could boast of their radio station playing twenty percent local music. This was a sad situation. When going overseas people in other countries play almost exclusively music made within that country. The fact that South Africa needed to have South African music week was a shame. Mr Hlongwane said that in France there was no such promotional week, and indeed there was no need for one.

Dr Benjamin asked whether radio stations would play less local music if they had to pay needle time. Mr Hlongwane said that he liked to think that radio stations did not decide on content like they used to. Instead it was the public; the people listening to the radio stations who dictated what was played over the airways. He also stated that he believed people would not turn their radios off if radio stations played more South African music.

The meeting was adjourned.