South Africa: Broadcasters (Needle) Time To Pay Has Come

Last Updated: 31 August 2012
Article by Rachel Sikwane

Most Read Contributor in South Africa, September 2016

Life can be terribly complex. Take music copyright for example. A composer writes a song and the song enjoys protection under the Copyright Act as a 'musical work', with the songwriter owning that copyright. A performer (who could also be the song writer) then goes to a recording studio and makes a recording of that song. The recording enjoys separate protection as a 'sound recording', with that copyright belonging to the record company.   So two different copyrights – copyright in the musical work which belongs to the composer, and copyright in the sound recording which belongs to the record company.  And, on top of that, the performer who performed the song when it was recorded enjoys a so-called 'performer's right', something that was created by a piece of legislation called the Performers' Protection Act.

When the sound recording is sold the proceeds are divvied up in accordance with whatever agreement exists between the record company, the performer and the composer. But what happens when the sound recording is broadcast on a radio station, or in some other way "communicated to the public", for example by being played in a bar or restaurant? The Copyright Act provides that when this happens there are a number of consequences:  the record company is entitled to a royalty from the user (the radio station, restaurant, whatever); the record company must share this royalty with the performer; the amount of the royalty must be determined by agreement between the user, the record company and the performer, or, alternatively, their respective collecting societies; and if the parties can't agree on a royalty, the matter must go to the Copyright Tribunal or to arbitration. This right to royalties for broadcasts or communications to the public is sometimes known as the 'needletime' right, or also as 'pay for play'.

So, broadcasters and establishments that use recorded music in public are compelled to pay a royalty to record companies (and performers),  subject to a few exceptions -  community radio stations are exempted, and there are exceptions relating, inter alia, to the use of the sound recording for the purposes of private study, personal use and legal proceedings. But despite the fact that the needletime right has been on the statute books for quite some time, the various players have never been able to agree on a royalty formula. So the matter eventually found its way to the Copyright Tribunal.

Three parties were represented at the tribunal: South African Music Performance Rights Association (SAMPRA,) a collecting society that represents the Recording Industry of South Africa (RISA); South African Music Rights Organisation (SAMRO), a collecting society for composers (but now also accredited as a collection society for needletime rights royalties); and the National Association of Broadcasters (NAB), a body representing the broadcasters of South Africa. The Tribunal's task was very simple: determine a formula for royalties payable to copyright owners for needletime rights.  The decision it reached was as follows: broadcasters will pay royalties on 7% of their net income, and the amount will be calculated with reference to the amount of music played by the station and the overall amount of editorial content broadcasted. The formula to be used is as follows:

 A      C x 7
—  x  ——
 B      100 

(with A being the amount of time used by the station in a period to play the protected sound recordings administered by SAMPRA, B being the total amount of time used by the station to broadcast editorial content, and C being the station's net broadcasting revenue). The tribunal gave no indication of a starting date for royalty payments, and it didn't say whether or not the decision was retrospective. The broadcasters, who feel that the formula is unfair, have filed an appeal.  So this matter still has some way to go.

Leaving aside broadcasters like radio stations, it seems to me that needletime rights may also be an issue for those companies who offer digital music downloads and who, it must be said, have been slow to enter the South African market – Nokia are one of the exceptions, with their Nokia Music Store making it possible for South Africans to buy music using hand- held devices or personal computers. Although the business of these companies is to copy or reproduce sound recordings, consumers do expect them to offer short samples (perhaps 30 seconds) of the tracks on offer. This activity may well amount to a communication to the public. Although the term 'communicate to the public' has not been interpreted in South African copyright law, the definition given to it in the WIPO Performances and Phonograms Treaty of 1996, a treaty South Africa is a signatory to, suggests that it does cover snippets.  If it does, it means that companies offering digital musical downloads will need to do deals with the various record companies and performers, or at least their collecting societies.  And, as we have already seen, there are quite a few of these about (apart from the bodies that took part in the matter before the Copyright Tribunal, there is another collecting society known as National Organisation for Reproduction Rights in Music in Southern Africa Limited, or NORM). This doesn't make life easy, and the digital music download companies may well decide that it simply isn't worth the effort. Which will, unfortunately, deprive South Africans of the kind of choice consumers enjoy in many other countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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