Monday, July 06, 2009

The Problem
One of the problem areas for the music industry concerning any party that contributed to the creation of an original song or recording, including the songwriter, recording studio and the artist is the collection of royalties and the prevention of piracy and unauthorized use and copying.Stephen Hollis is an  associate at Bowman Gilfillan in the Intellectual Property Trade Mark Prosecution Department
The internet and modern technology has spawned a realm where music can be broadcast, created, performed, shared and unfortunately also a platform for the rampant infringement of rights costing the abovementioned parties serious losses of revenue and revenue streams.
The Response
The law and industry bodies that are responsible for upholding the rights of artists, recording studios, performers, etc. were and to a large extent are still struggling to mobilise to meet the demands and challenges of the modern era.  It seems as if technology is enabling pirates, counterfeiters and infringers to stay one step ahead of the game.  In some areas though, modern technology is changing the landscape of the regulation of royalties where it was truly for far too long more of a ‘wild west’ that encouraged infringers to see just how far they could push the envelope.
One such area is that of the broadcast industry in general, but also that of the jukebox owner, disc jockey and the restaurants, bars, clubs,  weddings, sports, retail stores and other venues where music is regularly played to the public. 
Recent amendments to the Copyright Act and Performers’ Protection Act have re-introduced the concept of needle time royalties into our law (see below) and created the mechanism by which collection agencies can be accredited and handed them an enforceable mandate whereby agencies like SAMPRA (South African Music Performance Rights Association), SAMRO (South African Music Rights Organization), RISA (Recording Industry of South Africa) and NORM can begin to collect certain royalties.
Mechanical Royalties (a.k.a. Reproduction Rights)
Mechanical royalties are payable when a sound recording is copied from one format (e.g. cd) to another (e.g. Jukebox hard drive) for the purpose of commercial exploitation.
These royalties constitute one branch of copyright protection available to musicians and their record companies as it protects an artist’s right to control the reproduction and distribution of their musical work. The Copyright Act No.98 of 1978 (amended in 2006) ensures that these rights encompass all possible forms that a reproduction can take, including physical media like cassettes and CDs, digital media (internet) and even media yet to be invented.  Jukebox owners are responsible for these types of royalties as they copy music onto the hard drives of their jukeboxes. 
Needle Time Royalties (so-called ‘Pay for Play’ royalties)
Needle time sees the re-introduction of a royalty system in South African copyright law whereby music performers, vocalists, recording artists, instrumentalists as well as record companies are remunerated for the public performance (including the broadcast) of their recorded material.    What needle time means to the South African music industry is that musicians and copyright owners (recording studios) now have an added revenue stream and that broadcasters have an additional overhead. 
Parties that operate businesses where music is regularly being played to members of the public (like restaurants, bars, clubs, retail stores, sports and wedding venues) will need to negotiate license agreements with the appropriate collection societies to ensure that they do not infringe the copyright in the sound recordings they use for the communication of such music.  SAMPRA is looking after the needle time rights of the copyright owners (usually recording studios) and the performing artists, whilst SAMRO looks after the collection of royalties on behalf of composers.  Therefore, licenses with both might be a requirement.
The jukebox owner will have the added burden of a license with a agency like RISA which collects royalties for mechanical rights.  However, if the owners of the premises where the jukeboxes are placed already have licenses in place with regards to needle time royalties, the jukebox owner will not be responsible for such payments.  Jukebox owners also need to have their jukeboxes checked by the contracting collection society to ensure that their jukeboxes are fitted with appropriate encryption software to protect the music from actual theft and also to record playlists which can be supplied to the collection agency for proper determination of how the proceeds of the royalties should be distributed.  
Disc jockeys have to supply their playlists to the owner of the business or venue where he/she performed so that it can be communicated to the collection agency to ensure that the money will be distributed to the appropriate copyright owner and/or performer.  Disc Jockeys that perform as a main source of income might need to negotiate appropriate licenses as well – especially when performing at venues where existing licenses are not in place already between the owner of the venue/business and the proper collection agency.  If no license is in place the dj might be held responsible for copyright infringement along with the owner of the premises. 
A Fair Solution?
It will be interesting to see what the effect of these recent regulations will have in practice.  One train of thought is that it will extend intellectual property rights of performers and thereby give performers greater and much needed protection.  Others argue that it will simply place additional, onerous burdens on broadcasters and that the growth and development that South Africa so badly needs would be stifled.  Especially when considering   that a substantial percentage of the fund collected will flow outside the country, whilst only providing a marginal benefit to South African musicians.
However, if one considers the ease with which music can be copied, performed and communicated to the public without the authorization of the copyright holder or the artist(s) involved, the argument that the industry needed to galvanize to keep up with international trends and technological advances in an attempt to protect the rights of these parties from rampant and flagrant disregard and infringement, does hold some ground.
This may just be a step in the right direction to protect human ingenuity and encourage artists and investors in this creative industry alike to continue to grow this essential field of human endeavour.  The proper regulation and administration of these ideals pose the true challenge to the guardians of royalties in the music industry.