On 25 June 2002, the Copyright Amendment Act 9 of 2002 and the Performers’ Protection Amendment Act 8 of 2002 respectively amended the Copyright Act and the Performers’ Protection Act by introducing needle-time rights. The term “needle-time rights” refers to the right of an owner of a sound recording (embodying a musical work) and the performer of the musical work, to receive a royalty in respect of the broadcast, or performance, of that sound recording.

In the music industry, the parties entitled to payment of needle-time royalties, are the owners of the copyright in the sound recordings (usually the recording company) and the performing artists. It is important to note that, prior to the amendment of the Copyright Act and Performers’ Protection Act, performers enjoyed no copyright protection in respect of musical works. In other words, copyright protection in respect of musical works was limited to composers and authors.

The relevant provisions of the Copyright Act and the Performers’ Protection Act

The Copyright Amendment Act 9 of 2002 introduced, inter alia, sections 9(c) and 9A to the Copyright Act. The Performers’ Protection Amendment Act 8 of 2002 introduced, inter alia, sections 5(1)(b) and 5(3) to the Performers’ Protection Act.

The amended Copyright Act now specifically recognises the exclusive right of an owner of copyright in a sound recording to authorise certain activities, for instance the broadcasting of the sound recording (section 9(c)). In the absence of an agreement to the contrary, no person may broadcast, cause the transmission of or play a sound recording, without payment of a royalty to the owner of the copyright (section 9A(1)(a)). The Copyright Act makes no mention of the performer’s entitlement to receive a royalty at this stage.

The amount of royalty to be paid by the user of a sound recording shall be determined by an agreement between the user of the sound recording, the performer and the owner of the copyright, or between their respective collecting societies (section 9A(1)(b)). Here the Copyright Act specifically recognises that a performer of the musical work embodied in the sound recording has to be consulted regarding the amount of royalty payable. In the absence of an agreement regarding the amount of royalty payable, the user, performer or owner may refer the matter to the Copyright Tribunal or to arbitration (section 9A(1)(c)).

In section 9A(2)(a) of the Copyright Act, a specific obligation is placed on the owner of the copyright, who receives payment of a needle-time royalty, to share such royalty with the performer of the musical work, who would have been entitled to receive a royalty in terms of section 5 of the Performers’ Protection Act. The performer’s share of the royalty shall be determined by agreement between the performer and the owner of copyright, or between their respective collecting societies (section 9A(2)(b)).

The amended Performers’ Protection Act specifically recognises the right of a performer to receive a royalty for the broadcast of a performance (section 5(1)(b)(1)). The amount of any royalty payable shall be determined by an agreement between the performer and the person who broadcasts the performance, or between their representative collecting societies (section 5(3)(a)). In the absence of an agreement, any party may refer the matter to the Copyright Tribunal or to arbitration (section 5(3)(b)).

Despite the fact that both the Copyright Act and the Performers’ Protection Act make provision for the referral of a dispute regarding the amount of royalty payable by the user of a sound recording to the Copyright Tribunal, no regulations have been published to regulate such a referral.

The referral to the tribunal and the relevant parties thereto

Adams & Adams represents a party involved in a dispute concerning the quantum of needle-time royalties. As it was impossible for the relevant parties to agree to an applicable royalty, it was necessary for the matter to be referred to the Copyright Tribunal. On 12 December 2008, the South African Music Performance Rights Association (“SAMPRA”), referred to the Copyright Tribunal for determination, in terms of section 9A(1)(c) of the Copyright Act, the amount of royalty to be paid by 32 commercial radio broadcasters, who are members of the National Association of Broadcasters (“NAB”), for broadcasting sound recordings. On 23 February 2009, the South African Music Rights Organisation (“SAMRO”) applied to be made a party to the proceedings. On 21 April 2009, the NAB applied to be made a party to the proceedings.

Although owners of sound recordings and performers of musical works had been entitled to be paid needle-time royalties by, inter alia, broadcasters, since June 2002, there had been a long delay in implementing these rights. The delay was caused largely by the delay in publishing regulations to govern collecting societies that implement and administer the rights on behalf of owners of sound recordings and performers of musical works. The process of applying for accreditation, after publication of the regulations, also added to delays in the implementation and enforcement of the rights.

SAMPRA is an accredited collecting society administering the rights to receive payment of a royalty in terms of section 9A of the Copyright Act, on behalf of the Recording Industry of South Africa (“RISA). RISA is a trade association representing owners of copyright in sound recordings in South Africa. RISA members own, or control through exclusive licences, more than 95 % of the sound recordings that have been broadcast by the members of the NAB since 25 June 2002 (the date on which sections 9(c) and 9A of the Copyright were promulgated).

The NAB is a non-profit organisation, consisting of more than 80 members, all of whom are active participants in the broadcasting industry. These members include all the South African television broadcasters, all but one of South Africa’s commercial radio stations and all the public radio stations, community radio stations and signal distributors. Some of the 32 members of the NAB that have specifically been cited as respondents to SAMPRA’s referral include 5FM, RSG, JACARANDA 94.2 and 94.7 HIGHVELD STEREO.

SAMRO, traditionally dedicated to protecting the intellectual property rights of composers and authors, is also an accredited collecting society, administering the rights to receive royalty payments, on behalf of performers, in terms of section 9A of the Copyright Act and section 5 of the Performers’ Protection Act. In order to facilitate the administration of needle-time royalties on behalf of its performer members, SAMRO formed a trust, the Performers’ Organisation of South Africa Trust (“POSA”).

With respect to the referral to the Copyright Tribunal, SAMPRA represents the owners of the copyright in sound recordings embodying performances of musical works. SAMRO represents the performers of the musical works who are entitled to share in the royalties collected by SAMPRA. The NAB represents the 32 broadcasters who have been called upon by SAMPRA to pay needle-time royalties to the owners of the copyright in the applicable sound recordings and the performers of the musical works.

Subsequent to SAMPRA’s referral, the NAB considered it appropriate to bring a cross-referral to the Copyright Tribunal. The NAB wants to determine, inter alia, the rate applicable to all members of the NAB for the payment of needle-time royalty and the date from which such royalty is payable.

As an alternative to the tariff suggested by SAMPRA in its referral (which is supported by SAMRO) the NAB has submitted its own proposed formula for the determination of needle-time royalties.

The hearing

The referral has been set down for hearing in front of the Honourable Acting Mr Justice Sapire (the Commissioner of the Copyright Tribunal) for twee weeks from 21 November 2011 to 2 December 2011.

Considering the enormous impact that the outcome of this referral will have on the livelihood of musicians and the liability of broadcasters, this matter will be closely watched and a further report regarding the outcome of the referral can be expected.

Written by:
Jani Cronjé - Senior Associate, Trade Mark Litigation, Adams & Adams
Verified by – Gérard du Plessis, Partner, Trade Mark Litigation, Adams & Adams