account for 4.11 % of the South African economy, and 4.08 % of employment1. These figures
are significant, but there is potential to grow the creative sectors even further. In the UK, for
instance, creative Industries are growing faster than any other sector of the economy and
now account for 5.8% of all UK jobs2. IFPI’s global market report, Recording Industry in
Numbers, the authoritative publication on the recorded music market, shows that in 2016 the
South African record industry was the 30th largest in the world. With a population on a par
with some of the most successful music markets, there is great potential for growth in the
South African market (and in scores of African regional markets), particularly in its digital
music market.
Our proposals are designed to ensure that the DTI’s intention to promote the interests of
South African music creators and consumers listeners becomes reality. In this submission we
explain the important role of record companies as the engines of growth in music markets, in
particular through their investment in artists. We further identify provisions in the Copyright
Bill and Performers Protection Bill, which could undermine the commercial basis for making
that investment, with conflict with the WCT, WPPT, and TRIPS, and which are at odds with
the industry best practices that have underpinned growth elsewhere.
The music industry is increasingly a digital business, with 50% of revenues globally coming
from digital uses of music. In South Africa, that percentage was 33% in 2016, showing the
enormous potential for growth. However, to provide a healthy internet environment for legal
digital services to launch and grow, it is crucial to ensure not only that the law reflects the
provisions of the WPPT accurately, but also to ensure that the law meets the commercial and
technological developments which have occurred since the adoption of the WPPT.
We submit that our proposals are consistent with the DTI’s intention first and foremost to
promote the interests of South African music creators and listeners. Our suggestions would
help to create a copyright system that would enable the South African music industry to grow
and develop to its full potential. They should also attract investment in the South African
music industry, benefitting South Africa’s creators, online services and the South African
economy.
We are aware of the pivotal role that South Africa can play in the development of the
recorded music industry across the African continent. The African continent is the obvious
first market for South African recorded music exports. Moreover, If South Africa can set a
standard of copyright legislation that encourages and incentivises investment in new
recordings, while protecting and enhancing the economic success of all those involved in
creating recorded music, we hope that those standards will be adopted in other African
countries. This would benefit the South African music industry and the region, intensifying
trade in music rights across the continent.
1 http://www.wipo.int/export/sites/www/copyright/en/performance/pdf/econ contribution cr za.pdf
2For example, the creative industries in the UK are growing faster than any other sector of the economy and
now account for 5.6% of all UK jobs
https://www.gov.uk/government/uploads/system/uploads/attachment data/file/546262/DCMS Sectors Eco
nomic Estimates - Employment.pdf, page 5, table 4.1
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 2
IFPI also co-ordinates the collective management of recording industry public performance
and so-called “needletime” rights globally, establishing best practice for collective
management and assisting some 75 collective management organisations (CMOs) around the
world to ensure maximum transparency, accountability and good governance in their
operations. IFPI works closely with SAMPRA, which has implemented IFPI Music Licensing
Companies Code of Conduct and Distribution Guidelines, and which stands as an example of
best practice for the African continent. We were grateful for the opportunity to discuss best
practice at the Workshop on Collective Management in Pretoria in March this year, and this
submission also addresses some areas where the Copyright Bill could be further developed to
reflect international best practice, ensuring efficiencies and accountability in the interests of
all right holders.
We remain at the disposal of the South African Government to provide any further assistance
required.
SECTION I: THE ROLE OF RECORD COMPANIES IN DEVELOPING AND SUSTAINING THRIVING
MUSIC MARKETS
“Making music is about passion, inspiration, emotion and creative talent. However, it is not
just a gift of human nature: it also requires the extraordinary amount of hard work, time,
effort and sustained investment.
An enormous supporting cast of skilled, dedicated and passionate people are devoted to
helping make the artist and their music a success. The behind-the-scenes community works
in hundreds of different ways. In countless different roles, to support the artist and to take
their work to a large audience of fans, often spanning the globe. It is no less important in
today’s music landscape than in the past – in fact it is more important. In a world of digital
diversity and complexity, this help is needed more than ever before.
“Investing in Music” tells the story of the immense effort and skill of the team surrounding
today’s recording artists. It also shows how much financial investment is needed to help an
artist pursue the career to which they aspire.
This is a truly impressive story, giving insight into the work of today’s global music sector.
As an artist who has witnessed their vital role over my long career, I salute the investors in
music.”
4(1)(b)
, 2017
IFPI
Record companies are the largest upfront investors in artists’ careers. Common features of
contracts signed with emerging artists include the payment of advances, recording costs, tour
support, video production and marketing and promotion costs. These investments are not
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 3
supported by any guarantees of returns other than the common interest of artists and
producers in making the recordings popular and commercially successful.
Global experience has shown us that unsigned artists seek record deals to fund their creative
activities, to connect them with producers and other musicians, to market them and their
work, and to strike the best deals for the use of recordings.
Despite declining record industry revenues, artists continue to benefit from their
relationships with record companies. For example, while the total recorded music industry
revenues have declined, the artists’ share of those revenues has decreased by much less than
the record companies’ share. IFPI conducted research in 2016 to obtain an accurate picture
of how royalty payments have changed as the market has shifted from physical sales to digital
channels. Industry data compiled by IFPI from the three major global record companies,
covering local sales for locally signed artists in 18 major markets in the six year period to 2015
shows that artists’ share of record labels’ sales revenue increased by 20% from 2011 to 2015.
This positive trend is likely to continue as digital revenues make up a greater proportion of
the growing market.
SECTION 2: RATIFICATION OF WPPT
As we stated above, we commend the South African Government for seeking to further the
interests of those involved in making recorded music in South Africa, including by seeking to
bring the law into line with the provisions of WPPT. However, we submit that the interests of
South African creators would be best served by ratification and full implementation of the
Treaty.
The effect of this would be to enable South African creators to benefit from the use of their
works in foreign markets (in which 92 countries have to date ratified or acceded to the WPPT).
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 4
In particular, as the African music market develops, new digital services emerge, and other
African countries ratify WPPT, revenues from South African music exports (South Africa being
the largest recorded music market in Africa) will flow into South Africa. By ratifying WPPT
now, South Africa will be securing future revenues for South African artists.
Ratification would also benefit South African artists immediately as the foreign use of their
works can be monetized through reciprocal licensing agreements with partner collecting
societies.
SECTION 3: COMMENTS ON THE PROVISIONS OF THE COPYRIGHT AMENDMENT BILL
This submission addresses the principal areas of concern in draft Bill. We do not cover every
issue, but stand ready to provide further input and assistance if required. We also support the
more detailed submission of IFPI National Group, RISA, and the submission made by SAMPRA.
The issues covered by this submission are as follows:
1. Scope of the communication to the public right
2. Downgrading of the communication to the public right and equal sharing of royalties
3. Downgrading of the making available to the public right
4. The sweeping statutory licensing system in proposed section 9A
5. Equal sharing of revenues from the making available right would render the South
African digital music market unviable
6. Limitation of the term of assignments to 25 years
7. Regulatory interventions into private contractual relations
8. Exceptions and limitations, including the proposal to implement fair use
9. Best practice for the collective management of rights
10. Other issues
___________________________________________________________________________
1. Scope of the communication to the public right
IFPI welcomes the proposed amendment to Section 9(e) of the Copyright Act, confirming that
sound recording producers in South Africa have the exclusive making available right set out
in Article 14 WPPT, which underpins the digital music industry. However, the wording of draft
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 5
section 9(e) omits an express reference to “public performance”, as provided for in the WPPT
definition of “communication to the public”, which states that communication to the public
“
includes making the sounds or representations of sounds fixed in a phonogram audible to the
public”. To avoid any misunderstanding that the amended act is removing public performance
from the existing section 9(e) of the Act, we submit that the new section 9(e) should expressly
refer to public performance.
The provisions of the proposed new section 9A of the Copyright Bill are extremely concerning,
and are inconsistent with WPPT and international practices. The effect of section 9A would
be
to downgrade the existing full exclusive rights in existing section 9(c) and (d) and the
amended communication to the public and making available right in proposed section 9(e)
to mere remuneration rights, render contractual negotiations unworkable, undermine the
economics of the digital music economy, and introduce a sweeping statutory licensing
regime. These provisions are addressed in more detail below.
2. Downgrading of the communication to the public right and equal sharing of royalties
The existing section 9(e) in the Copyright Act provides sound recording producers with an
exclusive right of communication to the public. The communication to the public right enables
record companies to derive revenue from the public performance (see point 1 above
regarding the importance of section 9(e) expressly referring to public performance),
broadcasting and other communications of sound recordings (as distinct from the making
available of their works – described in more detail in point 3 below).
Sections 9A(1)(aA)-(aE) have the effect of downgrading the right of communication to the
public from an exclusive right to a mere right of remuneration by removing the ability of right
holders to choose whether or not to license, merely allowing them to negotiate the royalty
for a licence, failing which the Tribunal may adjudicate (we comment in more detail on best
practice for the collective management of right at point 9 below). Although the existing
section 9A puts in place a system for adjudication in the event that a rightholder and a user
are unable to agree a royalty for the use of works, the proposed section 9A(aB) goes much
further, seemingly permitting users to use works without first entering into a licence.
The analysis section of the Bill does not explain the policy justification or evidence relied upon
for this downgrading of the right, yet the effects of the proposal would be significant.
Downgrading the right would weaken the industry’s ability to license those rights effectively
and therefore would have a negative effect on the South African record industry’s revenues.
This in turn would reduce the ability of record companies to invest revenues back into the
development of new artists in South Africa.
These rights used to be known as “secondary” rights, since the primary form of generating
revenue was through the sale of physical goods. However, the primary market globally is now
the sale of electronic copies of recordings and the licensing of access to recordings for a wide
range of consumer and commercial demands, and the South African is also following this
trend. The digital share of market has increased from 26% in 2015 to 33% in 2016, and the
physical market share has reduced from 53% in 2015 to 39% in 2016 (meanwhile public
performance revenues have increased, further illustrating the importance of the exclusive
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 6
right of communication to the public in South Africa). Ensuring that all such digital sales and
all such licensing takes place on market principles is of central importance to the ability of the
recording industry to continue to invest in and bring to market a continuous stream of new,
fresh and innovative recordings by new artists as well as established artists. Downgrading the
right runs contrary to that aim.
Furthermore, the
minimum standard of protection required under Art.15 WPPT is that of a
remuneration right. Indeed, the Agreed Statement to Article 15 WPPT provides expressly that
this minimum level provided for by the Treaty does not provide a comprehensive solution in
the digital environment. :
“Agreed statement concerning Article 15: It is understood that Article 15 does not
represent a complete resolution of the level of rights of broadcasting and communication
to the public that should be enjoyed by performers and phonogram producers in the
digital age. Delegations were unable to achieve consensus on differing proposals for
aspects of exclusivity to be provided in certain circumstances or for rights to be provided
without the possibility of reservations, and have therefore left the issue to future
resolution.”
There is simply no justification for downgrading the existing best practice provision of an
exclusive right by enabling users to use works without first obtaining a licence. We note that
the existing South African law, at section 9(e) of the Copyright Act, represents a global best
practice in transposition of the WPPT standards as it provides that the communication to the
public right is an exclusive right, which is consistent with WPPT. Limiting this right would
contradict the modernising aims of the Bill, and there is no evidential basis for doing so.
Exclusive rights enable record companies or their collective management organisations to
negotiate fair commercial terms for the public performance and broadcast of sound
recordings. These licensing activities benefit record companies and artists alike, since these
revenues are shared equally by record companies and artists.
As to which, draft section 9A(2)(a) provides that royalties from communications to the public
“
shall be divided equally between the copyright user, performer, owner, producer, author,
collecting society, indigenous community, community trust or National Trust on the one hand
and the performer on the other hand or between the recording company, user, performer,
owner, producer, author, collecting society, indigenous community, community trust or
National Trust.”
We do not understand this provision. Why, for example, would the user (in other words the
licensee) share in the royalties it pays for its use of sound recordings? We are also unclear as
to the role of the other parties cited in the licensing of sound recordings.
In any event, it is already establshed industry practice globally and in South Africa that the
revenues from the public performance and broadcasting of sounds recordings are shared
equally between the sound recording owner (record companies) and performers. In view of
that, we propose that the draft section be amended to reflect that arrangement.
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 7
However, insofar as the section applies to revenues from the right of making available to the
public, we oppose any such provision for the reasons explained at point 5 below.
3. Downgrading of the making available to the public right
The making available to the public right (derived from Article 14 WPPT) and expressly set out
in the proposed amendments to section 9(e) of the Act underpins the licensing of digital
services that offer any “interactive” uses of music. In other words, any making available of
music other than purely “linear” communications to the public where the user has no control
over the music that is communicated by the service (these linear transmissions are covered
by the communication to the public right described above). Article 14 WPPT provides that the
making available right is exclusive, and does not provide any option for contracting parties to
provide lesser protection, such as by making the right a remuneration right as proposed by
section 9A(1)(a)(iii).
In practice, the exclusive right enables right holders to enter into bespoke licensing
agreements with a wide range of services of terms negotiated between the right holder and
the service. This right has enabled the recording industry to licence some 200 digital services
globally, and thirteen in South Africa alone.
Downgrading the right of making available to a mere remuneration right would be seriously
detrimental to the music market in South Africa, likely reducing revenues for artists and
producers alike and possibly rendering the economics of a digital music market in South Africa
wholly unworkable. The problem is compounded by subsequent provisions of draft section
9A, as explained in points 4 and 5 below. We respectfully submit that it should be made clear
that the provisions of section 9A do not apply to the making available right. This would be
consistent with the international treaties and international practice.
4. The sweeping statutory licensing system in proposed section 9A
As part of downgrading the rights of communication to the public and making available to the
public, sections 9A(1)(aA)-(aE) propose to introduce a sweeping statutory licensing scheme.
The effect of this would be to entirely remove right holders’ control over how to license the
rights of communication to the public and making available. Most concerning, it would enable
digital services to make available recordings even without a licence, with licensing terms to
be negotiated subsequently or adjudicated by the Tribunal. This would likely be a race to the
bottom, substantially reducing the revenues that can be derived from digital uses of works,
thereby reducing revenues paid to performers by record companies, and therefore reducing
investments back into new and established artists and repertoire. It would also remove the
ability of sound recording producers to authorise the reproduction of their recordings,
rendering the provisions incompatible with Article 14(2) of the WTO TRIPS Agreement.
The proposed power for the Tribunal to set the terms of licence agreements between an
individual right holder and a user amounts to an intervention into private contract law and
constitutes a serious limitation on individual record companies’ and other right holders’
ability to authorise or prohibit the use of their sound recordings. Such an expansive limitation
on the rights would constitute a breach of the obligations under international copyright
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 8
treaties (the Berne Convention, WTO TRIPs Agreement), and would be contrary to the WCT
and WPPT treaties, which the Bill is otherwise seeking alignment with (as stated above, we
encourage the South African Government to ratify the WPPT).
It is submitted that oversight of collective licensing arrangements by a copyright tribunal can
be appropriate in relation to collective (but not individual) licensing schemes, such as those
currently in operated in South Africa by SAMPRA in respect of public performance and
“needletime” rights. However, the best international practice is to put in place a tribunal as a
highly specialised neutral dispute resolution mechanism, and not a body regulating individual
private contracts. For example, section 149 of the UK Copyright Designs and Patents Act 1988,
gives the UK Copyright Tribunal jurisdiction over “
licensing schemes which are operated by
licensing bodies and cover works of more than one author” in circumstances further
elaborated in that legislation. Similarly, the Arbitration Panel operating under the German
Patent Office has the authority to propose rates for certain of the German collecting societies’
tariffs schemes3.
It is possible that the inclusion of the right of making available in section 9A is simply an
oversight resulting from the proposed expanded definition of communication to the public in
section 9(e). However, even if that is the case, the provisions allowing users to communicate
sound recordings to the public even before entering into a licence is clearly open to wide
abuse, and should be removed. Section 9 of this submission sets out more detailed provisions
about best practice in the collective management of rights and the valuation of those rights
in disputes.
5. Equal sharing of revenues from the making available right would render the South African
digital music market unviable
The provision in section 9A(2)(a) (as confusing as it is, referring for example to users sharing
in the revenues they pay) would seem to require that revenues derived from the licensing of
the making available right be shared equally between producers and performers. Regrettably,
it does not appear that the provision has been drafted with due consideration for the practical
realities of the licensing structure of the recorded music industry or of its economics.
To require that revenues from interactive and certain other exploitations of work be shared
equally between record producers and the performers would be economically unfeasible,
considering that record companies cover all the costs and carry the risk of bringing new artists
to market. Compulsory equal sharing of all revenues from making available to the public
would remove all profit from record companies, making it economically unviable to continue
to produce new recordings, and breaking the cycle of investment referred in the introductory
sections to this submission.
Revenues from digital services comprise an increasingly large proportion of record industry
revenues internationally and are vital to the survival of the record industry. At the same time,
research conducted by IFPI shows that across 18 territories local performers’ share of industry
revenues from digital services increased by 20% between 2009 and 2015 relative to record
3 See Article 14 and 14(a) Urheberrwahrnehmungsgesetz (the Law on the Management of Copyright and
Related Rights (Copyright Administration Law)).
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 9
producers share, despite overall industry revenues decreasing until recently. This shows that
the economics of the digital music market work for performers. Although the policy
motivation behind this proposed section of the Bill is not articulated in the Analysis section of
the Bill, to the extent that it is to increase performers’ share of revenues from digital services,
it is likely to have the opposite effect. The actual effect of this provision would be to remove
the incentive for record companies from investing (as described in section 2 above), would
make licensing of certain digital services uneconomical. While certain revenue streams may
be appropriate for such sharing arrangements (i.e. traditional broadcasting and public
performance rights when collectively administered, as we describe above), it would be a
market killer if applied to on-demand communications.
We are not aware of any other country in the world where the making available right is subject
to statutory licensing or compulsory revenue sharing in this way, and we strongly urge the
South African Government to exclude the making available right from the ambit of section
9A.
As explained at point 2 above, it is already standard practice in South Africa and
internationally that revenues from broadcasting and public performance (but not making
available) are shared equally between the sound recording owner (the record company) and
performers. In view of that, we would propose that the section be amended to reflect that
arrangement, while excluding the right of making available to the public from the ambit of
section 9A altogether.
6. Limitation of the term of assignments to 25 years.
a. Section 22(b)(3) of the Bill that limits the term of an assignment to 25 years would
undermine the record companies’ ability to invest in artists and recordings
The proposed section 22(b)(3) would undermine record companies‘ ability to invest in new
talent and disrupt the well-established practices of the recording industry in South Africa and
internationally. It would risk serious harm to the South African record industry as a major
incentive to invest would be removed. An artist catalogue, or historic repertoire, is an
important part of the revenues a record company can expect from an artist agreement. This
aspect has been accentuated by the shift away from physical consumption (CDs etc) to
downloads (iTunes etc), and now to streaming (Spotify etc). While CD sales are decreasing,
music can generate revenues from digital services over a longer period of time. The proposed
section 22(b)(3)) would disrupt this to the detriment of the entire music industry value chain.
As explained above, introducing new artists to the market and promoting their careers
requires large upfront investment with no certainty in relation to when, if ever, the
investment will be recouped. Limiting the term of assignment would increase the economic
risk even further and would likely reduce the number of investments in new talent
undertaken by record companies. The proposed provision should be removed.
b. The proposed limitation would complicate the licensing of sound recordings
At present, record companies are able to license third parties to distribute or use sound
recordings. Music publishers (who own the copyright in the underlying compositions and
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 10
lyrics) do the same. The proposed section 22(b)(3) could result in those wishing to use music
having to constantly renegotiate their licences as the assignments would terminate and rights
ownership change hands. This would significantly convolute the established licensing
practices, increase the costs of licensing and consequently reduce the revenues generated by
all those involved in the creation of recorded music.
It could also lead to a position in which neither the record company nor the performer is able
to license the use of a recording since the user needs both the record producer and the
performer’s authorisation. This is possible when the performer’s rights have been assigned to
the record producer, but may not be if the performer’s rights then revert back to the
performer. Consequently, the limitation may also have the effect of reducing the period
during which the performers can derive revenues from the recordings since they would not
be able to licence the use of recordings without the record companies also licensing their
rights.
Such a provision would be highly unusual, if not entirely unique. Indeed, we are not aware of
any such provision in the copyright laws of any other country. It simply does not make sense
commercially, and will harm artists and record companies alike.
7. Ministerial interventions into private contractual relations
The proposed extension of the Ministerial powers set out in section 39 of the Copyright Act
constitute serious regulatory interventions into private contractual arrangements. By way of
example only, proposed section 39(cG) empowers the Minister to prescribe compulsory and
standard contractual terms for the exercise of the rights set out in the Act, and proposed
section 39(cI) empowers the minister to prescribe royalty rates. The Minister could therefore
prescribe the terms on which a record company licenses a digital music service, including
royalties payable under the licence. These provisions are not justified and do not respond to
any market failure. The record industry seeks to make its recordings as widely available as
possible and on terms that make access to music affordable to consumers. In doing so, the
industry has already licensed 13 digital services for the South African market. These provisions
should be deleted.
8. Exceptions and limitations, including the proposal to implement fair use
a. Fair use IFPI submits that no case nor policy rationale has been made out for the introduction of a
broad “fair use” exception into South African law. We are not aware of any evidence
establishing the need for, or the desirability of a fundamental shift in South Africa’s approach
to copyright law whereby enumerated rights are accompanied by enumerated exceptions.
Nor are we aware of any evidence that the introduction of fair use would benefit the South
African creative industries, users of copyright works, or the South African economy.
We are somewhat reassured that the list of fair use purposes in proposed section 12(1)(a) is
a closed list, as opposed to the uncertain US “open-ended” model. Nevertheless, we are
concerned about the very broad scope of the purposes cited:
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 11
- Fair use for “personal use” (proposed section 12(1)(a)(i) could potentially cover any
use of a work by an individual. Although the fair use factors in proposed section
12(1)(b) should act as a safety-valve against the over-broad application of fair use, the
experience of the US indicates that those factors at times offer little safeguard against
highly commercialised uses of protected works. The “personal” use provision should
be removed, not least since proposed section 12A(1)(j) provides a standalone
exception for certain private uses (as to which point 8.b below).
- Fair use for “expanding access to underserved populations” (proposed section
12(1)(vii)) is also an ambiguous concept. While we recognize the positive intention of
the section, regrettably it may be abused by users (by which we refer for example to
digital platforms) wishing to gain access to works for free. We would urge a
reconsideration of this provision that precludes its application where a rightholder is
willing to grant licences for the access of their works by underserved populations. This
would have the positive effect of encouraging the further development of content
markets in South Africa.
b. Private copying
Draft section 12A(1)(j) would introduce a potentially far-reaching
private copying exception into South African law, without providing for fair remuneration for right holders whose works
are being copied. Although IFPI does not consider private copying exceptions to be necessary,
we would not oppose the introduction of a private copying exception that (a) is adequately
scoped to ensure it complies with the three-step-test and (b) provides that right holders
should be fairly remunerated when their works are copied4. The introduction of a levy on
devices and storage media as a quid pro quo for the loss of the copying exclusive right has
been found in many jurisdictions to compensate fairly copyright owners and performers.
However, a further concern arises in relation to proposed section 12A(2)(c) insofar as it relates
to the electronic storage of works. All of the “cloud” services of which we are aware do not
offer mere storage of content to their users. They also have additional functionality such as
making available stored content across users’ devices, or enabling users to stream music from
the cloud. These services are themselves copying sound recordings and making available
sound recordings, and (except in the case of infringing services) they should therefore be
licensed by right holders to carry out these restricted acts.
This increasingly important market could be undermined if new private copying exceptions
were created, expanded or interpreted to permit cloud service providers to set up music
distribution services on the back of private copying exceptions. Proposed section 12A(2)(c)
poses that risk. Although it refers to the storage are being “
accessible only by the individual
and the person responsible for the storage area”, in practice this does not safeguard against
such a service becoming a hub for copyright infringement, and profiting from that activity. So-
4 For example, the High Court of England & Wales recently quashed a newly introduced private copying
exception following a legal challenge that the exception was not compliant with EU legislation because it did not
provide for right holders to receive fair remuneration. See https://www.gov.uk/government/news/quashing-of-
private-copying-exception
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 12
called “cyber-lockers” provide users with links to their stored files. In theory, the service is
providing storage that is “
accessible only by the individual and the person responsible for the
storage area”. In practice, users (often with the encouragement or inducement of the service)
make these links widely available, creating public access to unlicensed copies of sound
recordings. Services wishing to offer content services in this way should be licensed, and
should not be able to rely on their users’ private copying exceptions.
Private copying exceptions do not apply to commercial acts or to acts of making available. In
theory, a private copying exception could permit individuals themselves to make copies of
their lawfully acquired content in the cloud, but this possibility is purely theoretical, since, as
mentioned above, we are not aware of the existence of any such basic services. Therefore,
proposed section 12A(2)(c) does not reflect a use that is practically available to users, and
should therefore be removed from the draft. At the very least, it should be made clear in the
text that the exception in section 12A(2)(c) applies to the user alone, and may not be relied
upon by the service provider. Absent that clarification, infringing services may argue that their
activities are covered by the exception, and the market for digital music licensing will be
undermined.
9. Best practice for the collective management of rights
IFPI has been overseeing the effective, transparent, accountable and well-governed collective
management of producers’ rights for years. We and our members’ CMOs work closely and
very often in collaboration with performers’ organisations, often through joint CMOs for
performers and producers. We have developed the IFPI Music Licensing Companies Code of
Conduct and Distribution Guideline, and IFPI works closely with WIPO to encourage best
practice globally. To that end we were delighted to attend the Workshop on Collective
Management of Copyright and Related Rights in Music.
Although several provisions in the Bill go some way to introducing best practice in South
African legislation (SAMPRA already implementing the IFPI Code of Conduct and Guidelines)
we are concerned by the draft provision requiring one CMO for each right. It appears this
could prohibit the existing collaboration between performers and producers in SAMPRA. If
that interpretation of the drafting is correct, this proposal goes against the interests of those
right holders, the users (licensees) and the public at large. We are not aware of any similar
provisions or proposals outside South Africa. Joint sound recording producer and performer
organisations operate in some 40 territories. By working together on the licensing of rights,
performer and producers make substantial cost savings, thereby increasing the proportion of
revenues returned to them. There are also obvious benefits to users of being able to take a
licence from one CMO that covers both performers’ and producers’ rights.
We are also concerned by draft section 22D(1) which proposes that users (as well as right
holders) should have control over collecting societies. There can be no possible justification
for allowing users to control an entity from which they seek licences and users should be
removed from this section.
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 13
As a general point, it is also vital that any rates set by the Tribunal for the public performance
or “needletime” should reflect the economic value of the use of recorded music in trade. This
would be consistent with international good practice, which seeks to ensure that right holders
are remunerated adequately for the high value of recorded music. As much has been
recognised at European level – see Article 16 of the European Directive on collective
management of copyright and related rights and multi-territorial licensing of rights in musical
works for online use in the internal market (Directive 2014/26/EU), which states:
“Rightholders shall receive appropriate remuneration for the use of their rights.
Tariffs for exclusive rights and rights to remuneration shall be reasonable in
relation to, inter alia, the economic value of the use of the rights in trade, taking
into account the nature and scope of the use of the work and other subject-matter,
as well as in relation to the economic value of the service provided by the collective
management organisation. Collective management organisations shall inform the
user concerned of the criteria used for the setting of those tariffs” (emphasis added).
For example, for a pub or a bar the value of music is in the benefit to the business of playing
music. Economic studies have shown this benefit to be an increase in patronage and sales.
The same is true of retailers and public services like hairdressers and gyms. We can provide
further information on this if required.
The fundamental point is that the remuneration for the public performance of sound
recordings is a payment for the use of a commercial product. For the remuneration to be
equitable it should amount to the market price for these rights.
We enclose the IFPI Music Licensing Companies Code of Conduct and Distribution Guidelines.
10. Other issues
a. Term
The Bill does not address the term of protection for sound recordings.
IFPI submits that the
term of protection of sound recordings should be extended from 50 years to at least 70 years.
This longer term of protection would provide greater incentives for the production of sound
recordings, not least since recording artists would have the security of knowing that their
recordings have the potential to generate income during their entire lifetime. The longer
potential economic life of a sound recording would also enable producers to continue to offer
recordings to local consumers in updated and restored formats as they are developed. As a
result, the longer term would support the development of the industry and the creation of
new jobs.
Furthermore, a term for sound recordings of 70 years or longer has become the international
standard, and extending the term of protection would be consistent with the modernising
aims of the Bill. Currently 62 countries now protect sound recordings for 70 years or longer,
including 9 out of the top 10 music markets (by total revenue in 2014) and 28 out of the 32
OECD member countries.
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 14
b. Prohibition on contractual override
Draft section 39B (Unenforceable contractual term) would prevent record companies from
agreeing to contractual terms which would deviate from the provisions of the Bill. This
element of section 39B should be deleted to reflect the commercial reality of how rights are
licensed by right holders, including licences and assignments from performers and licences to
digital services and onwards to users.
c. Enforcement
Furthermore, no consideration of substantive copyright provisions would be complete
without considering the importance of appropriate enforcement mechanisms to enable
effective exercise of those rights in practice, including fast and effective judicial procedures.
We invite the South African Government to consider the importance of these issues alongside
the modernisation of copyright law and would welcome the opportunity to make additional
submissions in this area, or otherwise assist the government.
SECTION 4: COMMENTS ON THE PROVISIONS OF THE PERFORMERS’ PROTECTION
AMENDMENT BILL
We support the South African Government’s initiative to implement provisions of the Beijing
Treaty. However, we submit again that South Africa should not only seek to bring its law into
line with international treaties, but should ratify them too.
There are, however, areas of the Performers’ Protection Amendment Bill which cause
substantial concern for the reasons set out in our submissions on the Copyright Amendment
Bill. These are:
Section 3A, which seeks to limit the term of assignments to 25 years. We repeat our
submissions under point 6 above.
Section 5, which introduces a sweeping statutory licensing scheme equivalent to that
proposed in section 9A of the Copyright Amendment Bill. We repeat our submissions under
points 2 to 5 above.
In addition, we note that the proposed new
section 3B of the PPA introduces producers’ rights
into the PPA in a way that is not consistent with the existing or proposed section 9 of the
Copyright Act. We would therefore propose that the PPA should address performers’ rights
alone, leaving the provisions for copyright in sound recordings in the Copyright Act.
We also support SAMPRA’s more detailed submission on the Performers Protection
Amendment Bill, and we would welcome the opportunity to make more detailed submissions
on the Performers’ Protection Bill in due course.
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2017 – Page 15