Ref. Ares(2020)2829670 - 01/06/2020
Privileged and Confidential
IFPI Submission on The South African
Copyright Amendment Bill and Performers’
Protection Amendment Bill
22 February 2019
IFPI, representing the recording industry worldwide, has some 1,300 record company
members in some 60 countries and affiliated industry associations in some 57 countries. IFPI’s
objective is to develop fair and balanced market conditions for our members to operate in, to
enable the recording industry to continue to invest in artists, create jobs, and contribute to
economic growth. We are grateful for the opportunity to submit comments on the draft
Copyright Amendment Bill and Performers’ Protection Bill, and would welcome the
opportunity to appear before the NCOP should hearings on these bills be held.
The National Council of the Provinces has a vital role to play in ensuring that this legislation
creates a legal framework that sets a gold standard for the African continent, underpinning
the growth of the South African digital industry for the benefit of South African creators,
consumers and South African culture. The bills before the NCOP regrettably would not
achieve this. Instead, they risk setting South African creative sectors back, reducing
investments in South African cultural industries, and harming all participants in the creative
economy, including the very creators that these draft laws seek to support. We therefore
respectfully and strongly urge the NCOP to pause to consider the impact that these Bills would
have in their present forms, and make changes to the Bills which are essential to avoid these
dire consequences, as we explain in this submission.
The context – creating and releasing recorded music is a high-risk activity that depends upon
high levels of investment and deep partnerships between record companies and artists
Music does not just happen. Taking a song from a concept to a recording and then distributing
it takes a huge amount of work, time and effort, and an array of people. There are the writers
and recording artists, the creators and performers. There are those who discover and nurture
artists, those who produce the recordings and the videos, and those who market and promote
them. And there is the distribution, in physical and digital formats, to thousands of retail
partners and digital services.
All this demands substantial up-front investment, well before a single stream plays or an
album goes on sale.
Success often also requires a long-term vision. The vast majority of albums do not break even
financially, and those that do take time to do so. Nor is the true value of every artist or album
immediately recognised and appreciated.
Record companies remain the largest investor in music, investing 27 percent of their revenues
into A&R and marketing. They have sustained this investment through recent years, even as
the industry weathered two decades of revenue decline.
The partnership between artists and labels goes far beyond the financial. Record companies
nurture artists, allowing them to develop their sound, their craft and their careers. Labels’
marketing expertise and resources enable them to create and deliver cutting-edge campaigns
that engage fans around the world. They help manage thousands of partners spanning the
globe, requiring local expertise in each market with networks of relationships and marketing.
The bills before the NCOP risk seriously harming the carefully balanced ecosystem that
enables record companies to invest in and partner with artists, working together to drive the
success of the South African music industry.
1. EXECUTIVE SUMMARY
We welcome the commitment of the South African Government to modernising South African
copyright law to make it a standard for the region and to bring it into line with the WIPO
Internet and Beijing treaties and best practice, in pursuance of our shared appreciation for,
commitment to, and support of the creative as well as the commercial success of South
African art and artists. We also support the aim of the Copyright Act Amendment Bill and the
Performers’ Protection Amendment Bill of ensuring that South African creators are
remunerated fairly for their artistic endeavours, the fair remuneration of artists already being
of central importance to our sector. In their present forms, the Bills will not achieve these
aims.
We understand also that that there are serious concerns regarding the constitutionality of
both bills. These concerns are elaborated in more detail in the submission by RiSA, the IFPI
national group in South Africa. We further understand that as a result the bills may be found
to be invalid.
Regardless of the above concerns regarding constitutionality of the Bills, we proceed to
comment them and in this submission we respectfully propose essential changes to these Bills
to avoid the most harmful unintended consequences.
The principle areas of concern are:
Copyright Amendment Bill (“CAB”)
1.
Section 8A: Drastic interferences into the commercial arrangements around the
exploitation of music videos, which risk reducing the income of a large number of
performers, reducing the number of performers who will be engaged to perform in music
videos, and reducing the revenues available to record companies to invest in South
IFPI Submission on the South African Copyright Amendment Bill and Performers’ Protection Amendment Bill –
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African artists and repertoire. In addition, the potential retroactive effect of these
provisions would appear to be unconstitutional.
2.
Section 39: Broad Ministerial powers to prescribe contractual terms, thereby unduly
regulating the framework in which the creative industries may operate.
3.
Section 12: The introduction of a sweeping open-ended US-style “fair use” exception,
combined with numerous new enumerated exceptions.
4.
Section 1(h) (and related sections): Inadequate implementation of provisions concerning
technological protection mechanisms, which risks turning South Africa into a safe haven
for piracy.
5.
Section 9A (1)(aA) – (aB) and 8A(6)(a)-(b): Reporting obligations, which could be
misinterpreted as downgrading exclusive rights to mere remuneration rights, which
would be incompatible with the WIPO Performances and Phonograms Treaty which
South Africa intends to ratify.
Performers Protection Amendment Bill (“PPAB”)
1.
Section 3A: Unwarranted and harmful restrictions on the transfer of rights by performers,
including an automatic reversion of assigned rights after a maximum of 25 years, and
Ministerial obligations to regulate the terms of contractual agreements between
performer and producers. These provisions would wholly undermine the South African
music industry, reducing revenues for performers and producers alike, and creating
major disincentives for investment in South African record companies and artists.
2.
Downgrading of performers’ rights from exclusive to mere remuneration rights: The bill
proposes levels of protection for certain performers’ rights, which less than the
requirements of the WIPO Performances and Phonograms Treaty which South Africa
intends to ratify.
3. We also note that the problematic fair use provision and provisions on technical
protection measures are duplicated by reference to the CAB.
We address each of these issues in detail below.
2. NCOP HEARINGS ON THE BILLS
We understand that the NCOP may hold hearings to hear the view of stakeholders on these
bills. Given the importance of the bills to the future of the music industry in South Africa, and
the serious threats they pose in their present form to that that future, we respectfully request
that we and other stakeholders be given the opportunity to appear before the NCOP to
present our concerns.
IFPI Submission on the South African Copyright Amendment Bill and Performers’ Protection Amendment Bill –
22 February 2019 – Page 3
Detailed Comments on the Copyright Amendment Bill (“CAB”)
1. SECTION 82 – MANDATING A ROYALTY ENTITLEMENT FOR ALL AUDIOVISUAL
PERFORMERS WILL RESULT IN REDUCED INCOMES FOR PERFORMERS, REDUCED
ENGAGEMENT OF SOUTH AFRICAN PERFORMERS IN AUDIOVISUAL PRODUCTIONS AND
REDUCED INVESTMENTS IN SOUTH AFRICA
Section 8A of the draft bill presented to and passed by the National Assembly includes a new
proposal, introduced without prior consultation, to regulate the remuneration terms of
private contractual agreements between audiovisual performers and audiovisual copyright
owners, which includes performers in and copyright owners of music videos.
Section 8A(1) proposes that performers shall “
have the right to share in the royalty received
by the copyright owner for any of the acts contemplated in section 8”, i.e. all licensed uses of
audiovisual works, or sales thereof. Section 8A (2)(a) proposes that the written agreement
between the performer and the copyright owner may be agreed between the parties’
collecting societies, despite collecting societies having no role in such agreements. Finally,
section 8A(3) provides that in the absence of an agreement on the amount of the royalty, the
amount may be determined by the Tribunal, whose jurisdiction should be limited to
determining disputes concerning collectively managed rights.
Regrettably, the absence of consultation on this proposal has resulted in a provision that risks
fewer South African performers being engaged to perform in music videos, a reduction in
income for those who are engaged, and a reduction in investments in the South African music
industry, for the following reasons
1.1 How performers are paid for their performances in music videos now
Music videos comprise varying contributions from different types of performers, who require
varying contractual and remuneration agreements:
Performances from
featured performers (the artist or artists with whom the record
company has partnered). Featured artists, who have ongoing partnerships with
record companies, are remunerated in accordance with the terms they have
negotiated (and re-negotiated from time to time) with their record company, and
these terms almost invariably are on a royalty basis (in addition to often substantial
lump-sum advances); and
Performances from non-featured performers (the performers who typically are
contributing to a music video on a one-off basis, such as dancers performing in the
background of the video). Non-featured performers are typically remunerated by
way of one-off lump-sum payments. A music video can contain performances from
dozens of background performers.
These different modes of remuneration for these two categories of performer reflect the
relatively ancillary role played by non-featured performers when compared to the featured
IFPI Submission on the South African Copyright Amendment Bill and Performers’ Protection Amendment Bill –
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artist. This also reflects the fine economic balance underpinning the music industry, which
would be dismantled with harmful consequences by the one-size-fits-all approach proposed
in this provision. Finally, it reflects the fact that non-featured performers work on numerous
different productions and want to be paid upfront for their work. This approach also means
that non-featured performers do not share in the risk of the production. If the production
does not succeed commercially, as they majority do not, these performers are not affected.
They have been paid and their payment is not contingent on the success of the production.
1.2 Draft section 8A would fundamentally change the economics of the industry to the
direct detriment of performers
Section 8A would end the long-established international and South African practice of upfront
payments to non-featured performers. Instead, section 8A would mandate that these
performers must be paid on a royalty basis, meaning that instead of receiving an upfront
payment for their contributions to music videos, these performers would have to wait to
receive a share of royalties derived from licensed uses of the music video.
In practice, because only the minority of music releases are commercially successful, this
means that very few background performers will ever receive royalties equivalent to the one-
off payments they enjoy now, and further it will take significantly longer for them to receive
any revenues from their performances at all.
Draft section 8A will therefore remove the certainty of income for these performers, and
instead require them to share in the risk of the production, with no guarantee of any payment.
Record companies take these risks with every music video and sound recording they produce,
not least with new artists, but non-featured artists do not. Draft section 8A will change that
to the clear detriment of those performers.
1.3 Draft section 8a will reduce the investments that record companies can make in
South African artists and repertoire.
Draft section 8A would entitle all performers to share in revenues from licensed uses of a
music video, irrespective of the nature of their performances. Where a production is not
commercially successful, there will be little by way of revenue to share as explained above.
For the minority of productions that do succeed commercially, those revenues would have to
be shared with a much larger group: the featured artist (who is already contractually entitled
to royalties), every non-featured performer who has performed in the music video
irrespective of the nature of their contribution, and the record company. Put simply, the
featured artist’s and record company’s share of revenues will be reduced. This will have the
direct result of reducing featured artists’ revenues and the revenues for record companies to
reinvest in artists and repertoire, meaning fewer South African artists’ careers will be given
the opportunity to succeed. In the worst case even the most successful productions will
become unprofitable, meaning the incentive to invest in such productions at all will be
significantly reduced, if not removed. Indeed, this worst case may be the most probable
because section 8A seemingly does not even entitle the copyright owner to recoup its costs
before such shares in royalties become payable (unlike section 6A, for example, where
“royalty” means gross profit).
IFPI Submission on the South African Copyright Amendment Bill and Performers’ Protection Amendment Bill –
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4. TECHNOLOGICAL PROTECTION MEASURES (TPMS) AND RELATED PROVISIONS NEED TO
BE REVISED TO ENSURE MEANINGFUL PROTECTION
In this section we address the inadequate implementation of, and the specific issues with, the
technological protection measures (TPMs) introduced in the Copyright Amendment Bill.
Article 18 of the Performances and Phonograms Treaty (WPPT), which South Africa intends
to ratify, requires that contracting parties provide “
adequate legal protection and effective
legal remedies against the circumvention of effective technological measures”. At present,
the proposed provisions in the Bill are not compatible with that requirement, as we explain
below.
This issue is of paramount importance when considering the central role of digital distribution
to the current and future economics of the music industry. While the recorded music industry
in South Africa is now predominantly a digital industry, piracy remains a serious obstacle to
continued growth in this area. The introduction of adequate provisions on technical
protection measures is therefore essential to protect against piracy and thereby enable the
development of new business models. We welcome the inclusion of the provisions on TPMs
in the Bill, but make the following recommendations to ensure that the provisions will be able
to serve their intended purpose.
4.1 Definition of “technological protection measure”
First, the definition of “technological protection measure” in section 1(i)(a) is problematic
because it refers to technologies that prevent or restrict infringement, as opposed to being
designed to have that effect. The plain reading of this definition would be that a TPM that is
circumvented is therefore not one that prevents or restricts infringement (because it has not
achieved that aim), and therefore the circumvention of it is not an infringement. This would
defeat the purpose of the provisions prohibiting the circumvention of TPMs.
We therefore recommend that, in line with Article 6 of the EU Copyright Directive
(Directive 2001/29/EC), for example, the following amendment be made to the definition in
section 1(i) of the Bill. We also propose the deletion of paragraph (b) in the definition. That
a TPM may prevent access to a work for non-infringing purposes should not have the effect
of removing its status as a TPM. Rather, the provision of section 28P(2)(a) would apply to
enable the user to seek assistance from the right holder in gaining access to the work in
question. As it stands, paragraph (b) of the definition is open to abuse and would provide a
charter for hacking TPMs. In this respect, please see also our comments below in respect of
section 28P(1)(a).
We also recommend that the definition of ‘
technological protection measure circumvention
device’ be amended also to include services and devices that (a) are promoted, advertised or
marketed for the purpose of circumvention of, or (b) have only a limited commercially
significant purpose or use other than to circumvent TPMs. This would ensure that the
definition is adequately scoped to encompass all TPM circumvention devices and services,
which would also be consistent with Article 6(2) of the EU Copyright Directive, for example,
and would therefore be compatible with WPPT (and the WIPO Copyright Treaty).
IFPI Submission on the South African Copyright Amendment Bill and Performers’ Protection Amendment Bill –
22 February 2019 – Page 10
Detailed Comments on Performers’ Protection Amendment Bill
1. SECTIONS 3A AND 8D: HARMFUL RESTRICTIONS ON TRANSFER AND UNJUSTIFIED
REGULATION OF PRIVATE CONTRACTUAL AGREEMENTS
While we support proposed section 3A(1), which provides that where a performer has
consented to the fixation of their performance, their exclusive rights under section
3(c),(d),(e),(f),(g) and (h) are transferred to the copyright owner of the audiovisual work or
sound recording in question, proposed section 3A(3) will harm producers and performers
alike, for the reasons we explain below.
1.1 Section 3A(3)(A) – unjustified interference in private contractual arrangements
Draft section 3A(3)(a) would require that written agreements between producers and
performers “
must at least contain the compulsory and standard contractual terms as may be
prescribed”. Draft section 8D provides that the Minister must make regulations prescribing
compulsory and standard terms covering seemingly every aspect of the contractual
relationship between a producer and a performer (the rights and obligations of both parties,
the remuneration terms, the method and timings of payments, the term of the agreement,
and dispute resolution mechanisms).
These provisions not only represent severe (and unsupported by an evidence-based need)
intrusions into private contractual relations, but are also premised on the assumption that
producers and performers should be subjected to rigid, one-size-fits-all contractual
regulation. This ignores the reality, which is that partnerships between producers and
performers vary greatly, and that both parties benefit from the flexibility that contractual
freedom permits.
In the context of sound recordings and music videos, the relationship and contractual
agreement between the featured artist and the copyright owner will differ substantially from
that between a performer appearing as a one-off background musician or dancer and the
copyright owner. The relationships between record companies and performers within in
those two categories will also vary greatly, and are wholly unsuited to standard contractual
terms.
The recording industry exists on the basis of its partnerships with artists; the artist is central
to everything a record company does. The market is highly competitive and for record
companies to compete they must ensure that artists receive competitive and fair returns for
their work, and must also compete to provide the varying levels of service required by
different artists. The agreements between featured artists and record companies reflect
negotiated agreements in which the artist is professionally represented, and these
agreements can vary significantly from one artist to another. For example, one artist may
want a “full service” agreement with a record company where the partnership covers almost
all aspects of the artist’s professional career, whereas another artist may want the record
company to play a more limited role. Contractual terms set by a Minister will never be able
to take the nuances of these highly personal relationships into account, and will instead
IFPI Submission on the South African Copyright Amendment Bill and Performers’ Protection Amendment Bill –
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1.3.1 Reversion of rights will make sound recordings unusable after 25 years, thereby
harming the very performer that the proposal purports to protect
Sound recordings almost invariably include performances from a large number of performers,
comprising:
the
featured artist (the principal performer or performers (in the case of a band or
group). Featured artists enter into partnerships with record companies whereby the
two parties work together to produce, typically, a number of albums (the
partnerships are much broader than that, but this element is relevant for present
purposes). Featured artists receive “advance” payments from record companies
(lump sums, often very substantial, which provide income for the artist to work on
their music), and royalties from the revenues generated by the recordings; and
“session musicians” who perform the “backing track”, such as a drummer or backing
vocalist. Session musicians, typically contract with record companies on a one-off
basis to perform in the background of one or more tracks. They are paid upfront,
and tend to work on numerous projects across different record companies.
In each case the performer typically assigns their performers’ rights to the record company.
This enables the record company to license third parties, such as digital services, to make the
recordings available to the public, thereby generating revenues from the recordings, which
are shared with the featured artists, and reinvested at high rate back into the development
and marketing of new artists and repertoire. On average 27 percent of record company
revenues are invested back into artists and repertoire and the marketing of them.
Reversion of these assigned rights to performers after a maximum of 25 years would fragment
the rights in a recording and render it unusable by anyone. Because a recording is made up
of a number of performances, no-one would gain anything from the reversion of the rights in
their performance. A performer cannot do anything with their reverted rights in their
percussion performance on a track that comprises, for example, other performances by
backing singers, keyboard players, drummers etc etc. These rights on their own cannot be
licensed without all of the rights of the other performers and of the record company.
The sole effect of the reversion would be that the rights in the recording are fragmented
between the record company which owns the copyright in the sound recording and the
performers who each own their rights in their own contribution to the overall track, with no
party able to license and derive revenues from their individual rights.
Therefore, unless following the reversion of rights the record company can secure new
assignments or exclusive licences from each of the performers of a track, the track cannot be
used by anyone. The inability of the record company to regain the reverted rights from just
one performer (eg the drummer) would mean the track cannot be licensed to, for example, a
digital music service, because the use would infringe the drummer’s reverted rights even if all
of the other rights had been re-assigned back to the record company.
IFPI Submission on the South African Copyright Amendment Bill and Performers’ Protection Amendment Bill –
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This is not a hypothetical risk. When considering the thousands of tracks produced by a record
company in partnership with many thousands more performers, the impossibility of securing
renewed assignments of rights after the reversion is clear. While the record company may
have an ongoing relationship with the featured artist on a track or album, locating every
session musician who has performed on a track or album would be impossible in many cases.
The effect of the proposed 25 year reversion will therefore be that a vast catalogue of
recorded music will fall out of circulation because it simply cannot be used without infringing
one or more parties’ rights. In effect the period that a sound recording can generate revenues
for producers and performers will be halved from the current 50 year term of protection to a
maximum of 25 years.
A provision intended to protect performers would therefore in fact harm them, as well as
harming the producers whose investments are vital to the careers of recording artists, while
depriving South African culture of a vast array of recorded music.
The harm will be felt even more acutely because historic repertoire is an increasingly
important part of record company and performers’ revenues now that the music industry is
predominantly a digital industry. The shift away from physical consumption (CDs etc) to
downloads (iTunes etc), and now to streaming (Spotify, YouTube etc) means recorded music
can generate revenues from digital services over a longer period of time. The proposed
provision would result in the majority of sound recordings produced after the law comes into
force being removed from such services after 25 years because the rights could not be
cleared.
1.3.2 Reversion of rights would have a direct negative effect on investments in South
African artists
As set out previously, the recording industry is a high-risk investment industry. Record
companies invest substantially in new artists, paying them advances and investing large sums
in the production of their recordings, music videos, tour support, marketing and other costs.
It is these investments that enable artists to focus solely on their art rather than having to
work for a living while trying to create.
The majority of new artists do not “break through”, meaning the record companies’
investments are written-off (we note that nonetheless unsuccessful artists are not required
to re-pay the advances paid by record companies to them – the record company incurs these
losses). This means that the revenues from successful sound recordings (which are shared
with featured artists) are vital to the ability of record companies to be able to invest in new
artists and repertoire. If record companies cannot do this, many artists’ careers will simply
never get started.
For the reasons set out in the section above, the proposed reversion provision risks rendering
the majority of recordings unusable after 25 years. That means such recordings would cease
to generate revenues for record companies and artists, reducing the revenues available to
reinvest into new artists and repertoire. The virtuous circle of re-investment would be
seriously disrupted, to the direct detriment of emerging South African artists and South
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