global market report, Recording Industry in Numbers, the authoritative publication on the recorded
music market, shows that in 2014 the South African record industry was the 24th 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 help South Africa implement the DTI’s intention to promote the
interests of South African music creators and listeners. 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, which could undermine the commercial basis for
making that investment, and which are at odds with the industry best practices that have underpinned
growth elsewhere.
In order 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.
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
By way of introduction to the importance of record companies in developing new artists, we set out
below some extracts from Plácido Domingo’s introduction to the recent IFPI
Investing in Music report:
(The full Investing in Music Report is available at
http://www.ifpi.org/content/library/Investing_In_Music.pdf):
In my long career, I have worked with all the major record labels, and even some of the smaller ones.
From my experience in the recording industry, I know very well what a big difference a record label
can make to the success of an artist’s career. To achieve success, of course, means investment by
the labels, both in time and money, in promoting the artist and his or her recordings.
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 2
It is very important, from time to time, to be reminded of the industry that is working tirelessly behind
the artist. Today, it is easy to take for granted the constant supply of new music from a huge range
of artists, emerging on a weekly basis. In the digital world, it is so easy to access music, people can
forget the time and effort that goes into creating a professional recording, as well as the work needed
to bring it to the attention of the public.
The investors in music are vital to the work of artists. They are the risk-takers who win if an artist is
successful (and far fewer succeed than fail), but lose if they are not; they provide the financial support
in advance of recording that others are not prepared to give; they offer skills and understanding of
how to reach the consumer in all the ways the digital age allows; and they provide many other skills
too. This is all part of the work of record companies who, according to this report, invest US$4.3
billion dollars worldwide in the work of recording artists.
Investment in music cannot be taken for granted. Like the creativity of the artist, it is something that
needs to be supported and protected by a secure legal environment. That is why a safe, adequate
copyright framework for artists and labels is so crucial.
4(1)(b)
Indeed, 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 supported by any
guarantees of returns other than the common interest of artists and producers in making the
recordings popular and commercially successful. Global statistics show that on average between 7
and 8 out of every 10 newly signed artists do not break even, meaning that the money invested in
them is lost in whole or in part.
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. In September 2014, IFPI partnered with
The Unsigned Guide,
an almanac of information from unsigned artists, to survey performers currently without a record
deal. Seventy per cent of the unsigned artists surveyed said they wanted a record deal. The Annex to
this submission sets out some case studies on the relationship between artists and record companies.
Worldwide, the record industry invested US$4.3bn in Artists & Repertoire (A&R) and marketing in
2013. Between 2009 and 2013 the amount invested in A&R and marketing was in excess of
US$20bn.
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 2014 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
outside Japan and the US in the five year period to 2014 shows that while record companies’ sales
revenue fell 17 per cent, record companies’ payments to artists – in the form of royalties and
unrecouped advances – declined much less in real terms (down 6 per cent) and therefore the artists’
share of total sales revenues increased significantly as a share of sales revenue, by 13 per cent. Over
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 3
the five year period, total payments by record companies to local artists totalled more than US$1.5
billion across the 18 markets.
More information about the role of record companies as the primary investors in the careers of
musicians is available in the Investing in Music Report (see link above).
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). 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 BILL
1.
Copyright in Sound Recordings
IFPI welcomes the proposed amendment to Section 9(e) of the Act, which would transpose the text of
Article 14 WPPT into the Act, but at the same time it is noted that some of the of proposed changes
are not consistent with the WPPT and/or international best practice, or are very unclear.
We submit that the Bill should be revised to clarify that:
(a) Sound recordings continue to be protected as copyright works. The relationship between
the rights proposed in section 20C and the copyright in sound recordings is unclear, at best.
The provisions in section 9 and section 20C are overlapping and contradictory.
(b) The Copyright Tribunal’s jurisdiction covers only collective licensing schemes, it should have
no jurisdiction over the commercial terms in direct agreements between individual right
holders and users.
(c) Artists and record companies can continue to freely negotiate the commercial terms,
including the level of royalties, of artist agreements.
Each of these points is addressed in greater detail below by reference to the same paragraph lettering.
a)
Sections 20 A through to 20 F are unnecessary, and overlap with and contradict Section 9
and the existing Performers’ Protection Act
The South African Copyright Act follows the copyright tradition. Accordingly sound recordings are
protected as works, and record producers enjoy protection as authors.
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 4
The proposed section 20 is an alien implant based on the civil law concept of “related rights”. It sits
poorly in the South African copyright tradition, as demonstrated by the problematic overlaps and
contradictions between sections 9 and 20 of the Bill.
We respectfully submit that the proposed section 20 should be deleted. Producers’ rights are set out
in section 9. Performers’ rights are set out in the existing Performers’ Protection Act, and it is assumed
that any changes relating to performers’ rights will continue to be addressed in that statute.
Notwithstanding our position that section 20 should be deleted from the Bill, we note that
section
20C(3) appears to downgrade the existing full exclusive rights of communication to the public (it is
not immediately apparent which exclusive rights are being referred to) set out sections 9(c) and 9(e)
of the Act to mere remuneration rights (the minimum standard of protection afforded by WPPT). This
would represent a weakening of protection and run counter to market trends by which record
producers are increasingly reliant on income derived from the licensing of these rights as income from
physical sales continues to decline (although income from licensing these rights has not offset the very
substantial global losses in sales revenues).
The communication to the public right enables record companies to derive revenue from the public
performance, broadcasting and other communications of sound recordings (as distinct from the
making available of their works described above). The proposal to downgrade the communication to
the public rights would weaken the industry’s ability to license those rights effectively and would have
a negative effect on the South African record industry’s revenues and, consequently, its ability 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 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. 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 .
The
minimum standard of protection required under Art.15 WPPT is that of a remuneration right. It
must be emphasized that this represents only the
minimum of harmonisation required. Indeed, the
Agreed Statement to Article 15 WPPT provides expressly that the Article does not cap or limit the
maximum extent of protection:
“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.”
We note that the existing South African law, at section 9 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. 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.
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 5
b)
Section 9A would introduce a sweeping statutory licensing regime, contrary to
international copyright treaties
The draft provisions of s.9A restate the Copyright Tribunal’s power to set the terms of licence
agreements between an individual right holder and a user.
This power 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 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). This power should
be revoked.
It is submitted that oversight of collective licensing arrangements by a copyright tribunal can be
appropriate in relation to collective licensing schemes. 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.
We also have concerns regarding other provisions regarding collecting societies and rate-setting.
For instance, the provision prohibiting the setting-up of joint collecting societies by right holders (in
particular by performers and record companies) would go 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.
As a general point, it is also vital that any rates set by the Tribunal for the public performance or
broadcasting of sound recordings 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.
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 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 6
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.
c)
Section 9A(b) is counterproductive
As noted above, statutory licensing and Tribunal oversight of individual licensing of exclusive rights is
contrary to international obligations (Berne and TRIPS) and would hinder rather than foster the market
for music rights. Moreover, the provisions of draft section 9A(b) are problematic also because they
disregard long-established industry practices, which have led to increased efficiencies in licensing
practices, thereby increasing the revenues derived from licensing by artists and producers alike. The
following is a brief description of relevant licensing practices which are currently applied in South
Africa; draft section 9A(b) would make it impossible to continue with those efficiency-oriented
practices.
1.
It is industry practice for artists to assign rights to record companies. Record companies are
then in a position to grant licences of bundled rights, which is fundamental to the possibility
of large-scale licensing of sound recordings and the associated economic benefits for record
companies and artists. Agreements between record producers and users depend upon
record companies being able to grant licences to enable users to use substantial parts of
record companies’ catalogues, if not their entire catalogues. It would be entirely impractical
to expect an agreement to be reached between the user, the record companies and
thousands of performers. There are approximately 7,500 performers on Major record
companies’ rosters alone, and none of these performers will have mandated collecting
societies to negotiate licences for their exclusive rights on their behalf. Requiring that
performers who have already assigned their rights should subsequently negotiate rates for
the making available of their recordings, goes against the industry practice and, crucially,
would be completely unworkable. The proposed section 9A(b) could make licensing of
catalogues of sound recordings impossible in practice, thereby stymieing developments in
digital markets and reducing public access to music in South Africa. That cannot have been
the DTI’s intention.
We note the recommendation of the South African Copyright Review Commission in its 2012
report that “
it should not be necessary, (as Section9A(1)(b) of the Copyright Act presently
requires), for the determination of the royalty payable under Section 9A(1)(a) that the
performer, or a collecting society acting on his or her behalf, should agree thereto. In this
regard, the CRC accepts the contention of SAMPRA that the current provision is likely to lead
to substantial problems in practice because of the difficulty of procuring the participation of
a significant number of performers in a multiplicity of tripartite negotiations with potential
users and copyright owners ” (CRC Report paragraph 3.3.7 at page 26).
2.
To require that revenues from interactive and certain other exploitations of work be shared
equally between the right holders (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. We have also noted the statement as long ago as 1993
by the Standing Advisory Committee on Intellectual Property that performance rights were
necessary in order to replace sales of physical products lost due to technology and unlawful
copying. (Standing Advisory Committee Report dated November 5th 1993 at paragraph 8).
Compulsory equal sharing of all revenues would remove all profit from record companies,
making it economically unviable to continue to produce new recordings, and breaking the
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 7
cycle of investment referred to above. While certain revenue streams may be appropriate
for such sharing arrangements (i.e. non-interactive broadcasting and public performance
rights when collectively administered), it would be a market killer if applied to on-demand
communications.
3.
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 (see http://www.ifpi.org/digital-music-report.php) shows
that across 18 territories local performers’ share of industry revenues from digital services
increased between 2009 and 2013 relative to record producers share, despite overall
industry revenues decreasing. Although the policy motivation behind this proposed section
is unclear, 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, and would therefore
result in reduced revenues for all those involved in creating sound recordings.
The South African Government should revise this proposal and remove (a) the provisions extending
the Copyright Tribunal jurisdiction, (b) statutory licensing to cover individual licensing of rights, and
(c) the division of revenues between performers and record companies, except in respect of royalties
paid by users in respect of the broadcast or public performance of protected works.
2.
Limitation of Term of Assignment
a)
Section 26(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 26(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 (26(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. The limitation would also have the effect of limiting 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 licensing their rights.
Draft section 39A (Unenforceable contractual term) would prevent record companies and performers
from agreeing to contractual terms which would deviate from the provisions of the Bill. This element
of section 39A 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. Similarly, proposed section 9B(2) which purports to give Ministerial oversight of
contracts between
inter alia record companies and artists constitutes a fetter on the freedom to
contract and will hold up rather than encourage investment in artists.
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 8
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 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.
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.
3.
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.
4.
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.
On the contrary, IFPI submits that the introduction of fair use into South African law would result in
plunging the growing South African online market for creative works into significant legal uncertainty
and would increase the risk of litigation and entry barriers for new services and creators wishing to
commercialise their works.
Fair use constitutes a fundamentally different legal approach to exceptions and limitations to rights
compared to fair dealing exceptions in that
there is no limit to the acts to which fair use may be applied.
The common law tradition of providing for clearly and closely worded “fair dealing” exceptions reflects
the tradition of providing an enumerated set of exceptions to the rights provided in legislation (or
specific uses of protected works, to put it another way). The overarching principle is that a use will
only fall within the exception if it is listed in the enumerated exceptions and is done for the purpose
of fair dealing. The US copyright law tradition of providing for “fair use” differs fundamentally from
the “fair dealing” tradition in other countries in that it does not require a list of enumerated
exceptions. Rather, it is typified by a non-exhaustive list of illustrative uses that may fall within “fair
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 9
use”, and the criteria to determine whether any use (not limited to the illustrative uses) is fair. Put
simply, fair use is open-ended and, as such, requires a great deal of litigation and judicial interpretation
to establish its scope and application.
Its introduction into the Act would mark a paradigm shift in South Africa’s copyright law, introducing
uncertainty that will require extensive litigation to resolve, hampering the development of the South
African digital music market.
Where exceptions to copyright are appropriate, we submit that clearly defined exceptions better
achieve legal and commercial certainty, promoting innovation, and are also consistent with the three-
step-test4.
Legal certainty drives innovation and growth
Record companies have licensed around 43 million tracks and more than 450 digital music services in
some 200 countries worldwide. Some of the most successful of these services were developed and
launched in countries that do not have fair use, for example Spotify (Sweden), Tidal / WiMP (Norway)
and Deezer (France). Indeed, the vast majority of the 200 or so countries where licensed digital music
services are available are not fair use jurisdictions. Fair use is not necessary to drive or sustain
innovation, as evidenced by the huge increase in innovative licensed digital music services globally.
The Act currently provides for specific exceptions and limitations for the purpose of fair dealing. In
common with many other countries, the fair dealing exceptions in the Act comprise a comprehensive
list, and consequently provide a high degree of certainty as to the acts that are permitted in respect
of protected works or subject matter. This legal certainty is essential to making the South African
online market predictable for new entrants.
Fair use is dependent upon established jurisprudence
A particular problem that would arise if a “fair use” doctrine were introduced concerns the scope and
application of fair use by the courts. An open-ended ‘fair use’ provision, such as the one available
under the US Copyright Act and that put forward in the Bill, cannot function properly without the
backdrop of substantial case law on the interpretation of fair use.
The scope and the application of fair use in the US have been developed in 150 years of fair use
jurisprudence. South African law does not have this case law history, making the interpretation of the
proposed fair use provisions, and the outcome of any litigation unpredictable. It is expected that the
introduction of fair use in South Africa would ultimately increase the number of cases that reach courts
on this issue, as both right holders and users will be unable to determine the scope of the exception
and judicial intervention will be required. As US academic and fair use proponent
put
it:
“fair use means the right to hire a lawyer”5.
In turn, uncertainty discourages investment and undermines licensing models which drive growth in
innovation and digital markets.
4 The limb of the three-step test, provided by the Berne Convention, WCT, WPPT, TRIPs, and by EU legislation,
requires that limitations and exceptions to exclusive rights should only apply in “certain special cases”.
5 http://lessig.org/blog/2004/03/talkback manes.html
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 10
In addition, the drafting of the fair use provisions is itself problematic, and it is not clear how the
proposed “fair use” exception could co-exist with the enumerated fair dealing exceptions already in
the Act.
Where new exceptions to copyright are justified on the grounds of a sound evidential basis or a
genuine overriding public interest, we submit that clearly defined exceptions for the purpose of fair
dealing, drafted so as to comply with the three-step-test6, would better achieve legal and commercial
certainty.
We also note that draft section 12A(1) appears to 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 copied7. 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.
5.
Other Points
Aside from the major concerns raised above, we also have concerns in relation to other provisions of
the Bill such as:
The
broadcasting quotas (proposed section 10A(c)).
Certain of the
criminal offences (proposed 23(a).
Draft section 12A(7) concerning
parallel imports of trademarked goods creates confusion
by its proposed inclusion in the Copyright Act. While we assume this is not the intention, to
permit parallel imports of sound recordings would constitute an unjustifiable limitation of
the right in section 9(b) of the Act (and equivalent provisions for other copyright works). It
would exacerbate the already serious piracy problems in South Africa.
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.
CONCLUSION
In this submission, we have addressed the priority issues affecting the recording industry and
welcomed the stated aim of modernising South African copyright law in line with international
standards and the demands of the modern, increasingly online market for creative works.
6 The limb of the three-step test, provided by the Berne Convention, WCT, WPPT, TRIPs, and by EU legislation,
requires that limitations and exceptions to exclusive rights should only apply in “certain special cases”.
7 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 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 11
[All redactions in Annex 1 are based on Art. 4(1)(b) of Regulation 1049/2001]
worldwide took to the band’s authenticity and talent. We were able to make use of global machine
to highlight their music and personalities to the world.”
***
MKTO: USING A GLOBAL NETWORK TO BREAK AN ACT
MKTO are pop duo
and
. The story of their success is an example of how
some record companies can leverage their global presence to help break new artists.
The pair met when their paths crossed in the TV world and were discovered, nurtured & developed
by renowned writer/producers
and
who subsequently introduced them to
Columbia Records in the US. But their first taste of commercial success was to come from thousands
of miles away in Australia.
,
at Sony Music Entertainment, says: “As a
global company we meet on a regular basis to take stock of new signings, new music and identify new
opportunities on an international level. In one such meeting in London,
who runs our
Australian and Asian region heard MKTO’s track Thank You. He immediately felt he had a chance with
this song and artist in his market. He returned to his team and launched into an engagement campaign.
Within weeks, the social media pull noticeably shifted to Australia and soon we began to build on the
Australian radio chart.”
The campaign paid off with Thank You going triple platinum and topping the Australian airplay chart.
The success enabled the US record company to further invest with the band’s second single, Classic
and ultimately release their full album in Australia before the rest of the world. The band returned on
subsequent promotional trips and eventually partnered again with Sony Australia on a highly
successful paid tour.
says: “Every good record company must take risks –and must invest. Here, Sony Music
Australia - lead by years of experience, passion and great ears - took a gamble on an unproven
American signing. Columbia in turn took a risk developing a marketing and promotional campaign for
a foreign market prior to their own. And thanks in no small part to plenty of hard work from the group
and excellent guidance by their manager, these risks paid off.”
The Australian campaign resulted in more than just local success and paved the way not only in their
home market but globally.
says: “With our Australian company taking early
ownership of the MKTO project, it enabled the artist to undergo a rigorous bootcamp of experience
before they encountered the intense & competitive US market. Six months of shooting videos, live
shows, TV performances, media interviews and interfacing with the label and the industry gave them
the insight & confidence to hit the ground running on home turf.”
The record company went on to promote MKTO in the US where Classic is now platinum. And now
sights have turned to the launch of the group’s career in Europe – where they have already scored a
Gold single in the UK and a platinum one in Sweden.
***
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 14
NEGRAMARO: INVESTING FOR THE LONG TERM
Sugar Music, Italy’s leading independent record labels, signed rock band Negramaro ten years ago.
The group has become the biggest Italian rock band of modern times, but their success did not come
overnight.
says: “Investing in a rock band in Italy can be difficult.
There are usually a lot of people in a band so it can be expensive and rock is not really the dominant
genre in Italy. But Negramaro had Mediterranean influenced melodic song writing that we found
really interesting.”
The band’s eponymous first album was instinctive, but essentially self-produced and regarded as too
alternative to attract a significant fan base among Italian consumers. Sugar Music brought in producer
, who had worked with superstars such as
, to work on some new songs that
were repackaged with the first album, but the result was still not a commercial breakthrough.
says: “We lost money on the project for the first two and half years, but we had a real belief in
the band and invested in the production of a second album.”
worked with the band on their second album Mentre Tutto Scorre which was a rock-pop fusion
which has greater traction with the Italian public. The band entered their song Mentre Tutto Scorre
at the Sanremo Festival competition, often seen as breakthrough opportunity, but were eliminated in
the first round.
Sugar Music played the album to the film director
who was enthused by the band.
“He loved Negramaro’s music and the fact that they had not broken as a band, and he put six of their
songs into his film Le Febbre. It introduced them to a whole new audience and we leveraged this
success to help them become a stadium filling rock band.” The album sold more than 350,000 copies.
In 2007, Negramaro relocated to the US to work on their new album La Finestra. The album was
produced and arranged by
, in collaboration with Negramaro themselves: it included
fourteen tracks ranging from rock to harmonies inspired by the heritage of great Italian singers-
songwriters; from electronic elements to “visual” lyrics evoking pictures and metaphors to explore a
sense of social and personal discontent.
Among the most notable moments in the band’s history are a string of memorable live shows; after
hundreds of live shows, the band’s extensive touring culminated in May 2008, with a memorable
concert held at Milan’s San Siro stadium, the first time ever for an Italian band to play the so-called
“La Scala of football”. The concert’s images, music and atmosphere were captured in Negramaro’s
first live album San Siro Live. The DVD launch was an unprecedented cinematic and musical event,
featuring screenings in more than thirty HD digital movie theatres all over Italy.
In 2010 Negramaro were back in movie theatres, this time penning the soundtrack for
criminal drama Vallanzasca - Gli angeli del male. The movie was presented out of
competition at the 67th Venice Film Festival.
Negramaro went on to have a string of commercially successful albums, overall sales of more than 1.5
million, and Sugar Music has recently released a compilation of their biggest hits over the last decade.
They also produced the anthem for the Italian football team’s 2014 World Cup campaign.
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 15
The label is now trying to break the band outside of Italy, sending its songwriter
to
writers’ camps overseas and looking at promotional activities in Latin America and the US.
says: “We took a chance on investing in Negramaro and maintained our belief in them
even though success did not come overnight. We helped them develop their talent act and generated
different opportunities to take their music to a wide audience. Believing in artists and supporting
them is what we do and we are so proud now that Negramaro are the most popular band in Italy.”
IFPI Comments on the Department of Trade and Industry Copyright Amendment Bill 2015 (the “Bill”),
Amending the Copyright Act No. 98 of 1978 (the “Act”) – Page 16