Ring­tone rip-off fury

CityPress - - News - LLOYD GEDYE news@city­press.co.za

Arow over mu­sic roy­al­ties is heat­ing up across Africa, with cell­phone gi­ants ac­cused of vi­o­lat­ing copy­right in both Nige­ria and South Africa, and po­ten­tially fac­ing bil­lions of rands in fines and bills.

Con­ti­nen­tal su­per­stars DJ Cleo and Nige­ria’s Flavour N’aba­nia have asked for sales data from MTN, its sub­sidiary and con­tent ag­gre­ga­tor Con­tent Con­nect Africa (CCA), and Vo­da­com so they can have them au­dited to es­tab­lish whether their copy­right has been in­fringed.

While the com­pa­nies strongly deny any in­fringe­ments, which CCA dis­misses as “lu­di­crous”, in­dus­try in­sid­ers say their li­a­bil­ity could run into the bil­lions in un­paid roy­al­ties and fines in South Africa alone.

DJ Cleo and Flavour have each en­joyed hugely suc­cess­ful hit sin­gles, which would have gen­er­ated sig­nif­i­cant rev­enue when sold by the com­pa­nies as a down­load, ring­tone or ring­back tone.

If they can prove copy­right vi­o­la­tions, the SA Copy­right Act pro­vides for a first of­fence fine of up to R5 000, or a jail term. If it is a re­peat of­fence, the act pro­vides for a fine of up to R10 000 or a jail term, per in­fringe­ment.

How­ever, DJ Cleo and Flavour are not the only mu­si­cians in dis­pute with MTN.

This week, Capasso, the body that col­lects me­chan­i­cal roy­alty rights on be­half of song­writ­ers, ac­cused MTN of ow­ing R1 mil­lion in roy­al­ties for 2014 and fail­ing to de­clare mu­sic sales data and earn­ings for 2015. A me­chan­i­cal roy­alty needs to be paid to a song­writer each time one of their songs is sold, ei­ther on a CD, as a down­load, as a ring­tone or on a stream­ing ser­vice.

Al­though MTN de­nies this, Capasso CEO Nothando Mi­gogo told City Press it has been ask­ing for a meet­ing with MTN since April last year and “they won’t even meet us; they won’t give us the time of day”.

In De­cem­ber, the Nige­rian Copy­right Com­mis­sion filed crim­i­nal charges against MTN Nige­ria for 3 009 copy­right in­fringe­ments re­lat­ing to the work of Nige­rian artist Baba 2010.

But MTN told City Press this week it had set­tled with Baba 2010 and he had with­drawn his com­plaint.

DJ Cleo and Flavour

In mid-De­cem­ber, copy­right ex­pert Graeme Gil­fil­lan, rep­re­sent­ing DJ Cleo’s com­pany, Will of Steel Pro­duc­tions, and N’aba­nia’s com­pany, 2Nite En­ter10­ment, be­gan send­ing out six sep­a­rate re­quests for data from MTN, Vo­da­com and CCA.

In his let­ters, which City Press has seen, Gil­fil­lan says there has been “dis­quiet” at the way the com­pa­nies use a “three-month lim­ited li­cence” to sell ring­back tones per­tain­ing specif­i­cally to how me­chan­i­cal roy­al­ties are ac­counted, re­ported and dis­closed.

At the heart of DJ Cleo and Flavour’s dis­putes is the fact that ring­tones and ring­back tones are sold on a three-month, opt-out li­cence, which means that if the buyer does not can­cel the agree­ment, they are recharged ev­ery three months.

Gil­fil­lan says stud­ies show most con­sumers keep their ring­tone for be­tween two and five three-month pe­ri­ods, and ev­ery sale needs to be re­ported and roy­al­ties paid, not just the first one.

Gil­fil­lan wrote that at­tempts to ob­tain proof of pay­ment for li­cence re­newals were “re­buffed” by the com­pa­nies.

He has de­manded data, which would al­low an au­dit of the sales of the two artists’ works. He has also asked for a list of all sound record­ings hosted by the two artists on the com­pa­nies’ retail sites and for who sup­plied the works to MTN, as well as a state­ment show­ing all sales and how much was earned on them.

In ad­di­tion, he has re­quested a state­ment track­ing all me­chan­i­cal rights and proof of au­tho­ri­sa­tion to of­fer th­ese works for free, and how of­ten this was done.

Gil­fil­lan says if the com­pa­nies had done this al­ready, there would be no need for an au­dit.

Let­ters be­tween the par­ties City Press has seen show the ne­go­ti­a­tions have be­come rather heated.

Vo­da­com and MTN told City Press this week they re­port on ev­ery ring­back tone billed for, be it a new sale or a re­newal.

But Capasso in­sists it has faced con­stant “rate dis­putes” and that MTN has shown “un­will­ing­ness” to en­ter into li­cence agree­ments, adding that CCA is also dis­put­ing its rates.

Capasso’s busi­ness affairs man­ager, Wise­man Ngubo, says ne­go­ti­a­tions have been go­ing on for a year.

To­wards the end of 2014, MTN set­tled pub­lish­ing roy­al­ties with Capasso for the pe­riod be­tween 2006 and 2013. The 2013 roy­al­ties were paid out at 8%, the rate which Capasso claims is now in dis­pute.

But MTN in­sists it is not dis­put­ing the rate and is happy to pay it, but wants clar­ity on claims made for songs be­long­ing to nonCa­passo mem­bers.

Capasso said in a state­ment this week: “Failed ne­go­ti­a­tions and rate dis­putes have been the or­der of the day for over five years; this while the mo­bile gi­ant con­tin­ues to sell hit sin­gles.”

CCA’s Antos Stella says it has been in good faith dis­cus­sions with Capasso as late as this month, adding CCA ap­pointed an in­de­pen­dent com­pany to deal with the com­plex­ity of me­chan­i­cal roy­al­ties. She has de­clined to com­ment fur­ther.

“MTN is up to date with most roy­alty pay­ments with Capasso and is in the process of set­tling the re­cent roy­alty in­voice from Capasso for the cur­rent pe­riod, which amounts to less than R1 mil­lion,” the com­pany said.

PHO­TOS: LUCKY NX­U­MALO / SUP­PLIED

Flavour N’aba­nia (left) and DJ Cleo

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