Ringtone rip-off fury
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But MTN told City Press this week it had settled with Baba 2010 and he had withdrawn his complaint.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.
Flavour N’abania (left) and DJ Cleo