The South African Music Industry

APPENDIX ONE: UNDERSTANDING COPYRIGHT

Copyright legislation

“Unlike book publishing, the physical sale of the music itself is not the core business; the central asset is the copyright …”⁸³. What this quotation points to is the fact that whilst the cassette or the compact disc is the most commonly recognised commodity form in the music industry, it is the musical work - the work of the composer and the artist - that forms the basis of the creation of value in the music industry.

It is the right and the payment for the right to exploit⁸⁴ musical works that is protected in copyright legislation. Copyright legislation has both an international and a national dimension. At an international level the Berne Convention (1886) for the Protection of Literary and Artistic Works⁸⁵ constitutes the most long-standing framework for copyright legislation. A central principle of the Berne Convention is the principle of national treatment.
The principle of national treatment is that “Works originating in one of the contracting States must be given the same protection in each of the other contracting States as the latter grants to the works of its own nationals⁸⁶”.
As of the 6^th March 1994, there were 105 States, of which South Africa was one, party to the Berne Convention. The principle of national treatment is further strengthened by the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), that constitutes part of the World Trade Organisation’s trading regime⁸⁷. South Africa is a signatory to TRIPS.
Thus copyright legislation is embedded in a global legislative environment which confers both rights (protection of copyright in foreign territories) and obligations (protection of foreigners’ copyright in the domestic territory) on the member States.
National systems of copyright confer two areas of rights, namely rights pertaining to the musical composition and rights relating to the sound recording⁸⁸.
The musical composition rights refer to the rights protecting the actual composition rather than a particular recording of a composition. Royalties accrue to the publishing house and the composer through the exercise of usage rights. Usage rights can be divided into two categories - mechanical usage and performance royalties.
Mechanical usage refers to each time that particular recording is used in its original form. Thus mechanical usage rights would be collected each time that a copy is made of a particular musical composition.
Performance royalties are collected each time that composition is used, whether it is re-interpreted by another musician; it is used as the backing to an advertising jingle (synchronisation) or if it is used in its original form.
The royalties that radio stations pay may take the form of a percentage of the advertising revenue in relation to the percentage of air-time dedicated to playing music or alternatively may be a flat rate.
Sound recording royalties refer to those recordings that are the result of an artists recording of a particular composition. These rights are usually held by the record company. Once again there are two forms of usage rights - mechanical usage and performance royalty.

Figure 24: Understanding Copyright

Mechanical usage refers to the selling of the particular CD and the royalties accruing to the record company and artist, whilst performance royalties would be paid on the public performance of that song or the broadcast of that song.

The administration of copyright⁸⁹

Music is perhaps one of the world’s most thoroughly globalised export products. As a result of the spread of music across the globe there arose the need for a system of administration that would ensure the collection of the royalties owed to rights-holders by the various users of music. This administrative system is supported by the international system of legislation discussed above and, in particular, the principle of national treatment.

The administration of copyright is a complex procedure which takes a variety of forms. In the first instance a record company or publisher may license an agent in another territory to distribute, manufacture or otherwise represent a particular musical work in that territory.
Thus the secondary agent becomes responsible for the manufacture and distribution of a particular musical work in a territory, however part of the income which is derived from this activity has to be transferred back to the copyright owner, who is in a foreign territory. It is this process of licensing that gives rise to the complex trans-national revenue flows that are characteristic of the global music industry.
In addition to the involvement of commercial agents in the administration of copyright, there are often a range of copyright collection agencies which are often non-profit organisations. Copyright collection agencies invariably operate on the basis of membership who register musical works with them.
It is this process of registration that enables the agencies to pay royalties to the various rights-holders when their musical work is used. It is the copyright collection agencies role to ensure the collection and distribution of royalties arising from the exploitation of a musical work for the owners of that work.
These organisations work on the basis of reciprocal agreements with copyright collection agencies in other territories that ensure that composers’ and publishers’ royalties are paid to them.
This administrative system has evolved to ensure that wherever a song is played or album reproduced that the appropriate royalties get paid to the rights holders. However this system is neither as comprehensive nor as effective as this theoretical model might suggest and the failings of this system are highlighted in the body of this report