Music, Money and Middle Men: Changing Dynamics between Collecting Societies, Rights Holders and the Public
- Victor Nzomo |
- January 22, 2016 |
- CIPIT Insights,
- Collective Management Organisations,
- Intellectual Property,
- Public Interest
Disclosure: Back in the day when this blogger was young and naive, he worked both at Kenya Copyright Board (KECOBO) and Music Copyright Society of Kenya (MCSK). The views and opinions expressed in this blog are solely those of the author and should not be attributed to the author’s past or present employers or clients.
It all started with this twitter hashtag. Actually, no – one might want to start from an earlier point in time. On February 20th 1984 a local newspaper published an article titled: “Musicians Complain of Royalties” where it was reported that musicians who were members of the then Musicians Performing Rights Society of Kenya (MPRSK) had complained that the license fees collected on their behalf by MPRSK under a pre-existing collaboration agreement with the Performers Rights Society (PRS) in London were not being paid out to MPRSK members. On March 1st 1984, Mr. S.N. Ndemange the then MCSK General Manager wrote a letter captioned “Royalty Payment” addressed to Mr. Habel Mwalumba Kifoto, one of the complaining musicians mentioned in the newspaper article, explaining that the functions of MPRSK had since been taken over by MCSK, a duly registered company limited by guarantee incorporated a year prior in 1983, that would serve as the national society of composers, authors and publishers of musical works. Shortly after, Kifoto joined MCSK as a member and later rose up the ranks to become the Chairman of the Board of Directors at MCSK, a seat he occupied until his untimely demise on July 31st 2011.
Four months before Kifoto’s death, he received a letter on April 1st 2011 from the then Chairman of KECOBO informing him that the Board had resolved at its meeting on March 30st 2011 to revoke (with immediate effect) the license issued to MCSK on October 30, 2010 in accordance with the provisions of section 46(9) (a) and (c) of the Copyright Act.
In record time, KECOBO’s license revocation letter and the gazettement of MCSK’s deregistration were rendered nugatory by a court order cleverly obtained by MCSK allowing it to continue its operations while the matter between KECOBO and MCSK was being heard at the High Court. A year later, MCSK and KECOBO hammered out a settlement mediated by former Attorney General, Hon. Amos Wako and the court case became history.
So back in 2011/12 while KECOBO was busy pulling out the big stick of ‘regulation’ on MCSK – a good number of that collecting society’s membership may well have perceived KECOBO as the enemy for stopping THEIR organisation from collecting THEIR money. Ofcourse there were those MCSK members who sided with KECOBO’s deregistration of MCSK but they must have known deep down that ultimately the success or failure of MCSK lies with them as members.
In the meantime, an interesting ‘middle man’ begun flexing its muscles ostensibly taking advantage of the never-ending and very public love/hate relationship between collecting societies and rights holders. The middle man in question is none other than the Content Service Providers (CSPs). One such CSP is Cellulant Kenya Limited.
On December 16th 2008, police officers accompanied by MCSK officials raided the premises of Cellulant and seized four of the it’s computers on allegations that the CSP had breached the copyright of its members. Three of Cellulant’s employees were arrested, charged and released on a cash bail each of Kshs. 15,000 /=. A few months later, Cellulant sued MCSK after KECOBO’s attempts to mediate a settlement were unsuccessful. In court documents, Cellulant claimed that it had separate agreements with 650 rights holders whereby it had agreed to pay them royalty of 10% of any ringtone that is downloaded by Cellulant’s customers (read: Safaricom subscribers).
Although it may seem obvious, it is important to understand the fundamental differences between CSPs and collecting societies. First and foremost CSPs are businesses like any other trying to turn a profit out of any investment as opposed to collecting societies which are registered and operate as not-for-profit entities on behalf of rights holders. Secondly, CSPs are licensed by the Communications Authority of Kenya (CA) to carry out certain activities including uploading content on Safaricom Limited’s Skiza platform whereas collecting societies are neither licensed by CA nor do they have the technical resources and skills required to deal with content beyond their licensing mandate regulated by KECOBO. Thirdly and most importantly, CSPs are authorised to deal in content pursuant to licenses obtained from rights holders which are by and large non-exclusive in nature whereas collecting societies like MCSK have in place exclusive assignments from rights holders which essentially means that MCSK is able to do all things on the rights holders’ behalf including negotiating, suing or licensing users such as CSPs.
As a result, the High Court in the Cellulant case did its best to explain the differences between collecting societies and CSPs as highlighted above. Here is one of the critical passages from the court’s ruling on the matter:
“It was apparent to the court that the plaintiff [Cellulant] was exploiting the individual music artists by taking advantage of their ignorance by dangling the carrot that it would pay them a higher percentage of royalty than that offered by the defendant [MCSK]. The plaintiff would rather deal with individual artists who have no mechanism of verifying whether any of their artistic output had been sold as ring tones to the members of public, than deal with the defendant which has the technical knowhow and expertise to exact the royalties due to its members from the plaintiff.”
Despite this ruling and numerous subsequent complaints by CMOs and rights holders, CSPs have continued to operate as middle men with the blessing of the CPSs’ main customer, Safaricom Limited. Safaricom knew that having the CSPs as middle men would serve as a secure buffer between its Skiza portal and the rights holders. The turning point for Safaricom must have been a court battle between the mobile operator and a musician named John Boniface Maina.
On May 14th 2013, JB Maina sued Safaricom for copyright infringement of his popular gikuyu songs muiritu wa kabete, tiga kumute, njeri, ndwara cece among others which were uploaded by Cellulant and others on Safaricom’s skiza platform. JB Maina proved to the court that there were no licenses with any of the CSPs or any assignments with MCSK. As result, the court granted JB Maina special orders known as ‘Anton Piller Orders’ which basically allow you to enter into the premises of any person or company alleged to be infringing your rights under copyright and collect evidence of the said infringement. Subsequently, JB Maina returned to court accusing Safaricom and others of contempt of court therefore claiming that Safaricom’s Chief Executive Officer and others should be committed to civil jail. A year later on May 5th 2014, it was reported that JB Maina had accepted a settlement offer of KES 15.5 million from Safaricom to withdraw the case he had filed in court.
In 2015, the collecting societies finally convinced Safaricom to cut out the middle men and a license agreement was signed jointly with MCSK and the two other collecting societies in the music industry namely, Kenya Association of Music Producers (KAMP) and Performers Rights Society of Kenya (PRiSK). The celebrations by rights holders were short-lived as a group of rights holders quickly filed two separate cases in court challenging various mandates of the collecting societies to sign a licensing deal with Safaricom. Some may argue that this is yet another case of rights holders getting in their own way by fighting their own collecting society. The court cases in question are Nairobi High Court Petition No. 317 off 2015 Xpedia & 4 Ors v. Attorney General & 4 Ors and Nairobi High Court Civil Case No. 262 of 2015 Irene Mutisya & Anor v. Music Copyright Society of Kenya & Anor which are still on-going.
To put it plainly, these two 2015 cases above are a clear indications that there are strong vested interests who would want CSPs to remain as middle men prevailing in the disharmony between the collecting societies, rights holders and rights users like Safaricom. In the meantime, one wonders whether the rights holders involved in these law suits understand that it is THEIR royalties and those of other deserving rights holders that are being used to pay the legal bills of the collecting societies to defend these suits.
Now let’s talk about that twitter hashtag, its YouTube video and a subsequent derivative YouTube video. From the history above, it is clear that rights holders have been complaining about royalties due to them from collecting bodies for over 30 years and in most cases they have done so with little or no exact information. Rights holders can and must do better if they want to effect real change within their collecting societies. A modest suggestion would be for rights holders to first arm themselves with the correct knowledge before even uttering a word or taking any action. A recent case of poor form by rights holders stemming from their own lack of knowledge is the Mukhwana case heard in court last year. This was yet another case of a MCSK member raising serious concerns and damaging allegations but without properly understanding the laws applicable, the internal procedures to be followed and the proper role of various arms of government in matters between collecting societies and members.
For the sake of clarity, the reference to the 2011 case between KECOBO and MCSK should be a reminder to members of the collecting societies that the government, whether executive, legislature or judiciary, cannot always settle the members’ internal grievances for them. In fact, rights holders must realise that the current legal framework for collective administration of copyright does not in any great detail address the supervisory powers of KECOBO vis-a-vis collecting societies and also does not address the vacuum created in the event a collecting society is deregistered. The solution has and will always be self-regulation and not state regulation.
A humble submission in favour of self-regulation within collecting societies is that rights holders should finally move beyond complaining in the newspapers (as was the case in 1984) or in social media (as is the case today) and instead channel their united efforts to addressing the problems in the systems within their respective collecting societies.
Many observers would agree that collecting societies have largely operated unchecked by a large percentage of their membership thus exacerbating many of the problems and inefficiencies being complained about by members. Membership does not begin and end with attending Annual General Meetings or voting for Board Directors. Membership means active participation right from the policies formulated and ratified by the Board of Directors quarterly down to the implementation strategies and activities of the Management each day by the employees of the collecting societies.
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