The mid-August legal action sees South Africa's foremost music publishers and composers' society take legal action to claim unpaid royalties due on digital downloads sold by Exactmobile. Primedia Ltd has a controlling stake in the Johannesburg-based mobile content provider.
According to the summons, NORM has asked for an order in terms of which Exactmobile must cease infringing the copyright of NORM's members and pay a royalty of 7,5% which it regards as reasonable, backdated to January 1, 2006.
NORM is also asking for R2m as additional damages as a result of the continued sale of mobile content containing copyrights controlled by 11 of its members, in contravention of the Copyright Act.
Says John Fishlock, NORM board member and MD of Universal Music Publishing, “We have been patient with Exact Mobile for too long now and believe that legal action is the only remedy that we have open to us.”
At the centre of the dispute between NORM and Exactmobile is the mechanical royalty rate that arises when the wireless application service provider records licensed works belonging to NORM's members into digital files for use as ringtones on cellular phones.
According to NORM, 7,5% of the consumer price of a ringtone sold is reasonable and in keeping with international standards: currently the mechanical copyright rate for ringtones averages at 8.2% of end-user price in Europe. Indeed, the 7,5% royalty rate has already been accepted by 14 wireless application service providers with whom NORM has already concluded Digital Agreements at the 7,5% rate. Included in the latter are several key players in the industry among them Musica and Pick & Play.
Initially NORM's Digital Agreements - including that with Exactmobile - operated on a cent rate up to 2005. After 2005, negotiations commenced with a number of service providers who then disputed the royalty rate claimed by NORM. This included Exactmobile who had indicated its willingness in writing to pay NORM's 7,5% rate. As members of WASPA (the Wireless Application Service Providers Association, established August 2004) Exactmobile has reversed it's position and now disputes this rate.
None of WASPA's members are currently paying NORM at the 7,5% royalty rate claimed by the collecting body on behalf of its members.
“Over the past few years we have been in negotiations with WASPA on the royalty rate but they are unwilling to move from their view that the royalty rate should be set at 5%. It is astonishing that they remain intransigent,” notes Jay Savage, NORM Board member and MD of Sony ATV Music. “Surely as the owners of the copyright in the works that they are using to run their businesses, we are entitled to claim a rate that we deem a fair one? That's what the statute says. Imagine walking into a Vodacom or MTN shop and demanding a R2,000 handset for say, R1,500. Well, you'd be leaving empty-handed. But these companies are doing exactly that. Remember too that as soon as subscribers fail to pay their bills, their phone service is terminated, and yet these same companies continue to trade in music they have not paid for,” he continued.
“That is in essence what is happening here and in the end, the losers are the songwriters and composers whose musical works provide the foundation for the recordings that service providers then use to sell to consumers and build a profitable business off,” he said
Among the high profile South African composers and songwriters affected by non-payment of royalties are Thandiswa Mazwai, Mapaputsi, Leon Schuster, Springbok Nude Girls, Tuks, Freshlyground, Sipho “Hotstix” Mabuse, Nicholis Louw, Zamajobe, Dozi, Yvonne Chaka Chaka, Harris Tweed, Phuzekhemisi, Karen Zoid, Deborah Fraser and Steve Hofmeyr. A large number of international composers and songwriters are also affected.
“By selling ringtones with copyrights that belong to our members, without a licence is in effect piracy,” says Savage. “The service providers are knowingly infringing the copyright in our works and are continuing to sell them whilst refusing to pay the reasonable royalty. And in effect subscribers who purchase music in good faith believe they are acquiring it legitimately - could conceivably be said to be receiving stolen goods.”
As part of its action, NORM is calling on all composers to publicly voice their objection to the unauthorised use of their creative property.
