By Robert Laing
If you think the cacophony of ringtones in the office is bad, try discern some harmony between the companies selling them and the three local bodies representing composers.
Music's migration from CDs to cellphones and iPods has caused rows over what the publishing royalties should be worldwide. Locally, this feud is escalating into a nasty court case. The publishing arms of the major record companies, represented by the National Organisation for Reproduction Rights in Music in Southern Africa (Norm), has slapped legal papers on probably the oldest and most established player in the local ringtone market, Exactmobile.
Part of the Primedia stable, Exactmobile is one of many ringtone sellers banded together under the umbrella of the Wireless Application Service Providers' Association (Waspa). Exactmobile stands out as the ringleader since one of its directors Gavin Penkin heads the Waspa portfolio committee arguing ringtone sellers should collectively refuse to pay more than the 5% royalties stipulated by South Africa copyright law.
John Fishlock, managing director of Universal Music Publishing and Norm board member, argues the 7.5% publishing royalties his industry body is requesting is low considering the average in Europe is 8.2%.
Earlier this month, a panel of US judges set the publishing royalties on digital downloads to the existing 9.1c per song in the price of physical music. Apple had threatened to close down iTunes if the judges accepted the National Association of Music Publishers' call for their cut to be increased to 15c per song.
Considering Apple charges 99c per download, the 9c it pays to publishers makes Norm's demand for 7.5% sound reasonable.
The decision by the US Copyright Royalty Board to set the same publishing royalties on music irrespective of media was seen as a landmark.
According to Penkin, South African music publishers currently make more per song sold as a ringtone than burnt on a CD.
Ringtones average R17.60, on which 5% equates to 88c. On physical music, Penkin estimates publishers only get about 40c a song even though the royalty rate is 6.7%.
Royalties on CDs are based on what in record company jargon are called PPDs (published price to dealer). Penkin's assumption of an average PPD of R90 for a CD with 15 tracks.
Fishlock disputes Penkin's calculation.
Echoing Apple's threat to close iTunes if publishing royalties were raised from 9c to 15c, Penkin said Exactmobile and others will stop selling music if the publishers squeeze their already narrow profit margins too hard.
"When we sell a ringtone for R20, at best we make a profit of R3.50 but often only 40c. All the players we have to pay the publishers, the record companies, the cellphone networks are demanding a bigger cut. This is already a low margin business, and we are asking ourselves if selling music is worth the bother," Penkin said.
Neither side in this conflict has been able to get its members to stay in key. Local music composers have a choice of three bodies: Norm, Southern African Music Rights Organisation (Samro), or South African Recording Rights Association Limited (Sarral).
The latter has broken ranks by accepting Waspa's offer of 5%. Fishlock said: "The rights Sarral control are very localised and probably constitute for about 3% of music rights in South Africa.
"Personally, I think Exact did this to try and state that someone agrees with their proposal of 5%. The 13 or so Service Providers who have concluded an agreement with Norm at 7.5% shows clearly that there are service providers who not only agree with Norm's set rate, but can also run a profitable business at this rate."
Ringtone sellers which have paid up the 7.5% billed by Norm include Musica and Pick n Pay.
Norm is the most important of the three since its members include all the major publishers as well as most of the country's independents. Among these are Universal Music Publishing, EMI Music Publishing, Sony/ATV, Gallo Music Publishers, Tusk Music Publishers, Peermusic, Sheer Music and Select Music Publishing.
The composers these publishers represent include 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.
Besides flinging legal papers at each other, Norm and Waspa have taken to attacking each other with press releases. Some of the mud flung at Waspa in a Norm press release seemed like it should have rather been aimed at the cellphone networks.
Jay Savage, Sony ATV Music managing director and Norm board member, said: "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."
Vodacom's ringtone arm Vodafone Live is standing firmly in the Waspa collective and refusing to budge from 5%.
MTN said in a press release launching music service Xploaded: "All the legal requirements regarding royalties, publishing and music rights will be administered by MTN Xploaded, ensuring that all the artists, whose music is downloaded, get what is rightfully theirs."
MTN did not respond by deadline if "what is rightfully theirs" translates into 5% or 7.5%.
Vodacom and MTN certainly can afford to pay the international rate, raising the question why the big publishers are targeting Exact.
Penkin said: "The record companies face huge problems with digital music, but refuse to listen to the solutions we propose.
"They are powerless against the many pirates, so they pick on us the legitimate players willing to pay them a reasonable amount."
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