In the driving seat: South African artist DJ Black Coffee performs during an Idols SA performance in 2016 in Pretoria. In the past two decades, more and more musicians taking have taken ownership and control of their work. Picture: VELI NHLAPO
In the driving seat: South African artist DJ Black Coffee performs during an Idols SA performance in 2016 in Pretoria. In the past two decades, more and more musicians taking have taken ownership and control of their work. Picture: VELI NHLAPO

South African songs, video and sound recordings are widely used on websites all over the world.

Facebook Watch, a platform launched recently in the US, will include commercial content and user-generated content. There are indications that the licensing of the content will present great opportunities for creators.

"Artists who had perhaps only seen Facebook, or the digital environment, as no more than a way to interact with fans directly, will suddenly start realising some additional revenue, should Facebook see the value in licensing content properly, at full value, unlike their competitors," says Nick Matzukis of the Academy of Sound Engineering.

YouTube is a leader in the on-demand industry and in 2016 — after seven years of legal disputes and lengthy negotiations — entered into a licensing contract with Gema, the German collective management organisation, to provide fair remuneration for music authors. This is now a benchmark in the industry.

On-demand streaming sites pay royalties to two separate licences: the recording industry for sound recordings and videos; and the publishing industry for compositions and songs. Collective management organisations (CMOs) track the use of copyrighted music and distribute the royalties earned.

The CMO structure has changed in SA due to digital licensing. In 2014, the Southern African Music Rights Organisation’s (Samro) mechanical division and the National Organisation for Reproduction Rights in Music were amalgamated into the Composers, Authors and Publishers Association. It filled the gap of administering digital licensing for on-demand streaming platforms such as Spotify, Apple and Deezer — which have grown by 200% in the past three years.

According to the IFPI digital music report, in 2016, the recording industry grew 5.9% — its first growth in 14 years. But musicians are receiving full value from streaming sites.

"The marginal cost to make a digital copy is zero, leading to the marginal value of the copy also being zero," says copyright lawyer Graeme Gilfillan.

"The reproduction right, which has fundamentally been destroyed, has been replaced by a share of subscription revenue and/or a share of advertising revenue with the algorithms used being the deciding factor.

"No matter how many streams, downloads and other issues you have, the value is gone and no one is told how much per million streams."

Streaming, whether subscription or advertising funded, has improved music monitoring. "It is probably the platform with the most accurate determinant of actual music consumption, at least on the recognised major streaming sites," says Matzukis.

The Open Music Initiative organised a meeting in 2016 between the US recording industry and all the streaming sites to develop a uniform system to provide correct information of composers, publishers, performers, labels and other rights for every song.

Business analyst Jonathan Shaw believes Facebook will develop software to track usage within its user content video and provide licence payments for music. "The world is evolving to such an extent that licensing will be able to be provided digitally with music recognition software being able to pick up usages and the licensee then paying for the actual usage of content."

The importance and value of Facebook income to South African labels and publishers prompted Gilfillan to submit recommendations to the Presidential Task Team on Creative Industries. He called for greater oversight in the industry, suggesting that the state through the Companies And Intellectual Property Commission, the Department of Arts and Culture, the South African Revenue Service (SARS) and the Reserve Bank play a more active role in implementing the statutes and in enforcing copyright law.

Gilfillan says income generated by the most played song in SA, the national anthem, on Facebook has a cost to the country because the income generated is offshore.

"Copyright is transferred daily from SA without any Reserve Bank notification or permission. Practices contrary to normal trade cause significant financial prejudice to local labels, publishers and the state [SARS] — and there is no special case that provides for what is transpiring to be an exception."

For more than a decade now, there has been straight-line growth in the trade imbalance of South African music royalty payments.

South African royalties and licence fee imports have risen 10-fold from R245m to R2bn in the past 10 years, but exports have increased from R49m to R67m, a paltry 26%. The Department of Arts and Culture is pushing to increase local control and ownership in the music industry and deconstruct monopolies. In 2006, it established the Association of Independent Record Companies for market share with the Recording industry of SA.

This independent collecting movement now includes the Independent Music Performers Rights Association for market share with the South African Performers Rights Association.

"What we need to correct as a third-world country is to make sure our people understand music is migrating. From a digital perspective, there are more opportunities now. If meter taxis were challenged by Uber, then Samro must be challenged as well. We mustn’t be rigid," says Mandla Maseko, chairman of the Association of Independent Record Companies.

In the past two decades, more and more musicians have taken ownership and control of their work: from the late 90s with Oliver Mtukudzi and Ringo Madlingozi, followed by Glen Lewis, DJ Fresh, DJ Cleo and the current crop of performers such as Black Coffee, Jaziel Brothers, Black Motion and DJ Kent.

Gilfillan says this means that "70% of the music industry has become black-owned".

This has coincided with a metamorphosis in the industry. Digitisation and the internet have brought uncontrollable reproduction and a disruption to supply and demand.

CD and DVD sales fell 85% in 2002-14, with income shifting to live performances.

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