Copyright Review Commission Report - ICT Law and Regulation ...

2009 and that its platform providers (Exact Mobile and IOGlobal) have in the past made royalty payments to therelevant collecting societies.4.3.8. According to the information made available to the CRC, only one MNO entity has an agreement with SAMRO,namely Vodacom (July 2011).4.3.9. Special, premium and pure webcasting fall within the realm of broadcasters. South African radio stations put upstreams for public consumption on their websites.4.3.10. As noted above, WASPs have been selling ringtones since 2000. The CRC is aware of the fact that someWASPs have been paying mechanical royalties to NORM since 2000. Only Vodacom has signed SAMRO’smechanical licence agreement. An overwhelming majority of WASPS have paid no royalties as they are notlicensed and have profited 100% from the digital exploitation of authors’ copyright works for almost a decade.4.3.11. The licensed mobile entities have been paying 60% of the retail price to record companies and 7,5% royalties toSAMPRA for making sound recordings available to download.4.3.12. According to representations made to the CRC, only 14% of all WASPS have agreements with NORM to paymechanical rights royalties. The percentage of WASPS that have agreements with SAMRO is significantlysmaller.4.3.13. The compliant mobile entities report use of content to the collecting societies and pay upon invoice. Mobileentities that are not invoiced for their customers’ downloading of works do not pay any royalties to copyrightowners. The share of the record companies’ royalties that goes to the performers is governed by the recordingcontract.4.3.14. From 2007 onwards, SAMRO contacted WASPs and alleged that a performance royalty was payable on thedownloading of music works. This liability was denied by WASPs. WASPA formed a Royalty Working Group todiscuss the demands from SAMRO and obtained a legal opinion that supported its position. Although SAMROthreatened litigation, the matter was not pursued. The Royalty Working Group was dissolved in 2009. At thisstage, WASPA agreed that mechanical royalties must be paid for all downloads, and that performance royaltiesmust be paid for any kind of streaming of sound recordings or music. The representative from SAMRO noted:The point is that our dispute with them has not been on the tariff, our dispute with them has been on the principle oflicensing performing rights.4.3.15. In a recent case in the US (re Application of Cellco Partnership D/B/A Verizon Wireless (case 1:09-cv-0774-DCLfiled 10/14/2009)), the court declined to hold that a sound recording (set as a ringtone) is performed in publiceach time a user’s phone rings. The court held that Version (a mobile service provider) did not need a publicperformance licence for musical compositions because it provides ringtones to its customers. This, of course,did not exonerate the service provider from paying the mechanical royalties, the communication right to thecopyright owner and the ‘making available’ right for every sound recording it delivers to a customer.- 33 -