Copyright Review Commission Report - ICT Law and Regulation ...
Copyright Review Commission Report - ICT Law and Regulation ...
Copyright Review Commission Report - ICT Law and Regulation ...
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6.3.3. SAMPRA should be given one year to rectify all areas of non-compliance.6.3.4. The CRC recommends that the legislation be amended to allow for one collecting society per set of rights withregard to all music rights governed by the <strong>Copyright</strong> Act of 1978 (performance, needletime <strong>and</strong> mechanicalrights). Currently, only the needletime collecting societies are supervised by the Registrar. Due to the recentcollapse of SARRAL <strong>and</strong> inadequate protection of its members, the CRC believes it appropriate to regulate allrelevant collecting societies. Due to administration problems (consistently voiced by users <strong>and</strong> interestedparties) associated with the multiple collecting societies <strong>and</strong> the international trends for both developed <strong>and</strong>developing countries, the CRC believes that ‘one society one right’ is the answer for the current situation. Aspart of this change, it proposes that all collecting societies be mixed (e.g. a collecting society for needletimeshould cater for both performers <strong>and</strong> record companies) <strong>and</strong> existing societies should be given a period of twoyears to merge, failing which an appropriate process should be used to appoint the mixed collection societies.The suggested merger of collecting organisations is as follows: For mechanical rights, it is suggested that NORM’s <strong>and</strong> SAMRO’s mechanical rights units merge to formone collecting society for mechanical rights; For needletime, SAMPRA should merge with SAMRO’s needletime unit to form one collecting society forneedletime; <strong>and</strong> SAMRO should remain with performance rights.7 LEVEL OF CORPORATE GOVERNANCE COMPLIANCE BY COLLECTINGSOCIETIES7.1 BACKGROUND: COLLAPSE OF SARRAL7.1.1. SARRAL was a collecting society looking after the mechanical rights of composers. SARRAL’s objective wasthe protection, reinforcement <strong>and</strong> enhancement of composers’ rights. The court ordered the liquidation ofSARRAL almost three years ago due to insolvency. A significant number of music composers <strong>and</strong> artists losthuge amounts of monies between 2003 <strong>and</strong> 2008 due to legal costs, reduced collections <strong>and</strong> other increasedcosts arising as result of legal disputes.7.1.2. The following facts should be kept in mind:7.1.2.1. SARRAL’s change of business model or accounting policies (between 2003 <strong>and</strong> 2004) resulted in abreach of contract with members. An extract from SARRAL’s st<strong>and</strong>ard member's contract is as follows: “Inconsideration therefore SARRAL shall be entitled to retain a commission of 7,5% of the gross total ofroyalties collected.” The consequences of the change in business model or accounting policies were thatthe members only received between 50% <strong>and</strong> 60% of the collections instead of 92,5% (100% minus 7,5%)as per their agreements with SARRAL. Without altering the members’ contracts, SARRAL unilaterallydecided not to honour the agreements (See Appendix 5 for a copy of SARRAL’s contract with one of itsmembers).7.1.2.2. According to the external auditors, they could not verify receipts from the SABC <strong>and</strong> distributions to themembers for the three consecutive financial periods of 2003, 2004 <strong>and</strong> 2005. (See Appendix 6 for copies- 46 -