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

8.1.2.2. Based on the CRC’s comparative exercise in respect of tariffs in both developed and developing countries,an average of 3,25% (currently paid by local radio stations) is extremely low as a total rate of music costfor an average music radio station. The CRC believes that a minimum rate of between 6,5% and 8%(performance rights plus sound recording rights) is appropriate for most radio stations in South Africa. Thisis based on the average of 8,06% for the countries selected for benchmarking determined in paragraph8.2.4.4. Based on this suggested minimum rate, there is a shortfall of approximately 3,25% (6,5% minus3,25%). Based on the shortfall of 3,25%, currently, the total annual leakage for radio stations is at leastR80 million per annum, which is largely due to non-payment for sound recordings by broadcasters and thefact that tariffs for performance rights are not competitive in relation to benchmarked countries.8.1.2.3. DMX Music is a background and foreground music service provider, providing pre-programmed music andgenre-specific audio channels to subscribers.8.1.2.4. In December 1995, DMX Music concluded an Audio Service Distribution Agreement with pay televisionoperator Multichoice. Under the agreement, DMX Music supplies the service to Multichoice for use inresidential homes in the form of 40 programmed genre-specific audio channels, which are updated atperiods determined by Multichoice and DMX Music.8.1.2.5. For 16 years (as from 1995), no payment has been made by DMX for performance rights and, for the pasteight years, no payment has been made for sound recordings. Accordingly, DMX contravened theCopyright Act of 1978 by playing music publicly for 16 years without the appropriate licences.8.1.2.6. The CRC believes that it is inappropriate for Multichoice to provide a music broadcasting platform tobroadcasters who are not licensed to play music.8.1.3 Television Stations8.1.3.1. Public television relates to all stations that are owned by the SABC (including SABC1, SABC2 andSABC3).8.1.3.2. The total amount paid for performance rights with regard to public television for 2010 amounted toR51,5 million.8.1.3.3. Based on the benchmarking exercise performed against both developing and developed countries, thereare no material leakages in this area arising from these tariffs.8.1.3.4. The total amount paid by private TV stations in respect of performance rights for 2010 amounted toR39,4 million, and there are no material collecting leakages arising from the tariffs based on thebenchmarking exercise performed.8.1.4 Community Broadcasters8.1.4.1. There are about 150 community radio stations licensed by ICASA. Most have licences with SAMRO, butdo not honour their commitments of paying annual royalty fees. The majority are in arrears with payments.- 55 -