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

10.10.2.10. Three of the four contracts examined made no reference to the sharing splits of sound recordingroyalties (needletime rights).10.10.2.11. Two of the four contracts examined did not deal with the artist’s right to initiate an audit on therecording company in order to satisfy him or herself about the manner in which his or her financialtransactions are handled by the recording entity.10.11 CONCLUSIONS10.11.1. SAMRO has investments in shares, unit trusts and properties, which generate significant amount of income thatis, in turn, distributed to the members. While there is merit in investing on behalf of members, one should bear inmind that more than 80% of the members receive less than R5 000 as their individual shares of royalties perannum. There is no sense in retaining members’ income if they cannot afford to meet their daily needs.10.11.2. SAMRO’s administration cost are higher (as a percentage of collections) than other comparative collectingsocieties.10.11.3. The CRC believes that the mechanisms used by SAMRO to trace beneficiaries are ineffective and that there arefar too many unclaimed royalties.10.11.4. The unclaimed royalties for SAMRO are written back to income after three years. The CRC believes that thisdoes not allow sufficient time to trace beneficiaries.10.11.5. Less than 3% of the royalties are generated outside the country, compared to 43% plus the foreign portion ofthe publishers share of royalties, which is generated domestically for foreign countries (due to low local musicquotas).10.11.6. There are significant areas for improvement in the contracts between recording entities and artists.10.11.7. The transparency around the flow of funds between the various sources of income and the recordingcompanies, and the computations of income available for distribution to the artists is limited. Owing toconfidentiality, the CRC could not assure itself that the artists are appropriately paid their share of the royaltyincome by the recording companies.10.12 RECOMMENDATIONS10.12.1. The scope of the Collecting Society Regulations should be enlarged to include other collecting organisationssuch as SAMRO and NORM. Collecting societies that currently fall outside the ambit of the Regulations shouldbe given three years after the date of amendments to reduce their administration costs in order to be in line withthe requirements of the Regulations.- 79 -