If various reports are to be believed, then popular singer, Flavour, his record label 2Nite Enter10ment and South Africa’s DJ Cleo may be on a war path regarding royalties with Telco giant, MTN.
According to Thenet.ng, the duo have both enjoyed hugely successful hit singles, which would have generated significant revenue when sold by the companies as a download, ringtone or ringback tone.
Sources in the camp of both stars have revealed that both stars have asked for sales data from MTN, its subsidiary and content aggregator Content Connect Africa (CCA), and Vodacom so they can have them audited to establish whether their copyright has been infringed.
While the companies strongly deny any infringements, with CCA dismissing the allegations as ‘ludicrous’, industry insiders say their liability could run into the billions in unpaid royalties and fines in South Africa alone.
If they can prove copyright violations, the SA Copyright Act provides for a first offence fine of up to R5 000, or a jail term. If it is a repeat offence, the act provides for a fine of up to R10 000 or a jail term, per infringement City Press reports.
DJ Cleo and Flavour are not the only musicians in dispute with MTN. You’ll recall that in December, the Nigerian Copyright Commission filed criminal charges against MTN Nigeria for copyright infringements relating to the work of Nigerian artist Baba 2010. MTN has however settled with Baba 2010 and he’s withdrawn his complaint.
This week, Capasso, the body that collects mechanical royalty rights on behalf of songwriters in South Africa, accused MTN of owing R1 million in royalties for 2014 and failing to declare music sales data and earnings for 2015. A mechanical royalty needs to be paid to a songwriter each time one of their songs is sold, either on a CD, as a download, as a ringtone or on a streaming service.
Although MTN denies this, Capasso CEO Nothando Migogo told City Press it has been asking for a meeting with MTN since April last year and ‘they won’t even meet us; they won’t give us the time of day’.
Copyright expert Graeme Gilfillan, representing DJ Cleo’s company, Will of Steel Productions, and Flavour’s company, 2Nite Enter10ment, began sending out separate requests for data from MTN, Vodacom and CCA since mid-December.
In his letters, Gilfillan says there has been ‘disquiet’ at the way the companies use a ‘three-month limited licence’ to sell ringback tones pertaining specifically to how mechanical royalties are accounted, reported and disclosed.
At the heart of DJ Cleo and Flavour’s disputes is the fact that ringtones and ringback tones are sold on a three-month, opt-out licence, which means that if the buyer does not cancel the agreement, they are automatically recharged every three months.
Gilfillan however says studies show most consumers keep their ringtone for between two and five three-month periods, and every sale needs to be reported and royalties paid, not just the first one.
Gilfillan wrote that attempts to obtain proof of payment for licence renewals were ‘rebuffed’ by the companies.
MTN, CCA and Vodacom reacts:
MTN
‘It is not correct that MTN is liable for billions of rands in royalty payments’ said sales, marketing and distribution executive, Larry Annetts.
‘MTN is up to date with most royalty payments with Capasso and is in the process of settling the recent royalty invoice … for the current period, which amounts to less than R1 million. MTN understands the importance and imperative of paying music royalties for music that it sells on its platforms. With regard to payment of mechanical royalties, we have … been trying to resolve [this] from as far back as 2012’.
‘MTN has been dealing with alleged claims for Will of Steel Productions since 2012 … Mr Gilfillan was invited to participate in this process; however, MTN had not received any document or response from him’.
Annetts confirmed Gilfillan had asked for information from MTN and was referred to CCA, which gave it to him.
‘Mr Gilfillan has, in fact, confirmed that he is asserting no claim on behalf of the individuals he represents’.
He said Capasso previously claimed royalties for both Will of Steel and 2Nite Enter10ment. ‘The fact that both artists have not received their royalty payments is of concern and should be investigated’.
Vodacom
Vodacom denies violating any musician’s copyright. ‘In particular, we reject any suggestion of criminal misconduct’, it said in a statement.
‘We have communicated with Mr Gilfillan on this issue on an ongoing basis. Vodacom informed Mr Gilfillan that it reports to CCA … in respect of his clients’ recordings. Mr Gilfillan needs to approach CCA’.
CCA
CCA says Will of Steel and 2Nite Enter10ment license sound recordings to it in terms of written contracts.
‘Neither Will of Steel nor 2Nite Enter10ment has shown any proof that they each own the songs and publishing underlying the sound recordings’, said CCA’s Antos Stella.
‘CCA denies that it has infringed the copyright of Will of Steel and 2-Nite-Enter-10-ment’s copyright in any of their songs and publishing. We informed Gilfillan that CCA sends recording royalty statements to his clients and that his clients are in possession of these statements, We informed him that mechanical royalties are reflected on statements sent to his clients.’
‘CCA can prove that it receives invoices from Will of Steel and 2Nite Enter10ment for recording royalties and that it pays them’.
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