A protracted legal battle between music industry artists and Premium Rate Service Providers (PRSPs) over the distribution of royalties from Safricom’s Skiza Tunes music platform was concluded on May 11, 2016 by a High Court ruling in favour of artists.
Since the conception of the lucrative service, PRSPs have been acting as absolute intermediaries controlling both artists’ access to the Skiza platform and the distribution of royalties due to them, an arrangement deviating from the standard compensation model in which Collective Management Organisations (MCSK, KAMP and PRiSK) equitably distribute the royalties pursuant to Section 30A of the Copyright Act.
Years of negotiations to change this arrangement resulted in an August 2015 agreement between Safaricom and the CMOs for the distribution of royalties through the CMOs and not through PRSPs in mid-2015. PRSPs and some artists immediately contested this arrangement in court, essentially freezing Kshs. 152 million in royalties.
Efforts to distribute the royalties have been hindered by even more court cases, leading up to a petition by the PRSPs seeking a determination by the High Court declaring Section 30A of the Copyright Act unconstitutional. The High Court ruling on 11th May dismissed the petition and affirmed the CMOs’ role of collecting and distributing royalties pursuant to Section 30A of the Copyright Act.
This protracted battle has also brought to the fore the skewed contractual terms of the Skiza platform and imbalance in revenue share, with Skiza Tunes and PRSPs collectively earning as much as twice the royalties due to artists.
Artist Dan Aceda took to Twitter to express his delight and gratitude to Justice Mumbi Ngugi for the ruling. He revealed some of the inner details surrounding Skiza Tunes and the deeper implications of the High Court ruling:
While the High Court ruling will hopefully bring to an end the squabbles over Skiza Tunes royalties and bring some equity in revenue share, the job is still half done for music industry stakeholders. The first order of business in the wake of the ruling should be to negotiate better revenue share terms with Safaricom. Given the CMOs’ bad record when it comes to transparency and accountability, stakeholders should demand better reporting and monitoring mechanisms to ensure that royalties are accurately and efficiently distributed. Receiving tax breaks from the government in the coming financial year is extremely unlikely but not impossible.
Such bold steps can only be successfully carried out if musicians, producers and other stakeholders come together, refine and articulate their interests; and finally vigorously lobby and negotiate as a single, organised block. That is the only way the music industry can effect meaningful change, a change they will urgently need considering the increasingly reduced access to external markets such as South Africa, which is transitioning to a 90% local content quota on its national broadcaster SABC by July 1, 2016.