[9] Sound recording royalties are colloquially referred to as "needletime royalties", a throwback to the time when
sound was relayed from a vinyl record via a stylus on a record player. Lobbying by musicians, performers and
the recording industry saw the amendments to the Act and the PPA, referred to earlier, being effected in
2002, to protect performers and owners of copyright in sound recordings. Record companies were motivated
by reduced sales of compact discs (CD's) due to piracy, facilitated by technological advancements. Musicians
and performers, on the other hand, were driven by their sense of being inadequately rewarded for their
services.
[10] The determination referred to in paragraph 1 was made pursuant to a referral to the Tribunal by SAMPRA in
terms of section 9A7 of the Act. In making the referral, SAMPRA proposed a formula which it contended
Page 267 of [2014] 2 All SA 263 (SCA)
ought to be used to determine the royalty rate. NAB, in turn, resorted to a crossreferral in which it sought a
determination based on its proposed royalty formula. In addition, NAB sought a determination from the
Tribunal about the date from whence that royalty was to apply. That issue and the appropriateness of the
formula proposed by NAB are the subjects of the crossappeal. Sapire AJ did not address whether he could or
should determine the date from which the royalties are to be paid, notwithstanding that it had been
pertinently raised. More about that later.
[11] Predictably, the royalty formula proposed by each produces a result most favourable to the interests
represented by each. Put simply, SAMPRA's formula results in a higher rate of royalty, whilst NAB's formula
produces a lower rate.
[12] At this stage, it is necessary to set out the formulae proposed by NAB and SAMPRA. The following formula is
the one proposed by SAMPRA:
"A
B
×
C
10
Where:
A = the amount of time used by a radio station in any period to broadcast the sound recordings administered by
SAMPRA;
B = the total amount of time used by a radio station in that period to broadcast editorial content,
and
C = a [radio station's] net broadcasting revenue.
Net broadcasting revenue means the amount in South African Rands equal to 85% in number of the published rate
card value (before any . . . deductions) of advertisements and sponsored promotions or features broadcast by the
Station, including any such broadcast by any entity which is an associate, subsidiary or agent of the Station and
including advertisements published on any internet simulcast service;
'editorial content' is defined as content, including the repertoire, broadcast for entertainment, information or interest
of members of the public and shall not include broadcast time allocated to programme promotions and/or
advertisements or promotions on behalf of the Station or any registered or unregistered charity or in support of social
action activities, including but not limited to awareness raising campaigns and initiatives, telephone helplines."
[13] In relation to C in the SAMPRA formula, the published rate card value is obtained from data published by the
AC Nielsen company. Economists, analysts, the media and the advertising world all rely extensively on the AC
Nielsen data. The published data includes the monthly values of advertising spots broadcast by each radio
station, calculated by reference to each such station's published rate card. The rate card does not take into
account discounts, and the 85% provided in SAMPRA's formula is based on its estimate of a 15% discount
allowed by radio broadcasters to advertisers.
[14] NAB proposed the following:
"A
B
×
C
×
D
×
E
F
Page 268 of [2014] 2 All SA 263 (SCA)
Where:
A = the amount of time that a radio station broadcasts protected sound recordings per time channel;
B = the total broadcast time of the radio station per time channel;
C = a radio station's net revenue per time channel;
D = the industry average net profit percentage for the period;
E = the radio station's audience for the period;
F = the total radio audience for the period; and
The needletime royalty per station is the sum of royalties calculated per time channel for the period. 'Time channel'
refers to a fixed period within the 24hour cycle, and according to which audience is measured (and therefore
advertising costed).
Net revenue is defined according to the industry accredited body the Radio Advertising Bureau ('RAB') as actual gross
advertising revenue adding all net events revenue and deducting all agency commissions, discounts, public service