NAB, Mr
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Lister testified that the proposal is impractical, because advertising is sold by broadcasters to advertisers in
bundles. Sometimes free spots are provided to advertisers in nonpeak advertising times as part of a bundle,
to induce advertisers to buy premium spots at premium prices. In addition, music usage in nonpeak periods is
substantially greater than at premium times.
[32] Mr Lister testified that there are other revenue streams that redound to the benefit of owners of copyright in
sound recordings, including from retailers, banks, shopping malls, sport stadiums, restaurants and the like,
and that the amount collected over the past three to four years from licensing is in the region of one hundred
million rand. Importantly, Mr Lister accepted that international royalty rates paid to composers were in most
instances higher than rates for sound recordings. He accepted that some of the largest members of RISA
repatriated to America and elsewhere the greater percentage of what was received as sound recording
royalties. Even though Mr Lister was loath to make any concession concerning royalty rights for performers in
the United States of America (the "USA"), it does appear that at least a substantial percentage of performers
have no royalty rights in respect of terrestrial broadcasting by radio stations in the USA. Mr Lister testified
that there is some money that accrues to South African performers from broadcasts internationally, but that
the outflow of funds to recording companies in other countries, particularly the USA, is greater.
[33] An important aspect of Mr Lister's testimony is the question of how a radio station's audiencereach is
evaluated in relation to revenue. Some radio stations with a more limited audience charge a higher rate
because the audience is regarded as having a higher value to the advertiser. It might relate to affluence, or
products connected to the target audience. There is undoubtedly difficulty in placing a value on listenership.
[34] An issue of significance is the percentage of works administered by SAMPRA that is subject to copyright. The
regulations under the Act require that a repertoire of copyright protected sound recordings be made available
by a collecting society. Regulation 7(1) of the Collecting Society Regulations, promulgated under the Act, 9
provides as follows:
"7. Licensing (1) A collecting society shall make available, on nondiscriminatory terms, for any potential user of
public playing rights the complete repertoire of records in respect of which the public playing rights are owned by the
South African and foreign rightholders that [are] represented by it."
It is necessary to point out that a complete repertoire has not yet been compiled or provided by SAMPRA. Mr
Lister testified that a substantial playlist provided by NAB to SAMPRA could in a relatively short time be
analysed to determine what percentage is not protected by copyright. This is an important issue because it
appears that not all the music administered by the SAMPRA is subject to copyright.
[35] The problem flowing from what is set out in the preceding paragraph is that it would be difficult to invoice and
charge broadcasters for the use of
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sound recordings without a proper reconciliation. Mr Lister suggested that this problem could be met by
resorting to the following procedure: A broadcaster would only be invoiced after an analysis by SAMPRA of its
playlist. He suggested that provisional payments be made, which could later be adjusted when a
reconciliation was completed, having regard to copyright in sound recordings. It also appears from Lister's
testimony that the royalty rate collected by the SAMRO in respect of composer rights is calculated at 3,25% of
revenue and that the rate is based on international comparisons. That rate is current.
[36] According to Mr Lister, since deregulation in 1995, the South African music industry peaked in 2007 and went
into decline thereafter. Mr Lister agreed that revenue is not always in direct proportion to profitability, but
pointed out that when revenue declines, margins tend to be lower and profitability less.
[37] Mr David du Plessis, General Manager of RISA and CEO of SAMPRA, testified that the rate proposed by
SAMPRA, when compared to international rates, is not below the average. However, it appears that only
Finland and France have a higher rate than the rate proposed by SAMPRA. He added a qualification, namely,
that the music usage per radio station would determine the ultimate rate. As pointed out above, the rate
reduces as the music used during a broadcast period lessens. He accepted that the average SAMPRA rate
would be above the SAMRO rate. Mr Du Plessis cautioned against a purely mathematical international
comparison, suggesting that circumstances in those countries have to be contrasted with circumstances
locally. According to Mr Du Plessis, only 2% of SAMPRA's repertoire is not subject to copyright. He was
adamant that if SAMPRA was provided with lists by broadcasters they could determine which qualify for
copyright protection and which do not.
[38] Ms Virginia Hollis, the Managing Director of Media Shop (Pty) Ltd and the vicechairperson of the South African
Advertising Research Foundation that conducts audience research for all media, testified. She spoke of the
media's reliance on the AC Nielsen data. Radio stations provide their logs of advertising broadcast to AC
Nielsen, which then publishes it. That then provides a basis for an estimate of what was spent by each radio
station. AC Nielsen provides the advertising rates as well. She testified that the radio stations do not provide
particulars of discounts provided to any advertiser. Ms Hollis confirmed what was said in evidence by Mr Lister,
namely, that it is often difficult to calculate revenue per time channel because of what she called "value add
ons", namely, providing free airtime to advertisers in some time channels instead of offering a discount, as an
incentive to advertise at higher rates in prime time channels.
[39] Mr Andrew McFarlane, a director and shareholder of a company that uses technology to determine the time
and duration of broadcast of sound recordings and to record the name of the artist as well, testified. The data