AIRCO has always taken the view that there should be one collection society that administers Performance Rights of recorded music works ("Needletime") on behalf of all record companies and performers. A fundamental rationale for the forming of a collection society is the significant benefits of economies of scale that are derived. This holds true in the largest economies in the world and is an even more important, if not a critical factor, in smaller territories such as South Africa.

Purpose and Background

The purpose of this document is to clarify AIRCO’s position in relation to the establishment of collection societies for the implementation of Performance Rights of recorded music works.

AIRCO has always taken the view that there should be one collection society that administers these rights on behalf of all record companies and performers. A fundamental rationale for the forming of a collection society is the significant benefits of economies of scale that are derived. This holds true in the largest economies in the world and is an even more important, if not a critical factor, in smaller territories such as South Africa.

AIRCO also ascribes to the principle that collections societies should in essence be formed for the purpose of collecting and distributing revenue in the most efficient manner. In order to achieve this, the stakeholders should bring to the society a collective rather than a competitive mindset.

It is AIRCO’s view that needletime has been delayed long enough and that the establishment of an effective collection society should be fast tracked and that implementation should be realized as soon as is possible.

Having said this it should also be acknowledged that the needletime regulations are, to a large extent, flawed. This could lead to further delays especially if the flawed regulations lead to conflict amongst stakeholders.

AIRCO believes that the adoption of universally accepted fair and equitable policies by a single collection society will, to a large extent, neutralise not only the weak regulations but also minimise the other challenges we will face in the establishment of the collection society.

Public Performance Collection Society Guidelines

AIRCO has, together with its international affiliates at WIN, formulated some guidelines for the collection and distribution of needletime rights. These guidelines are compiled from common wisdom and are not the result of original thought. It is believed that these guidelines do not differ fundamentally from the principles ascribed to by IFPI.

The fundamental assertion is that collection and distribution of public performance royalties should not be undertaken by any copyright owner or trade association directly, but rather outsourced to a single collection society that functions independently and is not under the direct control of any organisation or group of rights owners.

Further, that the following requirements should be the minimum standard applied to protect all rights owners and performers:

• Membership of this collection society should not be dependent on membership of any other organisation or on the payment of a fee to any other body.
• The collection society should accept both record companies and performers as members.
• The collection society should be a non profit organisation properly governed and adequately resourced and managed by competent professionals.
• Fees charged for administration should be fair and justifiable in relation to the level of service provided.
• There should be appropriate access to decision making processes by all rights owners and performers.
• There should be complete transparency in respect of both the collection and distribution revenues.
• There should be a code of conduct, to which the collection society ascribes, that entrenches the rights of all copyright holders and performers.

Inclusion of Performers in the Collection Society

The inclusion of performers in a single collection society rather than the establishment of a separate society that administers these rights on behalf of performers is no doubt the most difficult challenge that faces the music industry.

It is however, in the view of AIRCO, one of the most important issues as it is an area that has the potential to create significant future conflict. The inclusion of performers we contend is not only desirable but essential. A separate collection society that administers performers’ rights only is almost unworkable on a practical level.

Collection societies that represent performers only will not be able to collect revenue directly from broadcasters and other users as they do not have the right to issue licenses. They will also not be able to distribute any revenues as they do not have the necessary data or information to effect proper administration. These collections societies will therefore be marginalized in the actual processes and this will ultimately lead to conflict, disruption and possible delays in the distribution of revenue.

It is in the interests of the performers that they are included in the collection society which has the right to collect and the ability to distribute revenue.

Provision for this representation should be made in the structure of the collection society and to this end, AIRCO suggests that the Dutch collection society SENA be considered as an appropriate model.

How the performers or their representatives are elected to such a body should not be prescribed by the record companies, but assistance of government departments should be sought in the facilitation of this process.

The Way Forward

AIRCO sees the adoption of the above guidelines as the first step in the process of setting up a collection society that is both workable and sustainable. We believe that the adoption of these guidelines will avoid the conflict and delays that the industry will experience if they are ignored.

To this end, we have engaged in exploratory discussions with local collection societies SAMPRA, SARRAL and SAMRO and some of the proposals put forward by local societies are neither practical nor ethically acceptable in terms of the guidelines recommended above.

AIRCO has informed The Collection Society that it would recommend to its members and all independent record companies to join The Collection Society if The Collection Society sees fit to adopt these guidelines.

Should agreement on these guidelines and principles be reached, AIRCO believes that effective representation of the independent labels on the board of SAMPRA be immediate as input of the independent labels during the establishment phase is important.

AIRCO would not only endorse the collections society but would actively assist in the establishment of a collection society that adopted these principles.

If neither SAMPRA nor any other organisation agrees to adopt these guidelines, then AIRCO would be forced to initiate the establishment of a collection society that ascribes to the common wisdom of the above mentioned principles.

This option, AIRCO believes would ultimately be counter productive and contrary to our own philosophies and therefore would be only implemented if all attempts at unity fail.

We further believe that the independent labels should provide an appropriate portion of the funding for the establishment of the collection society.

We are aware that these guidelines do not offer practical solutions to the many challenges that face us in the collection and distribution of needletime revenue.

We are also aware that the establishment of an effective collection society is not a simple matter and it is for this reason that we suggest that broader inclusion is necessary. We have a healthy respect for the challenges that face the industry, but at the same time we are optimistic that practical solutions for our territory are achievable.

Critical business decisions will need to be made to ensure that the best of class solutions from around the world are adopted.

We do believe that we will achieve success if all stakeholders are committed to finding positive solutions to what is essentially the greatest opportunity available to South African music today.