Music Technology Policy

[MTP readers will recall that there is a fierce fight going on in South Africa over a new national copyright amendment that is backed by Big Tech but bitterly opposed by South Africa’s creative sector.  South Africa lawyer Stephen Hollis gives us the background and detail.  We’re pleased to have the opportunity to post Stephen’s article to bring everyone up to speed.  Stephen is a member of the Adams & Adams Entertainment Law Group in Johannesburg.]

In what will undoubtedly be recognized as a watershed moment for South Africa’s creative sectors, a broadly representative group of investors, stakeholders and trade and industry associations representing the whole spectrum of our creative industries petitioned President Ramaphosa not to sign the controversial Copyright Amendment Bill into law.

The trade associations include:

• ANFASA– Association of Non-Fiction Authors of South Africa
• S.A– Animation South Africa
• IBFC– Independent Black Filmmakers Collective
• MPA-SA– Music Publishers Association of South Africa
• PASA– Publishers Association of South Africa
• PEN Afrikaans(authors)
• RiSA – Recording Industry of South Africa
• VANSA– Visual Arts Network of South Africa
• WGSA – Writers Guild of South Africa

The Bill, together with the Performers’ Protection Amendment Bill (‘the Bills’), was rushed through Parliament and hastily approved by the National Assembly and the National Council of Provinces.  This, despite grave concerns expressed by stakeholders and investors (locally and internationally), and legal and constitutional experts that the Bill does not meet Constitutional muster, places SA in breach of important international treaties and risks the major destabilization of our already vulnerable creative sectors.

How did we get here?

The Department of Trade and Industry undertook the necessary task of updating our Copyright legislation and our Performers’ Protection Act to bring our laws up to date to meet the challenges of the digital environment and to uplift the plight of our vulnerable creatives and improve their earning potential.  One of the catalysts of change was the 2011 Copyright Review Commission (CRC) report which was commissioned by Minister Rob Davies after a group of musicians petitioned the Office of then President Zuma in a plea for assistance.  The issue then was that, almost a decade after the re-introduction of so-called Needletime royalties for performers featured on sound recordings, no meaningful royalty distributions have been forthcoming.  The commissioned enquiry resulted in a report from Judge Farlam and his team of around 200 pages, containing valuable recommendations on how to improve the plight of musicians, composers, artists and performers in the music industry.

Creatives were therefore understandably enthusiastic, as one of the key driving forces for legislative change was understood to be the recommendations of the CRC report. DTI surprised everyone when the draft Bill introduced a ‘world first’ in that it proposed to introduce ‘user rights’ that would afford users the right to share equally in royalty distributions with musicians, authors, composers and performers.  It also empowered users to transfer copyright out of the hands of current owners of original works.  It further allowed users to tamper with and remove technological protection measures and copyright management information from protected works, including digital works.

It also introduced another ‘world first’ in providing users with arguably the broadest set of copyright infringement exceptions that would effectively provide them with a plethora of new ways they could copy, reproduce, use, access, etc. copyright protected works without the need to pay license fees or market related royalties.  Not only did DTI’s draft Bill allow users to freely copy materials in the educational space, but it introduced a new statutory defence for users to rely upon when a copyright holder felt aggrieved when unlicensed use of protected works was made, called ‘fair use’.

The fair use debate

In what turned into the hottest topic of debate regarding DTI’s game changing proposals for the transformation of our copyright system into a user access-oriented system, was the importation of the controversial fair use doctrine from US law, where it finds its origin.  Without conducting any economic impact assessment or proper research, DTI’s controversial proposal seeks to import this US-statutory defence to copyright infringement into our law without any of the legal checks and balances that makes the system work somewhat well in the US.

Fair use represents a vague and open-ended set of criteria which leaves it to the Courts to determine whether the unauthorized use, copying, etc. of a copyright protected work can be made without a license.  The main counter-balance to this sanctioned authorization for users to make unlicensed use of copyright protected materials in the US, is the remedy that rights holders have in the US to claim statutory damages for infringement, ranging from US$750 to US$150 000 per act of infringement, which can be claimed on top of any real economic harm that can be proved by the rights holder.

In SA, a rights holder can currently only claim damages if it can be proven that the infringer had ‘guilty knowledge’ and the amount of damages is limited to actual economic harm proven or an amount that the rights holder would typically license the work for.  What this means is that an unlicensed user can claim to not have guilty knowledge of infringement until such time as a Court has considered the matter and found that the unlicensed use was indeed infringement.  This effectively pulls the few teeth left from the watchdog that SA creatives and rights holders can call upon to restrain unlicensed use of protected works.

So, while introducing the broadest regime of copyright infringement exceptions into our law, our rights holders’ remedies to prevent infringement is reduced to an all-time low.

Whose interests are served?

Stakeholders in our copyright and entertainment industries were understandably shocked at DTI’s proposals and what was initially thought to be clear drafting errors, were exposed to be a concerted and deliberate effort to weaken our copyright laws to enable users, and government, to make use of copyright protected materials without the need to pay the authors of the works.

When DTI co-hosted an event at a fancy hotel in Pretoria one week prior to the August 2017 Parliamentary hearings with the world’s largest users of copyright protected materials, in ‘Big Tech’, and referred to them as their ‘Partners’ in developing the new legislative proposals, the penny dropped.

While the Big Tech companies from the USA do require legislative reform to allow them to make use of copyright protected materials that do not affect the commercial interests of rights holders in very specific instances, government went too far in developing legislation that would skew the balance entirely in their favour, without any compelling reason, research, policy or impact assessment that might justify such a radical and ‘world first’ departure from the status quo that would weaken copyright protection in SA to an all-time low.

Unguarded statements from high ranking politicians, including the Chair of the National Assembly’s Portfolio Committee on Trade and Industry, Ms. Joanne Fubbs and from former Minister of Trade & Industry, Rob Davies, that the copyright exceptions are justified because text books are too expensive, a hidden policy agenda was revealed.  Government’s ‘free education for all drive’ will be funded by authors of books and works in the educational space.  DTI also legislated that the unlicensed use of copyright protected materials would be allowed for government insofar as it is required for the vague purpose of ‘public administration’.

Where does this leave our Creatives?

The sudden and unexpected departure from focusing on increasing the legal protections for our vulnerable creatives steers SA into uncharted waters. Recently, the EU Parliament voted to address the growing value gap in commercial usages of copyright protected works and introduced a legal responsibility on digital platforms to pay market related royalties for the use of protected works.  In SA, we are moving in the opposite direction in allowing for more unlicensed usages of works.

Government attempts to hide this visceral gutting of our copyright laws behind the electoral promises that creatives will now enjoy more rights, including royalty payments that content production companies will have to hand out on all works that are still in copyright and commercialized in SA, despite the fact that 90%+ of those projects have not yielded any profits.  It rides rough shod over contractual dealings of the past and sends a message to the world that ‘your contract negotiated in SA today may be ripped up by government tomorrow’.

The risk here is that SA content production companies will simply remove works from the market that have not yielded a net profit yet, in order to ensure that they can keep their doors open for business and not pay out monies on past projects that place them in financial risk.   Also, foreign performers would be able to claim against local film, music and other content production companies. Our creatives would no longer be employed or commissioned to create new works by international clients and investors and film and music production companies will move their upcoming projects to other jurisdictions.  Who will suffer from this the most?  The very local creatives that the Bills purport to protect.

Our creatives are effectively being sold down the river with empty promises, on the back of  a map to a pot of gold at the end of the rainbow, that does not exist.

What to expect if the Bills are signed into law

Major disinvestment into our creative sectors will result if the Bills are signed into law as presently worded.  While our creative sectors have warned repeatedly and consistently from the onset that this is the case, these warnings have simply been ignored.  The Publishers Association of South Africa (PASA) was the only party that commissioned an independent economic impact assessment which report was prepared by PwC.  This report warned that our publishing industry would be decimated if the Bill was signed into law, as is, and even though this report was handed to the National Assembly in 2017, government chose to completely ignore the findings, and did not deem it necessary to conduct its own assessment on how the copyright exceptions and fair use would likely impact on our creative industries.

After the National Assembly approved the Bills, the NCOP reportedly received around 1000 submissions in opposition to the enactment of the Bills.  The Chair of the Select Committee deemed it appropriate to allocate one hour to consider the submissions received from stakeholders and creatives’ representatives.  DTI presented to the Committee that the panel of legal and industry experts appointed by the National Assembly gave the Bills a green light.  This was a lie.  None of the four experts did so and they wrote a letter to Minister Davies to object and to request a retraction of that statement.

Even though Dr. Evelyn Masotja (acting DDG of DTI) proceeded to do so on the day that the NCOP considered the Bills, it was not deemed necessary by the Chair of the Select Committee, Mr. Edwin Makue, for a review of the experts’ opinions to be conducted.  The Bills were simply approved in record time and sent to the President for his assent.

Conclusion

While the much-maligned Bills have been railroaded through Parliament on the back of powerful and hidden political agendas, and carrying the fake promises to creatives that their collective plight would be uplifted, the reality is that the enactment of the Bills would destabilize and cause significant harm to our creative sectors and economy.

It would also deter and undermine the new President elect’s objective of breathing new life into our economy by inviting direct foreign investment into our economy and business sectors.  The only ones who would benefit would be those who wish to make use of copyright protected materials without paying license fees or market related royalties to the authors thereof, and without investing in the creation and development of local, original content.

While government, educational institutions and digital platforms are licking their lips in anticipation of the enactment of the Bills, our creative sectors are galvanizing and forming an opposition that would likely launch a legal challenge that would place the irrational, irresponsible and fundamentally flawed legislative copyright reform process in the international spotlight and highlight the ‘state capture’ of yet another important and valuable sector and resource that would harm all South Africans in the long run.