MTN Ripping Off Composers Royally ?

The Composers, Authors and Publishers Association (CAPASSO) has recently alleged that mobile network provider MTN owes almost R1 million in music royalties dating back to 2014. MTN uses and sells music as ringtones or ringbacks through services such as Caller Tunez and the MTN Play Store. CAPASSO is responsible for collecting and distributing song-writing and publishing royalties to its members and claims that MTN has failed to pay composers their royalties due for music it sells through its value added platforms.

The South African Copyright Act in its current form (the amendments to the Act have been discussed here) prohibits the broadcasting, transmission or playing of a sound recording without payment of a royalty to the owner of the relevant copyright. The Act does not prescribe the amount payable as a royalty but states that this shall be determined by an agreement between the user of the sound recording (MTN in this case), the owner of copyright or their representative collecting societies.

Although “musical works” exist as a protected category of work in the Act, a song may also have copyright subsisting in the composition (considered a literary work) and as a sound recording. CAPASSO is only concerned with the rights of composers and not those of holders of copyright in the sound recording or ‘musical work’. An interesting question then is whether, from the above section of the Act, composers have a statutory right to obtain royalties?

The answer to this question may be irrelevant in this case as it is clear that there have been agreements between MTN and CAPASSO for the payment of royalties. What appears to be in dispute is the applicable royalty rate. CAPASSO may therefore be able to sue MTN for breach of contract – claiming the full amount due and possibly an amount for any loss incurred as a result of the breach.

For their part, MTN maintain that they have consistently made timeous and adequate payment to CAPASSO. They have further requested that CAPASSO furnish them with the revised invoice with the allegedly outstanding fees but are yet to receive this document.

While it seems unlikely that litigation will be the end result, it will be fascinating to see how this matter progresses in the coming weeks.

For more information please contact Sipho Mudau