Ringtone royalty row heads for court

Ringtone provider eXactmobile and a music rights organisation are headed for court in a multimillion-rand battle over royalties.

The National Organisation for Reproduction Rights in Music in Southern Africa (Norm) issued a summons against the provider in mid-August, and on Wednesday eXactmobile filed notice in the Cape High Court of its intention to defend.

Norm, an association of music publishers and composers, said in a statement that it is asking the court for an order that eXactmobile “must cease infringing the copyright of Norm’s members” and pay royalties of 7,5% backdated to January 1 2006. It is also seeking R2-million in damages.

John Fishlock, Norm board member and MD of Universal Music Publishing, said that up to 2005, royalties on ringtones were charged as a fixed amount per download, with some discount on volume.

He said that ahead of the expiry of that agreement at the end of 2005, Norm proposed a new way of calculating the royalty—as a percentage of the amount charged to consumers by mobile content providers.

eXactmobile agreed to a 7,5% rate, but later reneged on the agreement and offered 5%, Fishlock said.

Following this impasse, publishers and composers have received no royalties from eXactmobile, or any other members of the Wireless Application Service Providers’ Association, to which eXactmobile belongs, since January 1 2006.

Fishlock said the difference in cash terms between the old and new rates is “substantial”. The original per-download agreement had been a concessionary rate to help eXactmobile and other providers roll out their businesses.

He said 7,5% is in keeping with international standards: currently the rate averages at 8,2% of end-user price in Europe.

The Norm statement said that among the South African artists affected by the non-payment of royalties are Thandiswa Mazwai, the Springbok Nude Girls, Freshlyground, Sipho “Hotstix” Mabuse and Zamajobe.

However, eXactmobile denied that it is not paying royalties for the ringtones it sells.

“There is actually a valid agreement in place between Norm and eXactmobile,” said the company’s chief executive, Davin Mole.

“This agreement provides the mechanical rights that we need to legally operate as a music seller,” he said.

eXactmobile said it has tremendous respect for musicians and composers alike, and has no intention of avoiding the mechanical royalty payment.

“We have been actively negotiating with Norm to increase the rate payable under the agreement, and have not been able to reach consensus on the amount of the royalty,” it said.

“There was certainly no need for Norm to summons the company in order to achieve payment.

“In fact, eXactmobile, and other major players in the industry, have the royalty payments accrued in trust accounts, ready to pay out as soon as Norm is willing to accept the payment.”

eXactmobile maintains that it has licences in place for all content sold on its platforms, and said it prides itself on a good relationship with the music industry.

“We have been paying out publishing royalties since the company launched,” it said.

“This week, in fact, we paid a large bill for one of the industry’s top composers.
The composer was paid at a rate of 5% and indicated that their company was satisfied with this payment.”

eXactmobile has claimed that the summons issued by Norm is invalid.

“There are certain fatal flaws, which will necessitate the withdrawal of the summons and we have launched the appropriate legal procedure,” said Mole.

“We would expect Norm to respect the legal process, and allow the law to take its course without further inappropriate discussion in the media.

“We view the comments made by Norm as defamatory and we reserve our legal rights in this regard,” he said.—Sapa

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