Shopping mall music – SCA rules on music royalties case
07 Dec 2015
With Christmas carols currently playing on repeat in shopping malls throughout the country, it is probably not the best time of year to pose the question whether the background music played in stores enhances or actually worsens one’s shopping experience. However, this very issue has come before the Supreme Court of Appeal which handed down its judgment in the case between the South African Music Performance Rights Association (SAMPRA) and a group of retailers that included Foschini, Truworths, Pick ‘n Pay and others on Monday, 30 November.
The dispute was about the royalties that are payable by a retailer when it plays background music in its stores. The Copyright Act was amended as long ago as 2002 to provide for the payment of a royalty where a person broadcasts or plays a sound recording to the public but it was only in 2008, after the formation and accreditation of SAMPRA, the representative collecting society that is tasked with administering its members’ rights to receive payment of these royalties, that demands were made of retailers to cough up for the privilege of playing background music in-store.
SAMPRA set a tariff for the payment of royalties which this particular group of retailers, and others, felt was unreasonably high. No agreement could be reached on the rate at which these royalties should be paid and the matter was referred to the Copyright Tribunal which agreed with the retailers and set a much lower tariff. Dissatisfied, SAMPRA appealed to the SCA.
SAMPRA argued before the SCA that the retailers ought to have led evidence before the Copyright Tribunal to show why the tariff set by SAMPRA was unreasonable. Specifically, SAMPRA argued that the retailers were obliged to have led evidence to establish the Rand value they derive from the use of sound recordings in their businesses. The SCA, however, pointed out that such evidence would have been almost impossible to obtain. Extensive studies would need to be conducted to establish the effect and value of playing background music in retail stores and, in any event, such a study would not necessarily apply to all retailers in all situations. The SCA was satisfied, however, that the claim of the retailers had been well-founded and that the tariff proposed by SAMPRA had been unreasonable, taking into account comparative tariffs in other, more developed countries.
The retailers proposed that the tariff be set at 30% of what SAMPRA had initially proposed (which, in some cases, was also less than what the Copyright Tribunal had proposed, but in other cases more, depending on the size of the store) and the SCA agreed. The licence fee per store per annum has been set at between R150 (for premises of up to 50m2) and R3300 (for premises of between 9001 and 10 000m2), with effect from 1 January 2008 (with an annual increase at CPI for each year thereafter).
So when you grit your teeth at hearing Boney M’s “Mary’s Boy Child” for the eighteenth time while doing your Christmas shopping this year, spare a thought for the retailer who has paid good money to be able to entertain you while you shop.
(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)