Collective Management of Copyright and Right of Copyright Owners to Royalties
The Federal High Court sitting in Lagos State, delivered a judgment on 25 November 2020 that has clarified the rights of Nigerian copyright owners and their right to royalties that accrue from the use of their copyright. The decision was given in Suit No. FHC/L/CS/1418/2019, Green Light Music Publishing Ltd, Chocolate City Music Ltd, Premier Music Publishing Company Ltd v Copyright Society of Nigeria Ltd/Gte, on the mode of distribution of royalties to copyright owners in Nigeria.
The suit was filed by copyright owners against the Collective Management Organisation (CMO),COSON.In order to understand the import of this judgment, it is apposite to consider the role of CMOs in the management and protection of copyright in Nigeria. Though the rules governing the collective management of copyright are generally applicable to all categories of work eligible for copyright protection, this article will focus precisely on copyright and the Nigerian music industry.
Copyright vests in the owner, the exclusive right to control the doing of a number of acts specified under the law. Some of such rights are: the right to reproduce, the right to publish, the right to perform and the right to broadcast the work to the public, among other rights. There can be no music industry without musical works. Under the Nigerian Copyright Act, a musical work may be protected as a sound recording, as a musical work (as stated under the Copyright Act) and as a literary work.
A sound recording is an audio recorded performance of a song. Sound recordings are mostly used by radio stations, television stations, restaurants, malls, bars etc to engage their listeners and customers. Thus, sound recordings may be accurately described as the most used form of copyright. Section 7 of the Copyright Act states that copyright in a sound recording is the exclusive right to control the direct or indirect reproduction, broadcast, or communication to the public of the whole or a substantial part of the recording, either in its original form or in a form that is recognisably derived from the original.
It is also the right to control the distribution of the work to the public for commercial purposes. Since copyright prohibits the communication or broadcast to the public of a sound recording, it then means that before radio and television stations, hotels, bars, clubs, malls etc can broadcast a sound recording, they must obtain the consent of the copyright owner.
Now, let us think about this for a while: there is at least one radio station in each of Nigeria’s 36 states, with some states having as much as 8-10 radio stations, there are also a number of internet radio stations, television stations (including cable television), bars, hotels, shopping malls etc.
In accordance with the law, before each of these outlets play or broadcast any song, they ought to obtain a license from the copyright owner. Because of the volume of songs they play each day, it is almost impracticable to negotiate and obtain a license from each artiste before his/her song can be broadcast or communicated to the public. It is for this reason that collecting societies or collective management organisations exist; to bridge the gap between the copyright owners and copyright users.
A collecting society is an association of copyright owners, responsible for the negotiation and granting of licenses, collection and distribution of royalties in respect of copyright works, on behalf of its members. It is because they collectively manage the copyright of their members, that is why they are also called collective management organisation (CMO).
A CMO or a collecting society has the authority of its members to manage their copyright and on the basis of this authority, grant copyright licenses (especially non-exclusive licenses) to interested persons and collect royalties from the grant of licenses on behalf its members. It is then expected to distribute periodically, the royalties collected on behalf of its members to them.
Musical Copyright Society of Nigeria (MCSN) and Copyright Society of Nigeria (COSON) are the only two generally recognised collecting societies in the Nigerian Musical industry. Problems began when some of the members whose copyrights are managed by COSON became dissatisfied with its royalty distribution method.
From the facts of the case, COSON adopted a ‘general distribution’ approach in the distribution of royalties to its members, which resulted in it giving its members about #30,000 yearly. Its members were dissatisfied with this royalty distribution formula and approached the court to declare it illegal and inequitable. The court declared the general distribution method to be inequitable and prohibited the continued distribution of royalties in that manner.
Globally, the royalty distribution formula is generally designed to reflect the usage of each member or each artiste’s works. This principle is also enshrined in the Nigerian Copyright (Collective Management Organization’s) Regulations 2007. Regulation 16 spells out the royalty distribution rule that should be adopted by CMOs as follows:
Subject to the provision of these Regulation, a Collective Management Organisation shall distribute royalties collected to its members in a manner to reflect as nearly as possible the actual usage of works covered by its repertoire
(2) A Collective Management Organisation shall establish a distribution plan that is fair and equitable based on a procedure acceptable to its members and information furnished by users.
The distribution of royalties cannot in the light of the above provision be pegged at a certain figure. The royalties to be paid to every copyright owner must be calculated in accordance with clear rules, which reflect actual usage of a work.
For example, the usage of veteran musician, Fela’s work may be considerably higher than that of an up and coming artiste, the royalties paid to the artistes should reflect their standing and the usage of their works. It is therefore imperative for CMOs in Nigeria, to develop royalty distribution rules, just like most other developed nations have done, that are acceptable to their members as fair and equitable. The rules should also provide the royalty sharing formula for different right holders in a particular work.
For example, the Southern African Music Rights Organisation (SAMRO) Performing Rights Royalty Distribution Rules spells out the percentage every right holder (the song writer, the publisher, the music arranger etc) gets from every license granted by the organisation. Adopting this approach will ensure that copyright owners are not unduly denied the full economic benefits that they ought to enjoy.
 The Copyright Act defines a sound recording as the ‘fixation of a sequence of sound capable of being perceived aurally and of being reproduced’.
See Copyright Act, section 51.