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Report on Royalty Payments & Programmes
10 March 2015
BACKGROUND (SAMRO’s role in the Music Industry)
PERFORMING RIGHTS ROYALTY DISTRIBUTIONS
NEEDLETIME RIGHTS ROYALTY DISTRIBUTIONS
SAMRO FOUNDATION
SAMRO RETIREMENT ANNUITY FUND
SAMRO MEMBER FUNERAL BENEFIT SCHEME
SAMRO’s role in the Music Industry
RECORD LABELRECORD LABEL
PUBLISHERSPUBLISHERS
BROADCASTERSMUSIC
CONSUMERS
BROADCASTERSMUSIC
CONSUMERS
CONCERT & EVENT PROMOTERS
BOOKING AGENTS & MANAGERS
CONCERT & EVENT PROMOTERS
BOOKING AGENTS & MANAGERS
COLLECTIVE MANAGEMENT
ORGANISATIONS
COLLECTIVE MANAGEMENT
ORGANISATIONS
MUSIC INDUSTRY VALUE CHAIN
COMPOSERS
ARTISTS
PRODUCERS
MUSICIANS
SAMRO
CAPCO
AIRCO
POSA
DALRO
SAMPRA
COLLECTIVE MANAGEMENT ORGANISATIONS
IN SA
DALRO SAMRO FOUNDATION POSA
SAMRO GROUP
SAMRO’S ROLE• Collect and distribute income for public performance of music
• Represent Composers & publishers
• Recipricol representation of international Collective Management Organisations
PERFORMING RIGHTS ROYALTY DISTRIBUTIONS
Royalty Payments
SAMRO sets royalty distribution plans on an annual basis. Our primary distributionsare:
– Radio and General (March) ,– TV (April)– Cinema (November)– Foreign (December/January)– GORP (December)
• Supplementary distributions take place throughout the year with distribution beingpaid out on an almost monthly basis.
‐
50
100
150
200
250
300
350
400
1963 1971 1981 1991 2001 2011 2012
R m
illio
ns
GROSS COMPANY INCOME 1963 ‐ 2012
DISTRIBUTION SUMMARY 2002 ‐ 2014
‐
50 000 000
100 000 000
150 000 000
200 000 000
250 000 000
300 000 000
350 000 000
AMOUNT FOR DISTRIBUTION Royalty distribution NRR distribution
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Income• Licence income grew by 6.1% in 2014• Average annual licence income growth since 2009 was 7.2% p.a.• Total growth in licence income over the same period was 41.7%• Total income grew by 8.7% in 2014• Average annual total income growth since 2009 was 7.4% p.a.
250
300
350
400
450
500
2009 2010 2011 2012 2013 2014
Total income Rm
Licence income Rm
Expenses• Expenses growth very small – only 2% in 2014• Since 2009, expenses have increased on average only by some 2.6% each year as opposed to income growth of 7.4% each year
80
90
100
110
120
130
2009 2010 2011 2012 2013 2014
Expenses Rm
Cost To Income Ratio• Despite a number of difficult years as a result of the struggling economy, we have managed to reduce the cost ratio again
• The cost ratio has reduced over the year from 24.81% to 24.22%
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
32.0%
2009 2010 2011 2012 2013 2014
Cost ratio
Distributions• Royalty distributions grew by 8.3% in 2014 while the average annual increase over last five years was 6%
• GORP grew 20% following a very profitable year on the market • After several difficult following the 2008 global crash, we are back on the growth track
175
200
225
250
275
300
325
350
2009
2010
2011
2012
2013
2014
Total Rm
Licence Rm
Distributions 2013 vs. 2014
295 000 000.00
300 000 000.00
305 000 000.00
310 000 000.00
315 000 000.00
320 000 000.00
325 000 000.00
330 000 000.00
Royalty distribution
2013 2014
Cost to Income Ratio
23.4
23.6
23.8
24
24.2
24.4
24.6
24.8
25
2013 2014
Detail of Royalties Paid Period: 2008 ‐ 2012Sum of Total PeriodDistribution 2008 2009 2010 2011 2012Cinema Film 4,498,755.43 4,209,327.25 7,141,581.18 7,098,187.89 5,254,243.49 Foreign 3,409,414.17 4,196,573.43 3,740,471.44 4,289,530.92 4,257,450.31 Foreign Suspense 1,441,286.53 2,608,178.73 GRPNon Royalty Revenue (NRR) 59,759,701.43 56,827,972.48 39,577,788.32 39,740,283.14 35,073,662.57 Performance Adjustment - 675,172.00 61,704.99 1,431,300.32 1,001,205.14 Radio & General 63,841,973.24 78,494,433.65 92,947,640.38 107,386,826.07 89,831,692.39 Rights Holder Correction - 1,184,312.15 1,318,923.30 1,323,552.29 Royalty Adjustment 10,178.77 -10,060.87 -20,333.81 -80,893.67 -45,077.97 Special SABC Africa DistSundry Mechanical 117.72 Supplementary NS 2,685,333.37 6,911,023.73 2,846,057.72 1,331,421.87 2,845,224.02 Supplementary Undoc 16,021,604.05 27,962,093.56 31,259,901.70 12,130,479.03 24,768,708.65 Supplementary Warsaw 2,112,690.26 2,839,511.87 2,421,709.56 3,361,742.05 2,120,086.41 Television 28,451,402.46 31,578,894.12 35,889,787.72 44,088,918.27 36,175,509.02 Grand Total R180,791,053.18 R213,684,941.22 R217,050,621.35 R223,538,123.44 R205,214,435.05
Detail of Royalties Paid Period: 2013 ‐ 2015Sum of TotalDistribution 2013 2014 N/A 2015 Grand TotalCinema Film 6,262,781.32 9,797,875.22 9,051,685.26 53,314,437.04 Foreign 4,067,081.76 2,212,884.41 11,245,011.37 37,418,417.81 Foreign Suspense 577,710.85 4,627,176.11 GRP 44,291,719.42 55,295,881.57 99,587,600.99 Non Royalty Revenue (NRR) 37,379,331.41 268,358,739.35 Performance Adjustment 5,259,501.32 3,874,228.85 12,303,112.62 Radio & General 93,821,778.32 96,057,312.69 99,761,921.05 722,143,577.79 Rights Holder Correction 1,178,192.92 5,004,980.66 Royalty Adjustment -817.88 -147,005.43 Special SABC Africa Dist 512,491.88 512,491.88 Sundry Mechanical 117.72 Supplementary NS 2,912,383.73 784,157.27 20,315,601.71 Supplementary Undoc 21,923,565.18 30,078,410.82 12,937,332.03 177,082,095.02 Supplementary Warsaw 12,855,740.15 Television 31,797,154.45 33,214,336.63 241,196,002.67 Grand Total R197,006,778.33 R223,824,424.24 R512,491.88 R192,950,217.40 R1,654,573,086.09
NOTE: 2015 figures only represent partial payments allocated to date.
Summary of split of royalties paid to members vs. foreign societiesPeriod: 2009 – FY 2014
Total Royalties paid July 2009 to June 2014Note: This is not the total amount paid in 2014. Only up to June 2014
Paid to: 2009 2010 2011 2012 2013 FY2014 Grand Total
Members 134,781,111.90 133,738,795.43 136,911,631.40 133,420,952.85 121,233,454.88 138,726,456.32 798,812,402.78
Societies 78,903,829.32 83,311,825.92 86,626,492.04 71,793,482.20 72,644,450.87 76,517,486.20 469,797,566.55
Total 213,684,941.22 217,050,621.35 223,538,123.44 205,214,435.05 193,877,905.75 215,243,942.52 R 1,268,609,969.33 Total reflected only includes partial earnings for 2014 and non for 2015
Total undoc paid July 2009 to June 2014
Paid to: 2009 2010 2011 2012 2013 FY2014 Grand Total
Members 17,503,367.80 21,739,550.13 7,870,762.77 18,509,648.11 14,767,343.86 16,735,148.83 97,125,821.50
Societies 10,458,725.76 9,520,351.57 4,259,716.26 6,259,060.54 7,156,221.32 9,089,826.70 46,743,902.15
Total 27,962,093.56 31,259,901.70 12,130,479.03 24,768,708.65 21,923,565.18 25,824,975.53 R143,869,723.65
Summary of royalties paid for undocumented works
Society performance internationally
‐25.0% ‐20.0% ‐15.0% ‐10.0% ‐5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
AKKA ‐ LatviaMCSN ‐ NigeriaSIAE ‐ Italy (0.8%)LATGAA ‐ Lithuania (5.7%)IMRO ‐ Ireland (‐4.0%)AEPI ‐ GreeceHDS ‐ CroatiaJASRAC ‐ Japan (‐0.6%)BUMA ‐ Netherlands (3.6%)MCSC ‐ ChinaASCAP ‐ USA (‐4.1%)SACEM ‐ France (‐2.1%)AKM ‐ Austria (4.9%)MCSK ‐ Kenya (20.2%) "off low base $2.3m USD"SUISA ‐ Switzerland (‐3.3%)SABAM ‐ Belgium (3.6%)SAMRO ‐ South Africa (10.0%)GEMA ‐ Germany (0%)SCD ‐ Chile (10.3%)TONO ‐ Norway (5.2%)BMI ‐ USA (‐2.5%)EAU ‐ Estonia (‐7.1%)SACM ‐ Mexico (5.2%)TEOSTO ‐ Finland (3.5%)STIM ‐ Sweden (4.6%)KODA ‐ Denmark (6.6%)APRA ‐ Australia (1.7%)PRS ‐ UK (6.3%)SOCAN ‐ Canada (‐5.5%)ZAIKS ‐ Poland (‐1%)SPA ‐ Portugal (‐13.1%)
Licence Revenue growth (prior year growth)
Society performance internationally over 2 years
‐5.0% 0.0% 5.0% 10.0% 15.0%
SIAE ‐ ItalyIMRO ‐ IrelandASCAP ‐ USAJASRAC ‐ JapanEAU ‐ EstoniaSACEM ‐ FranceSUISA ‐ SwitzerlandLATGAA ‐ LithuaniaSOCAN ‐ CanadaBUMA ‐ NetherlandsBMI ‐ USAGEMA ‐ GermanySABAM ‐ BelgiumAKM ‐ AustriaSPA ‐ PortugalAPRA ‐ AustraliaTEOSTO ‐ FinlandSTIM ‐ SwedenTONO ‐ NorwaySACM ‐ MexicoSAMRO ‐ South AfricaPRS ‐ UKKODA ‐ DenmarkZAIKS ‐ PolandSCD ‐ ChileAKKA ‐ Latvia off low base $4.7mMCSK ‐ Kenya off low base $3.2m
2 year average Licence Revenue growth
NEEDLETIME ROYALTY DISTRIBUTIONS
SAMRO’S ROLE• SAMRO accredited 1st April 08: Section Needletime 3(1)(b) of the regulations of the Establishment of Collectingsociety in the music Industry (“the regulations”), 2006
• Represent Performers
• Establishment of POSA in 2009 to administer Needletime Royalties for performers
Structure of Needletime Splits
• Follows PPL model from the Uk
• 65% for Featured performer/s
• 35% shared equally amongst the Non‐Featured performers
• SAMPRA has collected revenue for General Licensing for Periods: 2009 ‐ 2013
• SAMPRA paid royalties for 2009 – 2012 to POSA on the 23rd of December to
R0.00
R200 000.00
R400 000.00
R600 000.00
R800 000.00
R1 000 000.00
R1 200 000.00
R1 400 000.00
2009 (1) 2009 (2) 2010 2011 2012
Needletime Royalties Received
72.00%
74.00%
76.00%
78.00%
80.00%
82.00%
84.00%
86.00%
88.00%
90.00%
92.00%
2009 (1) 2009 (2) 2010 2011 2012
Percentage of Royalties Paid]
Summary of Needletime DistributionsRoyalties Received By POSA in Dec 2014: • 2009(1) R 322 555.91;• 2009(2) R 490 263.36;• 2010 R1 230 059.20;• 2011 R 972 466.98; and• 2012 R1 171 075.44.
Successful Allocation of Royalties to Performers:• 2009(1) 91.01%;• 2009(2) 78.90%;• 2010 87.73%• 2011 83.35%; and• 2012 84.90%.Average % of processed royalties is 85.17%
SAMRO FOUNDATION
Winners in Spain – Touchwood and BCUC
REISA Donation ‐ Jo Le Roux, Nick Motsatse, Annette Emdon and Nardus Van Der Walt
SAMRO RETIREMENT ANNUITY FUND(SRAF)
A Retirement Fund for SAMRO Composer Members
SAMRO Retirement Annuity Fund
• Fund was initiated in between the period 1961 ‐ 1969
• CISAC allows a 10% deduction of total royalties collected
• 40% of the social and cultural fund is used to feed the retirement annuity fund
• Initial contribution to fund was R100 – increased to R850 in 2014 (minimum per member with earnings in current period)
SRAF Continued…
• Fund was administered internally until 2007
• Fund investment managers are Symmetry – part of Old Mutual
• Administered by Robson Savage (Pty) Ltd
• Principal officer of the fund: Morne Oliver of Seshego Benefit Consultants (Pty) Ltd
SRAF Board of Trustees
• Board of Trustees consists of:
– 5 member trustees voted in by SAMRO members at the AGM
– 3 ex‐officio trustees appointed by SAMRO
– One independent trustee appointed by the trustees
j4
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j4 These are the latest figures available.jschu, 2014/07/01
RETIREMENT ANNUITY STATS
MembershipTotal members as at 30 Nov 2014: * 8 741
In 2014:* 111 Retirements processed* 17 Death claims processed
Fund ValuesTotal value of fund assets as at 30 Nov 2014: • R257 702 729
SAMRO Contributions (5yr View)• 2010: R5 345 009• 2011: R6 478 282• 2012: R6 017 812• 2013: R6 956 671• 2014: R8 296 669
SAMRO MEMBER FUNERAL BENEFITSCHEME
A Funeral benefit that pays out a cash sum towards funeral costs of SAMRO Members
FUNERAL BENEFITS PAID
Other Matters
• Support for CCIFSA: Cultural & Creative Industries Federation of SA
• Lack of Compliance from Government with SAMRO
Licensing
• Radio Airplay Quota’s
• Copy Right Review Commission Recommendations j5
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j5 These are the latest figures available.jschu, 2014/07/01
Communication to the Public Right
Recommendation:
The Copyright Act should be amended to adopt the Communication to thePublic Right and the Right to make available copies of musical works.
SAMRO Recommended Action:
SAMRO offers to provide the Government with a proposal containing a draft of thewording for the amendment to the Copyright Act in this regard. The amendment ofthe Copyright Act as per the recommendation is essential in order to lift the barrier tolicensing in the digital environment and ensure that digital music delivery isadequately licensed and royalties are duly collected and distributed to rights holders.
WIPO Internet Treaties
Recommendation:
Ratification of the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) by the South African Government.
SAMRO Recommended Action:
SAMRO welcomes this initiative which would play a key role in the successful licensingof the digital environment. SAMRO requires the assistance of Government in thisregard. Ratification of the treaties would lend strong support to the communication tothe public right and the inclusion thereof in the South African Law. Which will in turnensure that digital music delivery is adequately licensed and royalties are dulycollected and distributed to rights holders.
Barring of MNO’s and WASP’s
Recommendation:
Mobile Network Operators (MNOs) and Wireless Application Service Providers(WASPs) that fail or refuse to enter into the relevant licence agreements with collecting societies should be barred, by the Minister of Communications, from distributing content.
SAMRO Recommended Action:
SAMRO welcomes this initiative by the Minister of Communications which would playa key role in the successful licensing of MNO’s and WASP’s. SAMRO requires theassistance of Government in this regard.