WHY KENYA NEEDS A DIGITAL CMO FOR MUSIC AUTHORS, PUBLISHERS, PRODUCERS & PERFORMERS

#ReformMusicBusinessinKenya

Are you someone who applies their creative talent to the creation of musical works, writing the music, and sometimes also the lyrics, usually in a popular music style (e.g., Kapuka, Genegtone, Gospel, Rap, Trap, Benga, Rhumba, Amapiano, rock, country, hip hop, pop)? Then you are a songwriter. If you are someone who applies their creative talent to the creation of musical works, composing the music, usually in a kapuka, reggae, classical or jazzy or another groovy musical style then you are a composer. Could you also be someone who applies their creative talent to the creation of musical works, writing the lyrics, across many styles of music including musical theater? then you are most likely a lyricist. If you come across the term music writer, you shouldn’t worry. This is because songwriters, composers & lyricists are collectively referred to as writers in the music business. This is the position in America, Europe, and most UN member countries.

Copyright is a form of protection granted by Kenyan law for original works of authorship fixed in a tangible medium of expression. In Kenya and in most other countries, a musical work, fixed in a system of music notation or on paper, or in a recording may be protected under copyright law.

A sound recording may separately be protected under copyright law. Copyright protection applies to both musical works and sound recordings that have been made available to the public or kept unavailable. For more information on copyright in Kenya, you should visit the website of the Kenya Copyright Board (KECOBO). KECOBO is the Kenya government department that regulates and administers copyright law and regulations. Copyright regulates music, videos, film, pictures, software, books, photographs, & images.

The truth of the matter is that the right to communicate to the public which is a right granted to copyright holders has been adversely affected by emerging technology developments. Terms such as streaming are now mainstream. Unfortunately, these emerging technologies that have enabled things like streaming, webcasting, and ring tones have affected the rights of writers

We at the music Advocate Africa welcome a national debate on whether the current provisions of the Kenya Copyright Act fully cover the digital space. Our position is that the current provisions don’t fully cover the digital space because they are more appropriate in regard to reproduction, distribution & sale. However, we don’t have blanket provisions for these emerged rights. I don’t want to sound so technical. So let me try and break it down for you.

When it comes to licensing music users such as radio, tv, bars restaurants, and matatus we have a framework that enables CMOs like MCSK, KAMP & PRISK to issue blanket licenses. That framework is weak hence our push for a new framework. However, at least it exists.  The problem is that we don’t have a framework for issuing blanket mechanical licenses for eligible streaming and download digital service providers (DSPs) like Safaricom, Boomplay, Mdundo, and various other players like Spotify and apple music which operate in the Kenya music market. This is why Kenya needs a brand new digital CMO framework that will enable Kenya’s first digital CMO to administer blanket mechanical licenses to eligible streaming and download services in Kenya.   We need a national debate on Digital Service Providers that need blanket licenses. This is the trend in America, Europe & Asia. We must begin the journey now.

When our proposal for a digital CMO materializes, existing CMOs like KAMP, PRISK, & MCSK should not worry about their mandate. The Digital CMO will only administer a blanket mechanical license to eligible digital services to be identified in the law. It will not get involved in any other type of licenses or royalties including public performance licenses or royalties, synchronization licenses, or record royalties.

According to the Kenya Copyright Board, The Music Copyright Society of Kenya (MCSK) is a Collective Management Organization that represents the rights of authors, composers, and publishers. It collects and distributes royalties for public performance and broadcasting of its member’s rights. It also administers the mechanical and synchronization rights although the latter is voluntary as members may administer these rights individually. The mechanical rights also cover the rights in ringtones and are entitled to collect the royalties from users. MCSK also administers the rights of proprietors of the works if they are the bonafide owners and have legitimately acquired the rights from the authors, composers, and publishers. For several years MCSK has faced credibility and transparency questions from it disgruntled members. It was deregistered by the Kenya Copyright Board in August 2021. The dispute is still in court as at the date of this publication.

In regard to the producer’s organization, KAMP represents the rights of the producers of sound recordings and will also be entitled to royalties accrued from the public performance and broadcasting in relation to the sound recordings. The royalties are collected from the same users as MCSK such as broadcasting stations, entertainment venues, malls, restaurants, and hotels. Although they will be collecting from the same users, they will be collecting for the sound recording and not the underlying musical work. In August 2021 they were deregistered by KECOBO. The dispute is in court as at the date of this publication.

The Performers Rights Society of Kenya represents the performers such as musicians, thespians, actors and actresses, acrobats, and dancers among others. They collect royalties on behalf of members for the broadcasting and public performance of their fixed performances. In August 2021 they were deregistered by KECOBO. The dispute is in court as at the date of this publication.

The Kenya Copyright Board is a state corporation established under section 3 of the Copyright Act No. 12 of 2001. Its mandate is the overall administration and enforcement of copyright and related rights. The Board carries out public awareness, enforcement, registration of copyright, licensing of collective management organization, and education on matters of copyright and related rights. It coordinates the activities of the copyright industries. Rightsholders and users are expected to work with the Board to ensure proper administration and enforcement of copyright as well as create an enabling environment for the growth of the copyright industries in Kenya.

We envisage that the digital CMO will be a nonprofit organization just like MCSK, KAMP & PRISK licensed & regulated by the Kenya Copyright Board. The role of the digital CMO will be to issue blanket mechanical licenses to eligible streaming services including those that allow permanent downloads. This means that some digital services like the music services from Safaricom would require a blanket license. All telecommunication companies offering music services currently do not operate the services under a blanket license. This is unfortunate since none of the 3 existing CMOs collects royalties due under those services. In the United States, The Mechanical Licensing Collective (The MLC) which is a CMO established by the 2018 American Music Modernization Act in January 2021 began administering blanket mechanical licenses to eligible streaming services like Spotify. It took almost 3 years to set up the operations of the MLC from scratch. We envisage that Kenya will need some time to lay down the necessary infrastructure before the digital CMO can roll out operations

In America, the MLC collects the royalties due under those licenses from the DSPs and pays songwriters, composers, lyricists, and music publishers. The MLC has built a publicly accessible musical works database, as well as The MLC Portal that creators and music publishers can use to submit and maintain their musical works data. Kenya will have to legislate tools that will help KECOBO ensure that creators and music publishers are paid properly.

Why do we Need a Digital CMO Framework?

Kenya needs to establish a more efficient and effective way for digital service providers (DSPs) to license the music they make available on their platforms and to ensure that the proper rights holders whether publishers, administrators, and CMOs are paid the mechanical royalties they are entitled to for the use of their musical works.

Our proposal essentially proposes that the national assembly create a new blanket mechanical license that DSPs can secure to cover the use of all the music they make available on their platforms. Our proposal will also essentially create a new organization that will be doing something totally different from what the current organizations like KAMP PRISK MCSK are doing. They, therefore, should not be worried about their collective space. Kenya needs a pure digital CMO framework for the emerging rights that require more technological investment in monitoring the use and distribution of royalty.

Our proposal essentially seeks to petition the government of Kenya to set up a new organization to exclusively administer the blanket licenses, collect royalties from DSPs due under those licenses and distribute those royalties to rightsholders. It is our proposal that parliament compels the new digital CMO through legislation to build and maintain both a publicly accessible musical works database and a portal that the digital CMO Members will use to register, maintain, and update their music data.

How will Mechanical Royalty Rates be determined?

It is our suggestion that the government should invest in a study that will propose a mechanism that is transparent and participatory. This time around, Music Rights holders should have a more prominent role in the setting of royalty rates. The role of the government will be to identify a fair accountable system that oversees the entire system of determining rates. It should allow music users and music owners to collaborate in reaching a favorable, equitable, and progressive rate for the industry. In the United States, for instance, The Copyright Royalty and Distribution Reform Act of 2004 (CRDRA) established the Copyright Royalty Judges Program in the Library of Congress.

The Copyright Royalty Judges (Judges) oversee the copyright law’s statutory licenses, which permit qualified parties to use multiple copyrighted works without obtaining separate licenses from each copyright owner. The Judges determine and adjust royalty rates and terms applicable to the statutory copyright licenses. They also oversee the distribution of royalties deposited with the Copyright Office by certain statutory licensees and adjudicate controversies relating to the distributions.

The Judges are appointed by the Librarian of Congress to serve staggered six-year terms. Each may be reappointed to subsequent six-year terms. Under the CRDRA, each judge must have a law degree and at least seven years’ legal experience. In addition, one judge must have significant knowledge of copyright law, one must have significant knowledge of economics, and one must have a minimum of five years’ judicial or quasi-judicial experience. We propose that we conduct a study to see how we can adopt the American model and customize it to suit the Kenya Market.

How will the Digital CMO Collect & Pay Royalties?

We propose that the DSPs send sound recording usage data, and accompanying mechanical royalties, to The Digital CMO on a monthly basis. The Digital CMO then matches the usage data to the data of the musical work in The Digital CMO database. Once the data is matched, The Digital CMO pays out the mechanical royalties to music publishers, administrators, and self-administered songwriters, composers, and lyricists. We also propose that Songwriters, composers, and lyricists who have assigned their right to collect mechanical royalties in Kenya to music publishers or administrators receive mechanical royalties directly from the music publisher or administrator.

Royalty Statements

We propose that the Digital CMO will issue royalty payments and statements approximately 75 days following the end of each calendar month. When statements are made available, Members will receive a notification directing them to the Royalties section of The Digital CMO Portal where they can access their statements. We propose that the royalty statements will be made available in the following two layout formats: 

1. The Digital CMO Royalty Detail Statement Layout: Provides royalty data corresponding with the individual sound recordings contained in DSP usage reports. 
2. The Digital CMO Work Summary Statement Layout: Provides royalty data summarized at the musical work level. 

Parliament should ensure legislation makes it mandatory that statements will be provided in a file format that is compatible with the most commonly available spreadsheet software like excel. 

Adjustments

Royalty Adjustments

In light of Kenya’s music data challenges, we envisage that there may be situations that create a need to review and adjust royalty payments. There are a number of reasons that royalties may be adjusted retroactively pursuant to the proposed law.  Resolution of disputes between Members, or errors in the information provided by Members, may lead to adjustments where royalties are debited from one Member account and credited to another.  Members should notify The Digital CMO immediately if they discover a situation where they believe royalties are not being distributed properly. We will need to develop Guidelines for Adjustments so that the process is transparent, verifiable, and accountable.

DSP Adjustments

We also envisage a situation that would require DSP adjustments. We propose that parliament put a framework where royalty distributions may also be retroactively adjusted based on adjustments to prior usage reporting that The Digital CMO receives from DSPs. This should be expressly authorized by law for purposes of accountability & clarity.

Statutory Rate Adjustments

We also envisage a situation where royalty distributions may also be retroactively adjusted based on retroactive changes to the statutory mechanical royalty rates set forth by the organ parliament & KECOBO will create to set rates.   

We also envisage a situation where we may have unmatched data and the parties entitled to payment cannot be located. A reasonable period between 2-5 years should be legislated before the Digital CMO may distribute the unmatched royalty based on a formula dictated by the law. 

We submit that the new law should create a roadmap toward membership. The process of becoming a member should be well defined in law. In order for eligible artists and other rights holders to collect mechanical royalty, they will have to register and become members. This however doesn’t mean that non-members cannot get their royalty paid. The primary purpose of the digital CMO will be to match use and identify the right eligible parties to pay. It is also our position that the services offered to the Digital CMO members should be free. Eligible rights holders should have the option of administering their rights directly or through an appointed agent or manager. The onboarding process of registration should be digital on the CMOs portal. The portal should enable the members to create user accounts with all the necessary contact information and a member profile section.

The portal should be regulated in such a way that it enables rights holders to register, edit and review their musical works data; create and submit registrations for any new musical works; manage and update their contact information, banking details, and tax forms and invite other users to set-up their own user accounts under a members CMO profile.

The process of registering a member’s data should also be well spelled in law. Music data = money. Music rights holders should be sensitized by the law on the importance of registering music data accurately & comprehensively since wrong data will result in no payment or delayed payments. The Digital CMO members must be under a statutory obligation to provide accurate data. Auditing the accuracy of data should be a continuous process whereby members can check data & make any edits from their porta. Immediate registration of new musical works should be encouraged.

We also propose that for published and administered songwriters including those represented by CMOs, their publisher or CMO will administer their rights. Individual management should also be provided for. For a publisher or a CMO to collect, they will have to be designated and permitted in writing by the rightsholders.

The Digital CMO must be mandated to create a streamlined way for data management. It needs a unique combination of legislative & regulatory prescriptions.  

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