United Colours of Africa

Intellectual Property Know How

There were massive gaps in the vision of recording companies. And that has become evident now in how their technology and industry has changed.

Graeme Gilfillan Interview : I am multi-jurisdictional copyright lawyer qualified in a post grad position in EU US, UK International copyright law and I am a forensic specialist, which means that I investigate terms of copyright and royalty supply chains.

I am observing the same landscape as anybody else and everybody else across the globe. We live in a digital internet world so around law, if you have qualifications that stop at your countries border it doesn't really help you. Events that are happening in other jurisdictions have immediate, nanosecond impact on you. The law in general has been caught flat-footed completely by digitisation and the internet. That is the first issue. The old modis-operandi does not work anymore and the knowledge is extremely thin on the ground to an area of law that is regarded as complex difficult and not clear, and no formality to it. It is nice and clean you get a trademark registration and a class 41, there is no such thing as copyright. There is no little certificate that says this is yours. It is all perceived.

So, copyright was described 15 years ago and is still the headspace now as the poor cousin of intellectual property rights. It hasn't been attended to. Digitisation and the internet have changed the landscape significantly, where we see the rise of the knowledge based company, the biggest retailer in the world is an APP driven company, the biggest hostel company is an APP driven company, the biggest media company is an APP driven company. We have had some changes and these all make copyright extremely and highly relevant. But the qualification basis is not there.

A lot of things happening people don't see because of geographically bounded legal qualifications, a literature landscape that is unmindful of the various characters that effect each other, you might call it a synthesised coherence in the literature around this – to the extent that if you go back to how rights arise:

We used to have a performer and you could only see the performer when you wanted to see the performer. When the performer stopped performing, sound stopped and you didn't see the performance. If you weren't at the time and the place of the performer you never saw the performance of whatever instrument it might be that was being used. Come 1454 when laborious were writing for 5 centuries page by page, we get the Gutenberg press and the Gutenberg press introduces a second plane called reproduction. We have two value metrics, the value metrics of performing and the value metric of reproduction. These two value metrics have underpinned what you call the music industry from then until not so long ago.

So, technology has always been a friend. After the printing press, acetates, vinyl's … Technology typically wiped out what was before and brought something new and expanded the market place. It went from 4 tracks to 8, 16, cassettes and CDs. You get to 2002, arrived digitisation, Napster and the internet and it made commercial sense.

Fortune magazine November 2016, this is a chart that shows the US magazine which is emblematic of the global market. It charts between 1975 and 2016 the value proposition of different technologies in real time through that market place. We note that the 8 track was trundling along and overtaken by the vinyl. And the moment the cassette started coming into play, vinyl's fell off the cliff. CDs started and the cassettes fell of the cliff. And the CD and DVD era brought us $18.5 BN a year in roughly 2002 and by 2004 it was clear that this was not just new technology bringing new opportunity, this is technology changing technology. Fundamental changes that have never visited the industry before which is a 85% cliff drop – period – in reproduction.

"South Africa is a highly immature market place. What is the hallmark of immaturity in a market place? The inability of competitors to sit round a table and discuss what they have in common! The music industry is notorious world-wide for scraps at its meetings, crazy stuff when you go to hard-core countries. Only 1989 saw the formation of the international live music conference which is the live music industry. Before 1989 there was no association of like-minded professionals who competed with each other. The recording industry long time did that issue but it was closed and cliquey with technology - technology that suited only the few. There is a radical different approach to how you will deal and approach the market place, how you will deal with your customers. The South African market place there is no forum where the industry gathers. The live event LTPC conference run by the SA roadies association hit its 3 rd year and for the first time the country has shown a level of professionalism where the sector has competitors sitting down and being able to discuss what they have in common.

Competition focuses on differences, but association focuses on commonalities. And only when you can see what you have in common do you have a market stepping towards maturity. Competition can occur but good governance and regulation can also occur because that is in everybody's good interest.

Music industry has done itself another shot in the foot. It has been a corrupt industry historically. It has all the taglines of all the movies and TV shows that show it to be a heartless shit place. It is sexy, famous, glitzy and glamorous to attract you. But it is not being populated by good people. It attracts people for the wrong reasons. I am talking about the music industry, not the recording industry. Recording industry is about recording companies, it is about one aspect of the industry. There are 7 aspects to this industry; business of the artist, management agent, performance business, live performance, publishing business, songs, recording business, recordings … you then have the brand industry, brand of artists and third parties, fan industry which is now the customer industry, social media industry which is the interaction directly with the people – end users and then there is the media… 7 sectors.

Nothing has stopped they are playing the same game. It is the same system they have used in apartheid to bleed this country of money. They could quite easily ensure, when they put the regulations in, that the two apartheid societies that were birthed in the belly of the beast, particularly the performing rights society – SAMRO, didn't require any accreditation to keep on running. They had enough power to reach into the depths and bowels of DTI and stop it. The copyright review commission was corrupted. All the members of the commission had been on SAMRO's payroll 25K or more a month. This spilled out during the SAMRO employees strike during the accounts department. They were challenged on this, they rigged their report. Submissions that had been made, they did not put them in. People who had made submissions they removed their names.

The majors have no local shares, no black equity and routinely rip 400 M a year out of this country straight through the reserve bank. If you were to see the state of the national anthem you would die. I have done a study of our national anthem worldwide. It is alive and copyright and 80 people are collecting no problem. There are 228 other countries jurisdictions that are using it every time you play any fort of any kind. Never mind the language or the country. It is the most played song. We have no control. The London Olympic committee went and published our national anthem and they went and published it again at the Brazil Olympics. We don't have access to the data. I have an acute understanding and knowledge."

The issue is about looking forward. The future is not made in the past and that is the truth of things. If we really wanted to, we could cripple the whole plan and put people into jail and there are some that need to go to jail because they are running scams and skeems right now. There are 10 publishers in this country that meet every year in London and divvy up the spoils they steal from this country from the rest of the world. All they do is move the domicilium of a song in paper from this country and put it into another country. So worldwide incomes instead of coming here, it goes to another country. No statements, no income, no nothing is ever again reported. There are scams set up in Spain, US, Holland …

"The advent of the internet brought 4 things – it brought uncontrollable reproduction, it brought a situation where with incontrollable reproduction and unlimited supply and with an unlimited supply where everyone has tomatoes at the tomato place what is the value of a tomato? Nothing, zero! And then it introduced a disruption to supply and demand that hasn't been seen before in the past when we finished making the hit CD, nobody wanted to stop making it. Supply and demand had a role. Today everything we make is there forever. We talk about Zeta-bytes of information. The entire worlds' information of Zeta-bytes, the bulk of it was done in the last two years. That is how much shit is flying off the earth at the moment, in real time per annum.

So, a fifth issue is that the marginal cost to make a digital copy is zero. If the marginal cost is zero, the marginal value is also zero."

So, what nobody is saying and what nobody wants to call it, no matter how many streams, downloads and other issues you have the value is gone. The reproduction writing is destroyed fundamentally. The world market size in 2017 was $13 BN. The last time the world market was this low was back in the 30s, in real terms.

So, there is no money in streaming. To further nail this down. When you take the streaming services and look at the industry to how they negotiate their value. They negotiate in value on the basis of a share in advertising revenue. So, the income to the sector is completely disconnected from the value metrics that the sector has in its mind when they make copies, how many copies, how many streams and the counting issue. It is gone. And where is it going? December 2015, Billboard magazine a breakdown of the professional musicians income sources: 80.4% live, brand social media; 13.3% sales - downloads and DVDs, sound recordings. You collect that money every 6 months. It is going down. Can you have a life on that, no!"

We also have a problem that this is copyright law. If you go and do a BA LLB to call yourself an attorney in South Africa, if you took the 35 hour elective on intellectual property you would have spent an actual 35 hours being trained about paper trademarks, graphic designs, geographic indicators and trade secrets. You have no clue after 35 hours on all of those. To get an honours and masters in just copyright law is 4 years. There has been no investment, nobody saw the internet coming so big players dealing with copyright SABC, MNET, all the record companies, collecting societies, SAMRO; they have zero qualification in copyright law.

When you as a composer go and join SAMRO you assign your performing right to SAMRO. No publisher owns that right. SAMRO takes assignment. Ownership of the performing right in the musical and literary work: If you ask SAMRO for publishers' membership they give you a deed of assignment, for what? For the publisher to assign a performing right! The publisher doesn't own it because it has been given already to SAMRO. This doesn't work in law. If the composer assigns all the performing rights to SAMRO, then what right does the publisher have? They are not creative! They own it and they own all the other rights that the artist doesn't own. And this is the foundation of their membership. They have been doing this for how many decades?

They have created a thing called a work of music. What is a work of music, it is music and words? But, our copyright act provides in section 2 chapter one for what works are eligible for copyright and there is no such thing as a work of music. Music is music without words. It doesn't matter how you sing them perform them or speak them, words are words. It is not music. These are simple basic issues in copyright law. SAMRO tries to commission the making of musical works. But our copyright act specifies in section 21 C, that you can't commission a musical work. It specifies what you can commission – a sound recording, a film … and then for your money you become the owner.

I am one of 7 people on the African continent who has a multi-jurisdictional masters or better in qualified copyright law. It's a sorry state of affairs. For more than a decade I have interacted with big law firms. They want to get someone to come and talk about the music business – let's have entertainment law. The word entertainment is mentioned once in the copyright act with respect to the rights you need to have if you have a place of public entertainment – that is it. You can go to any publishers office in this country and you won't find a copyright act. So what rules do you stick by?

The TRC issue is important because we have estates that are owed huge amounts of money but they can't be found … Philip Ndlovu went there at 21 and signed a contract. He put his mother as next of kin. And now at 55 he is gone and they look in the file and his mother died 15 years ago and where she was living is now a parking lot.

We don't have the proper state over-site. An organisation like SAMRO shouldn't be allowed to operate without the proper state over-site. There is a radical need for us to up-skill copyright law capacity and qualifications in the country – particularly DTI.

Creative commons is not necessary. It comes in to make it easier for people who want to use and abuse to do so. Put something up with a creative commons licence that has your creativity and I will go and use it and make as much money as I want out of it. You have to understand the history of the process – Professor Lessing and his creative commons little circus, a lot of fools. Copyleft doesn't help you if you can't connect to your work and work is not connected to you.

In copyright law we are in deep shit. We are not paying any attention to the knowledge that is needed. Go and look at a firm like DM Kisch, they are an intellectual property firm. Go and try and find a copyright attorney. Trade-marks and patents and designs, no problem – plentiful – it is just a registration.

Copyright law deals with two kinds of works, authorial works where the author, the creator is the first owner and artistic works, photographs and sculptures. Musical works, literary works, words and dramatic works, plays, theatre issues where there is more than one thing happening on stage. And then you have a second bunch called entrepreneurial works where the person who did the arrangements is the owner – the person who paid is the owner. They are completely different animals- this is a sound recording, a film and a broadcast and a computer programme. Secondly the entire world has two basic types of copyright law – the common law which emanates from the statute of AMM in 1709 or 1710, the British. This particular law favoured capital as opposed to creativity. It is the law that gave birth to the Americans. And the American law is a stick law to its own stuff which comes off that. All the colonies and protectorates of the British inherited their law – capital over creativity, the money more important than your name. The Europeans – German and French - saw things very differently. They saw, creation as the authors own intellectual creation, enabled from the author. They put creativity on top of capital.

So, if you look at it from a political spectrum point of view, the Americans are right of Genghis Khan, the Brits are being harmonised into the EU for the last two decades, an unwilling dog going to the vet, being dragged. They are pretty much harmonised. And then left of Karl Marks, the French and the Germans. And basically the EU is very much of a civil law type character. South Africa was verbatim the British Imperial copyright act from 1916 – 1965.

So, we are phenomenally short here of good knowledge. The thing about IP law in general and it is only in patents in the IP portfolio that this is an issue and it is in the statute - what kind of qualifications … is it properly standardised? It is more like medicine – you need to work in a copyright industry before you can be properly qualified.

Secondly, if you think that in a digital internet world it is a good idea to have knowledge that stops at your border, you will just chase an increasing share of a shrinking market. People with those skills won't have jobs in the future because you need multi-jurisdictional skills. What is the law in Botswana and Angola and why don't you know it? If I get an engineer here and tell him to build a dam in Zambia he does that. He is the engineer. Copyright law is no different. If you need to know a far wider basis of law, you need to know the statutes – what does the law say?

There is such a disconnect in this country that the organisations dealing with things – the language they have doesn't speak to the law. I have tried hard and have failed to persuade big law firms to take the copyright law more seriously.

So, on the one hand we are seeing one of the fundamental value metrics of the music industry globally fall; centuries taken out. Technology has completely upended the game. You can take it from Missy Elliot, ‘put your thang down, flip it and reverse it,” a line from one of her songs. Meaning that, Prince gave away 3 M CDs in 2007 but he made 100 M on the tour. We used to go and tour for free to support the sale, all driven by the idea that making copies is going to make money. It is not making money. The catch here is if there is no money, why make? If you don't have a song that you can make a recording of, even if it is worth nothing, you cannot access the big buck. The industry has become a situation just like the advertisers are calling it – we are going to pay X amount of advertising, money, brand developers data miners and advertisers, these three groups are funding the plane – because they want customer information. Along comes social media and the music industry is stewed. Their customer is the shop. Coffee can charge 200k a gig and can fly around on a jet on the weekends because he has got 4 M customers and he can sell them over and over again because they can work out how many smart phones and they know exactly the value hit as opposed to a billboard on the corner of Joe Slovo.

So, we have a vast amount of the industry word-wide that is being impressed by an industry that is chasing an increasing share of a shrinking market it has its head in the sand and doesn't see the writing on the wall. Those that do see the writing on the wall are making fortunes. Is it being made by making copies or how many streams Ed Shearing has got? That is not where the money is. But when you want to talk to his 36 M followers of which at least 9% want to buy, you just tell them where to buy it. There are huge repercussions for the industry.

So, what sells music? A great song … always will, always has! What does marketing mean? Nothing! Are you going to market? No! How are you going to market? Join the 5000 messages or so an individual is exposed to every day and see at what expense you can try and get in there. You have to have something deeper, a great book, a great story, a great recording; a great song. You have to go to the ethereal world, that deeper point that connects. And, you need to know about your customer and give a shit. And if you don't give a shit about your customer then you are saying you don't give a shit about your money. And the old rule applies – shortest distance between two points is a straight line. And another issue is – it is one room – look for me find me and I will tell you where to go.

So, all in all the music industry I doubt whether the majors can survive another 18 months in this country without becoming completely different businesses or living on a diet that they are being fed on from overseas and hoping for the best.

85% cliff drop in the global industry:

How do you sell 100k units? I am Casper Nyovest, I have got 2 M customers, I am monetising 5% of them and they will buy. And they go and buy. If I don't have a hit song, social media to inform people where to go, I am into the digital slush and I will never see another cent.

The deeper is the connect with the customer; that you have got something they like or are inspired by; your lyrics, who you are, what you say and what you represent. You touch people's hearts – that is what a great song does."

It takes one song to change your life. It really does. And even if you never find that song again, your contribution with that song is immense. It is incredible difficult to write a great song. Quantity is irrelevant, but if you have one great song – you are a credit to your country, your clan, your family, community … The only hallmark we know about a great song is that it is not bound by genre – you can take it from genre to genre and it stands up in every genre. Whilst the Americans have been trying every algorithm they can think of, in order to work out the combination of sounds that will give you a great song, it has been illusive in the main.

Do your homework and find the percentage of Scandinavian writers who populate the writing of the top 10. It is ridiculous. Norway or Sweden provide sometimes 7 out of 10 of the top ten at any time. They are the writers.

The essence of the music industry - period - is songs. Songs have always been the essence. One of the best ways to understand songs is to remember a song called Sister Bettina put out by Ghetto Ruff more than a decade ago which was recorded in a bar, sung by a guy who was drunk out of tune and with only one track and all the noise and bleed. It sold serious numbers and under-ground the pirates went bananas. It sold millions – why? Most people can't sing in tune.

So, people like Miriam Makeba come from an era when song writing was regarded as high art. Today it is a point of greed. I can get more money if I write my own songs – never mind that it is a skill I should try and master. There is a lot of crap going to the market place because people think it is about themselves. I believe in it? Really but how many other people do? Record companies sell records, they are not interested in you actually!

So, you have a market place that our industry hasn't paid great attention to - its un-education. Being cool didn't necessarily mean being educated or making an attempt to educate. What you do know is that the people doing well have taken the time to get education, knowledge what we call ‘know-how' which sits in between knowledge skills, training, qualification. Know-how!

I get people wanting to start new labels every day. Do a workshop instead – inform yourself, where is the money. It doesn't mean the industry doesn't have money. Before you are going to spend what you are going to spend to try and get an artist off the ground, understand what are the key ingredients and they aren't about how many copies you can make of a recording. That flew out the window.

The music industry is a wonderful place, but it is cruel, it is hard – full of surprises. Stay on your toes at all times. It doesn't suffer fools. We have a concept called ‘Dumb shit incorporated'. You can belong to ‘Dumb shit incorporated' if you want – that means being arrogant about the English. English is the most dangerous language on earth. The English speaking musicians who think they know, are the most disadvantaged. The arrogance of English we call it. If English was a second language to you, you would never take it light. Who are the most successful artists in this country? People who have taken English seriously, and haven't rushed to sign anything! They have taken control and ownership of their rights. They own the record label, the publisher and they own the management. Three layers of administration and built teams. And there is a long list of them and they have all done corporatisation, and that is the way in which 70% of the music industry has become black owned. The simple process of transferring income to your skill to equity to get your skill owned. Don't pay me, pay my company. 80% of my income will never come from one source. I am a business, professional, not personal.

So, we have a situation with the music sector and culture which is about innovation. It is about keeping planes of culture alive. Language is a part of culture. Can't all be spoken. It allows us to have some continuity and sustainability as human beings. What is changing? How we listen. We only have so many hours in the day and can only listen to one thing at a time.

So, the entire view of the trade … I make my money says star X because I am interested in my customers. I can talk to them and there are measurable quantifiable outcomes. Advertising money has been throwing darts at billboards and newspapers and other forms of communication that just don't work. Marketing is fast becoming a dirty word because what are you talking about? Marketing is the customers point of view – how do you want your food, hot or cold? How do you want to be spoken to – nicely or rudely? Customer decides what the marketing function is.

If we have so many people trying to say so much at the same time, all the time 24/7 – then none of the old ways work. It is a completely different approach, and that going deeper is the connect, that culture has, between the creators and the consumers. So, there isn't imbalance were some get everything and others get nothing. There has to be a balance in the play – so what has happened is the creators have been caught flat footed because they have been caught with a recording industry that had its head up its arse and still does. These guys are running around thinking how great they are because they have got 6 streams, but point 7 zero's on the right hand side of a digital point before you find the value of a stream. It is a joke.

So, in the market place in SA and Nigeria you see a lot of smart players doing well, got teams, corporatized, control what they need to control – properly – will never sign with a major, respect their customers.

You can't run a label on itunes. It is a joke. N'Synch 2015 I go on tour. In 5 months I sell 5 million records. The gross take is 36 million dollars. Maybe I get 3 between the 5 of us. On tour in 5 months we gross 308 million dollars and we each earn 30. Hello? These are facts!

People make things, whether you pay for it in the issue of trademark or patent it doesn't matter. Whether you buy that spanner and there is a small shred of money going to somebody who dreamed it up for a period of 20 years as a patent. Copyright is a limited term. It just allows the creative gene, that person, to have a second bite of the cherry in the form of their progeny. Hopefully if you come up with something great, your kid will come up with something great too.

There is no ethics and morals about this. It is victimless crime so to speak. There is deep poverty now amongst the older musicians who can't get to the performance issue. None of their music is getting played, so no-one can hear it. So, if they have a great track, no-one can hear it. There is more to this than meets the eye. If 8 out of every 10 rand are coming from live performance and how you monetise your social media and how you monetise your brand, what does it say about the recording music industry?

So, it doesn't mean you stop making recordings – if you have got a big catalogue you start thinking about merchandise. Miriam Makeba, how is she going to sell, now that she has passed away, the 40 DVDs and CDs that she owns that she recovered? It is a box set with nice information. There it will sell. But, Musica won't take more than 7 of them. How do you sell, you can't live in a Musica world – insane.

We have rotten knowledge in the general. Going back a long time to Glen Lewis, Big Dogs, Fresh, Oliver Mtukudzi at age 44, and Ringo Madlinglozi in the late 90s; they started corporatizing and taking ownership and control … All the way through the Black Coffee's, the Jezeel Brothers … all the way through to “I am the Son pty ltd”. Fully aware got auditors – got people to check English and the law; and doing huge business. Not the cliché. Quietly, DJ Kent – 88 productions - serious operation, Shimsa - She music pty ltd - serious operation.

Interestingly enough these are people with a black identity that stood up for themselves, they are not trying to be black through a white arse. We look back in the industry – a number of our first line transformation companies turned out to be not transformation but white fronts. Black fronts for white capital. Your independents like 999, Kalawa were fronts for white business. Blunt. When a black motion that has a highly organised team that operates proper business, has to go and audit Kalawa because they are getting fucked over by Kalawa and what do they find, just a thin veneer and Universal underneath. There is no empowerment, no transformation, no capacitisation, just a couple of black faces painted on a multi-national company and sold their souls – happy to do it and take the money.

We say in South Africa there are 4 kinds of people, white whites and white blacks and black whites and black blacks. And essentially all South Africans fall into those four boxes. White whites and white blacks – few in number ran apartheid. The induna's, the shembe's, the apostolics, the moria's were happy no problem. Black blacks and black whites stood up and fought. It took long and hard, people got killed, decades passed and got to the other side to change.

None of us – I am one of them saw the real poison pill of colonialism first and apartheid second – when we noticed 10 million black people look at their skin and say I am black and the poison pill is I am not going to take instruction from another black person – I am going to ask who are you and how can you talk to me like that – even though you have the power? It is ingrained in my history that I can't take instruction from another black person. We are in a black country, run by black people, so what have we seen for 22 years? A very difficult challenging situation!

Language is the window to culture, so, we have a lot of people in this country who make no effort in language. If you have travelled a lot you know the sweetest sound to your ears is the sound of your own tongue. You can be in a room and through the noise and hear a line in your language and you make a bee-line, no shyness at all, to say howzit. Yet, a good portion of this country. particularly pale, Indian, coloured, refuse to make a single effort. But when they have to go to France you will find them at the CNA buying a phrase book to help them get around France. Ask yourself, if you live in this country – 50, 60 years and you do not know a word – how do you get around? With a superior exterior force that privileges you in a way that you don't have to bother about it! Our media, our soap operas, we have never put language on other people's tongues to try and create a culture where we see people speaking different languages.

In our industry we can see that shit. The market place that is really screwed is Afrikaans musicians. Haven't a clue! They haven't understood that the cult of the manager is dead. There is a thing called a management that requires many skills to be done properly. That no manager does. Like the Parlotones and others.

The market doesn't unlock itself, people trip along on the same issue thinking that I am going to sell 350 000 records and that all disconnects. Spotify gets its money from advertisers, brand developers and data miners. It works out how it is going to pay, by applying a percentage of its ad revenue. So, where is the connect between a percentage of ad revenue and the number of plays? Where is the connect? It is not there. They use funny algorithms to try and give a value that a stream is worth this? Or try and distribute a pool that has no basis. Go to SAMRO, I am an internet service provider and I have to get a licence, I have to pay you X, what is it for? I don't know?

So, music industry in this country is going through some maturity issues in the market place which is changing faster than you can believe. What is encouraging is a lot of younger players know the importance of know-how and they are prepared to apply it and go for it. Is there an issue in terms of some people crashing – sure – there are some horror and sad stories coming - collapses. What do you do? Your rights live beyond you.

So, there is an Indian newspaper online that made note recently between the similarities between Venezuela and South Africa with respect to transformation. Both countries needed to transform however both countries made a huge error in misunderstanding the importance of know-how to achieve transformation. Achieving transformation isn't just about putting faces, if you want to achieve transformation you have to have the know-how. South East Asia has excelled in this – never missed a trick in the importance of know-how. And the importance of the know-how is about the drop in the water that makes it all purple like crystal. Our transformation is hamstrung because a confusion about know-how.

People at the front edge of this industry, young people are coming in. People in their 30s are being reminded that they are old because they were once 19 and wanting to get in. If you don't take your knowledge and education seriously you are out. It is a highly competitive market and it doesn't suffer fools. You have to take yourself seriously, people take you as seriously as you take yourself. It doesn't mean being stupid about it. It means doing what is business like to do and un-business like not to do. Secondly you never leave school! Thirdly you never relax and not relaxing is not an issue. It is habitual. This is one of the edges of urgency of creation.


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