Ringtone company denies charge

2008-09-03 22:20

Johannesburg - Exactmobile has denied that it is not paying royalties for the ringtones it sells.

It was responding on Wednesday to this claim, made by the National Organisation for Reproduction Rights in Music in Southern Africa (Norm).

"There is actually a valid agreement in place between Norm and Exactmobile," said the company's chief executive Davin Mole.

"This agreement provides the mechanical rights that we need to legally operate as a music seller," he said.

Norm issued a summons against Exactmobile in mid-August, and on Wednesday Exactmobile filed notice in the Cape High Court of its intention to defend.

"Norm has asked for an order in terms of which Exactmobile must cease infringing the copyright of Norm's members and pay a royalty of 7.5% which it regards as reasonable, backdated to January 1 2006," Norm said in a statement.

Only remedy

It was also asking for damages of R2m it claims arose through the continued sale of mobile content containing copyrights controlled by 11 of its members, in contravention of the Copyright Act.

"We have been patient with Exactmobile for too long now and believe that legal action is the only remedy that we have open to us," said John Fishlock, Norm board member and Universal Music Publishing managing director.

He told Sapa that up to 2005, royalties on ringtones were charged as a fixed amount per download, with some discount on volume.

He said that ahead of the expiry of that agreement at the end of 2005, Norm proposed a new way of calculating the royalty - as a percentage of the amount charged to consumers by mobile content providers.

Exactmobile agreed to a 7.5% rate, then later reneged on the agreement and offered five percent, Fishlock said.

SA songwriters

Following this impasse, publishers and composers had received no royalties from Exactmobile, or any other members of the Wireless Application Service Providers Association, to which Exactmobile belonged, since January 1 2006.

Norm said a mechanical royalty rate arose when the wireless application service provider recorded licensed works belonging to Norm's members into digital files for use as ringtones on cellular phones.

It said some South African composers and songwriters affected were: Thandiswa Mazwai, Mapaputsi, Leon Schuster, Springbok Nude Girls, Tuks, Freshlyground, Sipho "Hotstix" Mabuse, Nicholis Louw, Zamajobe, Dozi, Yvonne Chaka Chaka, Harris Tweed, Phuzekhemisi, Karen Zoid, Deborah Fraser and Steve Hofmeyr.

It claimed a large number of international composers and songwriters were also affected.

However, Exactmobile said it had tremendous respect for musicians and composers alike, and had no intention of avoiding the mechanical royalty payment.

"We have been actively negotiating with Norm to increase the rate payable under the agreement, and have not been able to reach consensus on the amount of the royalty," it said.

"There was certainly no need for Norm to summons the company in order to achieve payment.

"In fact, Exactmobile, and other major players in the industry have the royalty payments accrued in trust accounts, ready to pay out as soon as Norm is willing to accept the payment."

Large bill

Norm disagreed that a 7.5% royalty was reasonable.

"We have consulted copyright experts, as well as other major players and we are confident our offer of five percent is a reasonable and fair offer, which is market related and meets the expectation of the Copyright Act."

Norm said the 7.5% royalty rate it was asking had already been accepted by 14 wireless application service providers with whom it had already concluded digital agreements.

"Included in the latter are several key players in the industry among them Musica and Pick & Play," it said.

"Over the past few years we have been in negotiations with Waspa on the royalty rate, but they are unwilling to move from their view that the royalty rate should be set at five percent," Norm said.

Exactmobile maintains that it has licences in place for all content sold on its platforms, and said it prided itself on a good relationship with the music industry.

"We have been paying out publishing royalties since the company launched," it said.

"This week, in fact, we paid a large bill for one of the industry's top composers. The composer was paid at a rate of five percent and indicated that their company was satisfied with this payment."

Exactmobile has claimed that the summons issued by Norm is invalid.

"There are certain fatal flaws, which will necessitate the withdrawal of the summons and we have launched the appropriate legal procedure," said Mole.

"We would expect Norm to respect the legal process, and allow the law to take its course without further inappropriate discussion in the media.

"We view the comments made by Norm as defamatory and we reserve our legal rights in this regard," he said.

- Sapa

- SAPA