Copyright lawyer’s investigation blows lid on alleged 55-year-old royalty payout scam
What is alleged to be the biggest music rights scam in South African history has been exposed because a multiplatinum selling gospel star has demanded to know what happened to her royalty money.
The apparent billion-rand scheme involves the SA Music Rights Organisation (Samro), which is accused of unlawfully deducting royalties from mostly gospel, mbaqanga, maskandi and kwela artists in an ongoing scheme that began in 1963.
In a tell-all interview, award-winning gospel powerhouse Hlengiwe Mhlaba told City Press that, over a decade, R8.5 million of her royalties was stolen by fellow gospel artist Sipho Makhabane, her former producer and manager. Makhabane did not respond to numerous calls, messages and emails sent to him from Tuesday.
But after Mhlaba hired copyright lawyer Graeme Gilfillan to investigate her royalty payments, the real extent of her losses came to light.
Mhlaba discovered that of her 90 songs collecting royalties through Samro, 24 were only paying out 16.7% of what was due to her.
Among these 24 songs, all new arrangements of traditional works, are her biggest hits, including Rock of Ages, uJesu Uyalalela and Mhlekazi.
The remaining 83.3% was, according to Samro’s own database, paid to a mysterious composer called “DP”.
Mhlaba claims that in the course of 14 albums she has had well over R100 000 taken by DP – on top of the millions Samro paid to Makhabane without her ever formally signing her rights over to him.
But that was just the tip of the iceberg.
Gilfillan discovered that Mhlaba was just one of numerous affected artists. Rebecca Malope, Thomas Chauke, Jabu Khanyile, Benjamin Dube, Mbongeni Ngema, Brenda Fassie, Miriam Makeba, Mahlatini, Margaret Singana, the Dark City Sisters and even American artists such as Otis Redding and Aretha Franklin were some of the authors of new versions of traditional works who had fallen victim to what he describes as a scam.
Gilfillan’s findings are being used as research for a PhD thesis on Mhlaba’s case. Based on the percentage of this type of royalty paid out by Samro, Gilfillan estimates that R1.2 billion was deducted in DP’s name over 55 years.
“We believe the quoted amount is a gross exaggeration and would welcome your calculations on this amount,” said Samro spokesperson Andile Ndlovu, who also challenged City Press’ understanding of the allegations. But he did not deny claims of unlawful deductions from mostly black songwriters to benefit mostly corporate record company interests.
He said that the 83.3% is still being “written back to distributable revenue for subsequent distributions”.
But City Press’ investigation found that, of the R370 million paid out annually by Samro, about 70% goes to the major multinational publishers and leading independent publishers operating in South Africa, who also constitute about half of Samro’s board.
Samro’s members are publishers and songwriters, the latter assigning the performing rights in all their songs to the organisation, which in turn licenses these rights for use in TV, cinema, public performances, radio and music played at events. Publishers, who administer these and other rights for writers, generally receive 50% of the money paid out.
The DP scheme can be tracked, says Gilfillan, back to 1963 when Samro’s board began accepting candidate members, its lowest tier of membership, who had no right to vote or attend meetings.
Publishers occupy the highest tier as the majority of Samro’s full members and therefore obtain shares of Samro income that candidate members cannot. Samro, founded in 1961, did not deny these findings.
Ndlovu told City Press that Samro will, this month, begin a national review of its membership practices.
A GOSPEL STAR GOES TO WAR
“The first time I saw my mother in church was in a coffin,” says Mhlaba about her childhood. Growing up poor, in a shebeen and with an absent father, she sought comfort from her church and began leading its choir.
She didn’t know how to read a contract or what royalties or deeds were when Makhabane gave her R500 for a Greyhound bus ticket to Johannesburg in 2004 to sing on eight tracks on his debut album Umuzi Omuhle.
She wasn’t paid a cent but was offered the opportunity to record her own album, she says.
In 2005 she burst on to the gospel scene with Rock of Ages. The album went multi-platinum, selling what she believes is 300 000 units.
She would do 11 more albums, several of which also went multiplatinum, with Makhabane. She never signed a contract with him.
She claims she didn’t even know about one of the albums. “I remember one day when I went to Musica in Gateway, I saw my picture. It was for an album called Resurrection that was a compilation of my songs. I’d never even been told about it.”
She says she even asked pastors to help resolve her growing dispute with Makhabane.
When she eventually consulted a lawyer to demand sales and copyright statements from Makhabane, he provided a statement of R39.2 million with a list of money he had paid her – about R4.5 million over 10 years.
The R4.5 million, she says, was for live performances.
She points to only two instances where Makhabane claimed he was paying for royalties, amounts totalling R250 000, but he never provided statements.
In addition, she later found out that Makhabane has also been paid, since 2009, for digital use of her works as ringtones and online downloads.
Sales figures studied by City Press, some of which Makhabane published on his own website, indicate Mhlaba is owed a further R8.5 million for CD sales, bringing her claims to R16 million without mobile, digital and other rights.
City Press sent Makhabane a full transcript of Mhlaba’s interview but he did not respond.
A 2017 letter from Makhabane’s then lawyer David Feinberg, which City Press obtained, admits Makhabane had no contracts with Mhlaba.
The letter claims they had a verbal agreement, but Mhlaba denies this.
Asked how Samro could have allowed Mhlaba’s royalties to be paid to Makhabane’s companies Big Fish Music and Amanxusa Music, Ndlovu replied: “We will not pick a side in this matter, however, if there was corruption on Makhabane’s part, Samro will take the appropriate actions to ensure that this matter is resolved, taking into account the interests of both members.”
Mhlaba says besides the financial damage she sustained, “it’s the emotional damage. This is very depressing. You go to hospital. You get sick from this.”
What sparked her fury was discovering how the alleged DP scam affected the entire industry.
“I’ve been asking God, ‘What is going on now?’ I thought I was just a singer. Now you are teaching me things I was not aware of. I’m speaking out for those artists who are gone, those who are alive and those who are still coming.”
THE MYSTERY COMPOSER CALLED DP
Samro questions City Press’ understanding that the mysterious “DP” is a composer, yet 83.33% is what it assigns to composers in its own definitions as well as to a composer called “DP” in its database and statements.
Ndlovu said there were different “views” on what DP was. The law, however, is clear, says Gilfillan and other copyright lawyers City Press consulted this week.
DP stands for dominus publicus, meaning the work is now in the public domain as it no longer qualifies for copyright because the composer died more than 50 years ago.
It cannot be assigned any copyright. However, when a new songwriter takes the work and rearranges it to make a new version, they claim 100% copyright in the arrangement of what is now a new work.
“This matter relates to a historical or legacy rule applied not only by Samro but other similar organisation in other territories,” claims Ndlovu, saying there is a “view” that the original composer would still be a rights holder.
But lawyers say this is not the view of the copyright act.
“Samro is aware that a number of members wish for its rules and policies around this matter to be changed. However, it would be impractical to address these concerns on a case-by-case basis,” says Ndlovu.
Gilfillan’s research indicates that white artists reversioning traditional African works – such as Bertha Egnos for her musical Ipi Ntombi – were also affected but only had 10% to 25% of their royalties deducted by DP.
DUBIOUS IN DUBAI
Samro, a non-profit company, employs 190 people with money earned by its members.
Its board and management were the subject of a recent City Press report that it had invested – and lost – R45 million in a high-risk venture in the United Arab Emirates Music Rights Organisation in Dubai without informing its members of the deal.
Samro told City Press this week there was nothing “untoward” about the failed investment, which it agreed to terminate in October last year.
It says it was “based on a potential return of investment of over R1 billion” and was bad timing, not high risk.