The Latest Ruling on Skiza Tunes Derails Efforts to Pay Artistes Better Royalties

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The Achilles heel for local musicians has been payment of royalties for their music. We are used to perennial complaints by musicians that they are not earning enough from their craft. Safaricom has been one of the major contributors of royalties for local musicians through their Skiza ringback service. By dialling *811#, a Safaricom subscriber is able to both search and download their favourite songs straight to their Safaricom lines. Callers are then able to listen to this music when making calls to these subscribers.

Safaricom outsources the management of the Skiza platform to various companies to manage the database that contains the content, the content acquisition as well as metadata. These companies usually help Safaricom avoid the process of individually contracting with the owners of the content. According to Hapa Kenya, the revenue split following this arrangement is :

  • 15% is paid to PRSP to be shared with artiste according to whatever deal they have
  • 10% Excise Duty paid to the Government of Kenya (GoK)
  • 16% VAT paid to GoK
  • 5% paid to PRSP for database management
  • Safaricom retains the 54%.

Assuming a musician makes 1,000,000 bob, here is the revenue split.

  • The musician will get Ksh. 75,000
  • VAT will be Ksh. 160,000
  • Excise duty will be Ksh. 100,000
  • PRSP share from your contract will be ksh. 75,000
  • PRSP share from Safaricom deal will be Ksh. 50,000
  • Safaricom share will be Ksh. 540,000.

(Source of revenue breakdown: Hapa Kenya)

Last year, the High Court in Nairobi directed that Safaricom pay artists’ royalties through the CMOs, effectively affirming Section 30A. Section 30A mandated Collective Management Organisations (CMOs) such as Music Copyright Society of Kenya, Kenya Association of Music Producers and the Performance Rights Organisation of Kenya (PRSK) to collect royalties on behalf of artists. The telco then entered into an agreement with these bodies effectively eliminating the need for PRSPs and Content  Service Providers beyond management of the database.

The PRSPs and CSPs  filed a suit in Malindi, seeking to declare section 30A unconstitutional as it limits the manner in which artist royalties are paid. A ruling was issued on November 1 declaring section 30A unconstitutional. As such, Safaricom will now have to pay musicians through content service providers and PRSPs. This effectively derails all the gains made in getting artists to earn better royalties and better wages for their craft.

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Eric writes on business, govt policy and enterprise tech.