Kenyan Regulator Cancels Leading Collective Management Licence To Streamline Music Royalties

NAIROBI, Kenya — In a move meant to streamline the collection of music royalties in Kenya, the government regulator declined to renew a 2017 licence for a leading collective organisation over unmet standards.

The Kenya Copyright Board (KECOBO), the government body which administers and enforces copyright and related rights, said it had denied the Music Copyright Society of Kenya (MCSK) the licence after it failed to produce mandatory documents needed to determine its suitability in the work.

MCSK, one of Kenya’s copyright collective management organisations (CMO), was registered as company in 1983. It collects royalties on behalf of authors, composers, arrangers and publishers of Music. The company states on its website that its aim is to build, mobilise, institutionalise and support the musical fraternity to integrate, sustain and enhance their earnings from music.

However, it had failed to submit a list of its members and reveal the amounts it collected as royalties, according to KECOBO. It has not produced its audited financial statements for the year July 2015-June 2016.

“In the absence of audited financial statements and a list of members who were paid royalties in the last one year, the board (KECOBO) found that the society did not qualify for renewal,” said Edward Sigei, KECOBO executive director.

The official explained the performance of the CMO could not be assessed in the last one year. Since October 2016, the society had been invited two times by the Legal and Technical Affairs Committee of the board to produce audited accounts.

“As such the application for renewal was rejected,” Sigei said in a statement.

Under the regulation 16 of the Copyright Regulation 2004, each collecting society is required to file a yearly annual report and copies of audited accounts. They must contain a comprehensive report of its activities, a list of its members and amounts of royalties collected.

Amount of royalties paid to each member or spent in administrative costs and names and address of its current officials are required. The auditor’s name and address and any other information required by the board must be filed.

Without the licence, MCSK cannot continue its operations as a collecting organisation. Responding to the cancellation, Merrit Simiyu, the MCSK’s Chief Executive Officer (CEO), said personal interests (to give MCSK’s work to another company) were driving the denial of the licence, since the regulator was aware of a technical challenge the company faced after a failed digital accounting system.

“We are going to court to challenge the decision. We have reciprocal agreements in other countries and this is infringing on the rights of our members,” Simiyu said in a telephone interview.

The official alleged that KECOBO had been kept briefed about a technical challenge regarding ERP (enterprise resource planning), in which the software failed and prevented the company from filing the requirements on time.

“When the system failed, it meant going back to start to keying in every detail manually,” said Simuyu, expressing his disappointment that the decision had been taken even after presenting a draft financial statement.

Last year, the company came under scrutiny, with musicians accusing the society of corruption and misuse of royalty monies. The government froze the company accounts for six months and its chief executive arraigned in court and charged with theft of MCSK money. He was later released.

“With the accounts shut, we had to start reconstructing the books of accounts,” Simiyu explained.

Fred Otswongo, a consultant at the Nairobi IP firm Random Folks Intellectual Property Group, said MCSK’s failure to report on time raised questions given earlier allegations of corruption, lack of accountability and good management of the royalties’ money.

“They should release the information on the required time. I think it is needed to show how the music industry in the country is moving,” said Otswongo. “KECOBO should also consider giving them some time to deal with challenges they are talking about.”

Related organisations – Kenya Association of Music Producers (KAMP), representing producers of sound recording, and Performers Rights Society of Kenya (PRISK), representing performers – will continue to operate.

The cancellation has thrown many musicians and artists into confusion, but it has also came as relief for many of them who have expressed reservations on how MCSK has been operation.

KECOBO has moved swiftly to organise forums for stakeholders, where it is asking for a review of a Collective Rights Management Regulation the organisation has drafted.

At present, there is no regulation that guides the promotion of the values of transparency, accountability and good governance in the collective management Industry, KECOBO notes in the draft.

 

Image Credits: Fredrick Nzwili