South Africa. Dr Theron took the view that there was some value to international comparisons, but qualified it
by saying one should be conscious of peculiarly South African circumstances. Although, more recently, there
has been a decline in radio listenership, there has overall been a growth in the revenue of radio stations.
[50] Dr Theron agreed that, from an economist's point of view, one would be concerned about the net outflow of
currency from South Africa in determining a royalty rate. She took the view that in determining the royalty
rate, one should minimise the impact on all parties. Importantly, Dr Theron thought that a simple, rather than
a convoluted formula would be preferable. As an economist, she testified in relation to any proposed formula
that a result that is startling should make one revisit the methodology producing the result.
Page 276 of [2014] 2 All SA 263 (SCA)
[51] Johannes Koster, the Executive Director of NAB, testified. In respect of advertising discounts, he testified that
a maximum of 16,5% is allowed as discounts to advertisers. In respect of a 50 000odd play list obtained from
SAMPRA, NAB had difficulty identifying the originality of all the sound recordings. In relation to editorial
content, Mr Koster testified that promotional competitions have entertainment value as well as playing a role
as a reward for listeners participating, and the advertiser attached to it gets exposure. It certainly could help
to generate revenue.
[52] Finally, I consider it useful to reproduce a broad based table compiled by SAMPRA on sound recording royalty
rates that apply in other countries. It is necessary to point out that the table does not provide motivations or
qualifications. However, as appears from what is set out above, there was testimony in relation to royalty
rates that apply in still other countries. The table that appears hereafter sets out the comparative rates.
0 1%
1 2%
Australia
Chile
Japan
Malaysia
Romania
Argentina
Barbados
Costa Rica
Lithuania
India
Italy
Jamaica
Panama
Paraguay
Poland
2 3%
Canada
Dominican
Republic
Latvia
Portugal
Slovenia
Spain
Switzerland
3 4%
4 5%
5 6%
>6%
Bulgaria
Peru
Austria
Czech
Republic
Denmark
Greece
Hong Kong
Netherlands
Thailand
United
Kingdom
France
Germany
Sweden
Slovak
Republic
Finland
Ireland
[53] That then, in summary, was the totality of relevant evidence.
[54] Sapire AJ found most of the evidence referred to above unhelpful. Throughout proceedings it was evident that
he required of the expert witnesses to actually provide the rate he was called upon to determine. He
disregarded the evidence of royalty rates applied internationally. He described how he would go about
determining the rate payable as follows:
"I do not propose to analyse or adopt the opinions of the experts but will . . . use the SAMPRA formula with an
adjustment to the denominator representing the percentage of the broadcaster's net income, to produce the desired
result."
[55] Sapire AJ considered the appropriate rate to involve a value judgment on his part. It is difficult to discern the
rationale for his ultimate conclusion. Towards the end of his determination he stated the following:
"This assessment is made on the limited information available, but will result in an equitable reward to the referrer's
clients, while not imposing an unaffordable burden on the broadcasters."
The following is the formula he determined should be used in calculating the needletime royalty:
"A
B
×
C × 7
100
Page 277 of [2014] 2 All SA 263 (SCA)
Where:
A = the amount of time used by a radio station in any period to broadcast the royalty protected sound recordings
administered by SAMPRA;
B = the total amount of time used by a radio station in that period to broadcast editorial content
'editorial content' is defined as content, including the repertoire, broadcast for entertainment, information or interest
of members of the public and shall not include broadcast time allocated to programme promotions and/or
advertisements or promotions on behalf of the Station or any registered or unregistered charity or in support of social
action activities, including but not limited to awareness raising campaigns and initiatives, telephone helplines
and
C = a radio station's net broadcasting revenue.
Net broadcasting revenue means the amount in South African Rands equal to 85% in number of the published rate
card value (before any deduction of agency commissions or any other deductions) of advertisements and sponsored
promotions or features broadcast by the Station, including any such broadcast by any entity which is an associate,
subsidiary or agent of the Station and including advertisements published on any internet simulcast service; . . . ."
[56] In essence, the maximum royalty rate of 10% was reduced by Sapire AJ to a maximum of 7% with the