Collective Management Organisations (CMOs) are private companies established under the Copyright Act to manage rights belonging to a class of owners, which cannot be managed individually. A Collective Management Organisation is mandated to negotiate royalties for the use of the members’ works and remit the incomes in accordance to rules prepared by its membership.

At a minimum, rights holders who have assigned their rights expect the CMO to operate at minimum costs, in order to pay a major part of its income as royalties and render accounts to them in a transparent manner. A collecting organisation is required to diligently serve the interest of its members and be accountable to them, failing which they could face sanctions from the licencing authority, the Kenya Copyright Board (KECOBO).

In ideal circumstances, CMOs are supposed to operate in perfect autonomy guided and appreciated by its members. However, in Kenya members and non-members of the CMOs have complained over the years about the performance of their collective organisations over lack of transparency and accountability- both key ingredients for member-centred organisations.

For that reason, the Kenya Copyright Board began the process of reforming the operations of the CMOs with the enactment of the Copyright Amendment Act, 2019.

Those amendments to the Copyright Act established a new framework that empowered the Kenya Copyright Board to take action, including ordering for inspection of books of accounts, forensic audit, making of far-reaching regulations and generally direct relevant corrective actions instead of revoking the licence of the society.

Forensic audit

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The main objective of the changes to the law was to ensure that government could intervene to secure the interests of the members before things get out of hand and avoid destabilisation caused by any revocation of licenses.

The complaints prompted the KECOBO Board of Directors to order a three-year forensic audit on Music Copyright Society of Kenya (MCSK), Kenya Association of Music Producers (KAMP) and Performers Rights Society of Kenya (PRISK) to enable it identify management gaps, possible risks and investigate allegations of mismanagement of royalties in line with the powers bestowed by the Copyright Act.

The forensic audit found some evidence of negligence, possible fraud, board overreach, overspending, lack of essential policies and management weaknesses making the CMOs operations at this moment not fully fit for purpose.

Maximum value

The KECOBO board recently resolved to submit the forensic reports to the relevant investigative agencies and in due course roll out several administrative measures to ensure the issues are fully resolved before the end of the year.

The latest action is part of a continuing efforts to ensure artists get maximum value for their talents to sustain themselves and contribute more to the economy.

This works in tandem with an earlier intervention that introduced the automation of the collection, media monitoring and disbursement of royalties function at the CMO side to ensure end-to-end transparency, accountability and credibility of all related records.

The royalty collection system makes payment of royalty easy for music users, thus avoiding conflict with CMO staff. The system also links with critical databases including Kenya Revenue Authority (KRA), Business Registration Services (BRS) and the National Transport and Safety Authority (NTSA) to support the royalty collection process.

The new royalty collection module promotes ease of doing business by enabling users to self-licence subject to prescribed tariffs incorporated into the USSD and web portal therefore reducing incidences of harassment of business owners and chances of collusion with licencing staff as well as removing the use of police services in that process.

The system ensures that only funds required for administration by CMOs are paid to them and payments to artists based on both general and scientific rules from a master account are made with regularity.

The policy and administrative reforms are being fast-tracked to be complete within the calendar year.

KECOBO expects to build into the reporting structure adequate early warning tools as envisaged by the Copyright Amendment Act 2019 to assure users and artists of the integrity of the collective management system remains intact.