Why State should rethink the consolidated music tariffs

Updated: Mar 26

In January this year, during an address to the nation, Kenyan commander in chief Uhuru Kenyatta made an announcement from Mombasa where in his address he recognized that producers in the entertainment industry are also a critical plank of our economy.

“…Kenyans are highly talented and the music industry is potentially one of the most lucrative. Hundreds of our young men and women have invested an incredible amount of effort in the industry but are getting very low returns from their investment. We must allow their investments to pay off so that many more can follow them into one of the industries that we can do exceptionally well in.” read part of the address.

“Following numerous complaints from the producers in the industry, I directed the Ministry of ICT to work with all stakeholders to resolve the legacy issues that have plagued rights holders for decades.

I am pleased to note that progress has been made and an agreement has been reached between all the key stakeholders. The Memorandum of Understanding signed on 20 December 2019 proposes a range of measures that will ensure genuine rights holders are appropriately compensated for their compositions.”

He then directed the Ministry of ICT, in consultation with the AG’s office, to ensure the tariffs are gazette.

It is worth noting that these tariffs are outrageous and ridiculously exorbitant. For example the tariff that took effect from January through 2022, proposes a 55 percent of Gross Revenues on Caller ring back tones, ringtones, downloads, streaming, simulcast and webcasting, including Content Service providers and Telecommunication companies.

Being the highest source of revenue for Kenyan artists, 55 percent is a joke to say the least. How will the remaining 45 percent be shared among artists, producers, distributers, marketing and promotion and pay bills? I support every effort by the state to grow the entertainment industry but this should not be done by greedy people with sinister intentions. The president might have meant well but this is not how to improve an industry.

Such a tariff on the other hand is counter-productive and negates the government’s goal of reducing poverty for the following reasons. First the Music tariffs are pegged on gross revenues in a month. It requires proper record management of records for ascertainment when in fact many producers, artists and record labels rarely keep records of every transaction.

Indeed, this would require knowledge and skills in record management that would certainly be lacking in most producers and artists.

Second, the basis of the consolidated music tariffs at 55 percent of the gross revenues instead of turnover profit is oppressive, discriminatory and presupposes that every such artist makes profits. It is a known fact that most artists enjoy marginal profits such that charging such a huge tariff of 55 percent on the gross revenues would eat into their profits and even the capital thereby driving them out of the industry. It will eventually discourage young people from doing music.

In essence, these tariffs will increase the cost of doing business since producers and artists will have to pay to make returns. It will also encourage brokerage services for purposes of compliance hence encouraging fraud and low compliance levels.

Finally, I would like to know who the stake holders Ministry of ICT and Kenya Copyright Board met. Are they the very individuals artists have been complaining about like Music Copyright Society of Kenya, PRISK among others?

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DON SANTO

Klassik Nation's President

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Is a full-service management, music publishing &entertainment company.
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