The government is set to revoke the licence of Music Copyright Society of Kenya (MCSK) over its high operational costs compared to the royalties it pays musicians, a move that will deny local artistes millions of shillings in fees.
Kenya Copyright Board (KCB), the regulator of copyrights on Thursday accused the society of spending more than 30 per cent of its revenues on its own operations.
MCSK’s expenses stood at Sh137 million in the year to June 2010 against revenues of Sh185 million, leaving it with a surplus of Sh48 million or 25 per cent of its collections, which are supposed to go to musicians.
“It (the costs) will jeopardise the renewal of their licence,” KCB chief executive Marisella Ouma said in an interview with the Business Daily.“They ought to use effective means to collect and distribute the royalties such as embracing IT.”
Similar comments were echoed by MCSK’s accountants: “MCSK has not managed to keep within this limit as the total expenditure in the year 2009/2010 was 76.4 of the total revenue collected,” said a brief from its auditors Mitoko and Company Certified Public Accountants.
“MCSK operates under a licence from Copy Board of Kenya which restricts operating costs to 30 per cent of the total collected revenue.”
The threat to withdraw MCSK’s operating licence is set to hurt earnings of local musicians who have, in the past three years, benefited from the society with top artistes earning up to Sh100,000 monthly in royalties.
The number of musicians represented by the society has increased from 400 in 2007 to 1, 300 in June this year.
But the bulk of the musicians have complained of getting measly fees from the society despite MCSK growing its collections.
The bulk of the revenue came from general licensing, standing at Sh171 million this year.
The fees are generated from music played in matatus, entertainment spots, concert promoters, taxis, value added service providers (ring tones) and cyber cafés.
In the year to June 2010 MCSK raised Sh13 million from broadcasting stations, up from Sh5 million in the previous year.
MCSK spent Sh53 million on salaries, Sh21 million (transport), Sh20 million (security on collections) and Sh6 million on seminars.
MCSK had not responded to our queries by the time we went to press.
The regulator’s threats come at a time when the society is focusing on growing its revenues to reduce its cost to income ration.