Telecoms companies to withdraw repertoire from mobile music services in Indonesia and the Philippines

Royalties dispute "helps no one but the pirates" says recording industry

December 19, 2006

Telecoms companies in Indonesia and the Philippines are set to withdraw most of the international repertoire they offer through their mobile music services for use as ringback tones, full track downloads, video music downloads and true tones because of a legal dispute with some music publishers.

The recording industry will still be able to offer domestic and some international repertoire, but is keen to reach consumers with its full offering. The industry is therefore working to help broker an agreement between the international publishers and the telecoms sector to restore the availability of most international works available on mobile music services in these countries.

Indonesia

Yayasan Karya Cipta Indonesia (YKCI), a collecting society representing composers, authors and publishers in Indonesia, has asked leading telecoms companies including Indosat, XL, Telkom Flexi, Telkomsel and Bakrie Telecom to pay an increased royalty rate for using most international repertoire or remove such music from their services.

The record companies had secured from local publishers licences a royalty rate of 5.4 per cent of the wholesale price per track. YKCI is now asking that this rate be increased to 12 per cent.

Arnel Affandi, executive officer of Indonesian record company trade group ASIRI, said: "The publishers are making a serious mistake. By insisting on an unreasonably high licence fee for musical works used in international recordings, they are depriving companies of the opportunity to offer repertoire legally and piracy will fill the gap in the market."

Philippines

The country's two major mobile service providers, Globe and Smart Telecom, recently decided to withdraw most international repertoire from their newly-launched music services after the international publishers asked for a royalty rate higher than the level charged by music publishers for locally-produced music.

Record companies including EMI, Universal, SonyBMG and Warner Music had launched a number of music services in partnership with Globe and Smart Telecom offering master recordings of top international artists including Beyonce, Black Eyed Peas, Coldplay and Madonna.

The record companies, represented by the Philippines record industry association PARI, had secured from local publishers licences at a royalty rate of ten per cent of the wholesale price per track. However, the international publishers have now asked for a rate more than double the local royalty.

In early September, PARI was warned that its members should stop offering international repertoire through the mobile services or face possible legal proceedings.

Christopher Sy, Chairman of PARI said: "We are very disappointed with the recent developments with the publishers. By depriving the Philippines of exciting mobile music services, the real losers are going to be the consumers. The music industry cannot afford a dispute which will stunt the growth of our legitimate business and only encourage music fans to find the tracks they want on the pirate networks."

Benefits the pirates

The dispute is in danger of suspending the growth of a digital music business that offered a compelling alternative to illegal downloading in South East Asia. Indonesia and the Philippines are two of Asia's smaller music markets, worth US$50m and US$25m in 2005 and held back by piracy rate of more than 50 per cent.

Leong Mayseey, Regional Director of IFPI Asian Regional Office said: "Record labels, publishers and technology providers all need to work together to help grow the legal digital music market across South East Asia. If consumers cannot legally buy international repertoire because telecoms companies have withdrawn them this benefits no-one but the pirates. It is vital that the publishers and the telecommunications companies settle this dispute quickly."

For more information please contact:
Benjamin Ng
IFPI Asian Regional Office
Tel: +852 2861 4383
benjamin.ng@ifpi-asia.com.hk