Arts contribution to GDP & Copyright Bill: SACO & Minister input

Meeting report

Minister’s Remarks
Minister Nathi Mthethwa said that the South African Cultural Observatory (SACO) was established due to a need for the information on the activities of the cultural and creative industry which was not being captured. The sector was generating a large revenue, but this was unquantified. It was determined to establish an external research project, reporting to the Department of Sports, Arts and Culture, that can scientifically quantify this information and become a leading source of reference for authentic data on the creative industry sector.

It was an injustice for creatives whose work is not registered anywhere and is unappreciated for its full value and contribution, either culturally or economically. Since SACO’s establishment the contribution of the sector is now much clearer. The goal to build a world class institution seems now to have been realised with the United Nations using SACO’s research in 2019. It has been important to consistently professionalise and upskill the industry through research and engagement, in order to best understand where to invest resources.

The Committee had raised a concern about the Copyright Bill and identified SACO as an entity to discuss this and the process for amendment. The process for the Bill started some years ago, with consultation between the departments, artists, and various entities. It then went through Parliament, passed by the National Assembly in 2018 and in 2019 the NCOP put its stamp on the Bill. It is now with the President to sign. There have been many issues around the Copyright Bill. The Minister of Trade and Industry and the Minister of Sports, Arts and Culture decided then to explore the arguments surrounding the Copyright Bill. This was not an attempt to circumvent Parliament but to fully understand the concerns that were being circulated through newspapers and online.

There are two sides to the argument, one side saying that the President should not sign the Bill and others saying it should have been signed yesterday already. The artists argue the Bill seeks to destroy artists and make them paupers, if there are so many copyright exceptions for the benefit of people with sight disabilities and for educational purposes. It opens up the possibility for multinational companies to exploit the work of local creatives. The need to protect content creators is necessary. In contrast the proponents for education and libraries and the blind argue that without passing this legislation it will limit access for those who cannot afford books and are dependent on libraries.

However, there are artists locked into contracts with record labels or managers which in some cases ensure the artist makes very little compared to the person who signs them. The argument is that government should be involved in the facilitation of these contracts, especially for young or rural artists with little or no legal background or understanding. Others have argued that contract negotiations should remain solely with the parties involved in the contract. However, having witnessed popular artists struggling to afford basic necessities due to unfair contracts there is a need for government to be involved in that space. SACO will continue to do its job on the impact of the Copyright Bill and the Performers Amendment Bill on the industry and will be able to share these with the Committee.  

South African Cultural Observatory (SACO) briefing
Ms Unathi Lutshaba, SACO Executive Director, SACO, spoke about the role of SACO as a research project, and its other activities as well as the Copyright Bill. The reason SACO was established was there was a need within the Department of Arts and Culture to engage in understanding how to facilitate job creation, development and social cohesion.

In 2011 a summit was called, involving practitioners in all spheres of the creative industry, to explore the sector and consider ways in which the sector could be measured for it to be properly understood. People in the creative industry had an idea of what their work was contributing to the economy but there was no tool to measure this. Relevant data on what arts and culture contributed did not exist and therefore trends and impact analysis were unavailable. There was also limited data from a government perspective, to inform decision making on how best to support the sector. Therefore, SACO was created for a deeper understanding in order to further promote the sector.

SACO is a research project tasked with mapping and evaluating the creative sector in South Africa, it is not an entity of the state. In 2015 the Nelson Mandela University, Rhodes University, and University of Pretoria responded to how SACO could be operationalised.A three-year project was awarded between March 2015-2018. A number of sector mapping projects were successfully run to help guide the department. There are new partnerships with the University of KwaZulu Natal, and the contract has been extended the contract for another five years from June 2018 - March 2023.

SACO is tasked with mapping, measuring, valuing and understanding the cultural and creative industries and is also a repository for all cultural data. The objectives of the project are to build evidence, to influence policy, share insight and build capacity.

To understand the full contribution of the creative sector in terms of economy, there first needs to be a definition. SACO uses the UNESCO definitions. Natural and Cultural Heritage such as museums, performance arts, music festivals. Then there is the commercial side of the creative sector such as design and creative services, audio visual and interactive, podcasts, film, video, and videogames. Other related domains are Tourism as well as Sports and Recreation due to the merging of the departments. SACO has now been tasked with creating a report on the nexus between sports, arts, culture, tourism and heritage. The UNESCO framework makes it very clear and easy to define the sector and all the domains within.

In 2017 SACO produced mapping studies for the creative sector, and reports were released in March 2018. It is one of the fastest growing sectors, contributing R63 billion to GDP per annum, which equates to 1.7%. The sector growth rate per year is 4.8% which is greater than the next best sector at 1.6%. Over 1 million people are employed in creative sector positions, which equals 6.9% of population, most of whom are young people under 35 years old. 86% of creative occupations are held by black people. There is an understanding the overall sector is overrepresented by white people; however, there is a lot of transformation in this sector, and the studies are showing many of businesses are owned by majority black women and young people.

There was also a need to look specifically at the provinces to understand where the 1.7% GDP contribution was coming from. The Gauteng province, Western Cape and KwaZulu Natal are the biggest contributors. 1.4% of the jobs are held by people in the creative services in creative occupations, such as film directors and music producers. 4.2% are employed in support occupations, such as accountants. The last 2% are working in other industries, as an example these might be designers working for car manufacturers.

As far as the transformation of the sector, there is a growing trend toward young people as use owners of their own businesses through writing books, performance art and others. Many of these types of businesses are owned by women, particularly black women. A lot of change has occurred during the period of 2011-2016 when the department began to look into the industry and how best to understand and maximise it. Now SACO has the opportunity to perform mapping results every two years as the sector does not change on a daily basis. This will allow for a greater understanding of the changing trends and the possibility to make projections within the sector.

Dr Sybert Liebenberg, SACO Research Director, said that when looking at international trade, the first mapping study focused on BRICS and there was a decline in the trade deficit with most countries, aside from Russia which was a positive trade surplus. Subsequent studies were then done into the trade in Africa as UNESCO reports have seen a change in trade trends towards the rest of Africa.

One of the main studies being done now is on the idea that there is a direct correlation between cultural seasons and the increase in trade in cultural products. The example in Russia was that there was a direct focus on introducing products into that market and as a result the economy grew.

There has also been research on the cultural and creative economies of 23 other countries. Countries moving toward digitalisation are moving rapidly toward linking to the 4th Industrial Revolution. Combined with the increases in inter-African trade this needs to be focused on more to grow the South African economy.

Ms Lutshaba explained that the National Research Agenda, in alignment with government policy, defines the work that SACO is doing. It is a living document that gets updated on an annual basis about any gaps that have been identified by the department, SACO or the industry. It currently has 198 research items that need to be looked into and even though SACO, during the next five-year year contract, may not be able to engage in all of them, other institutions, students and academics can access the document and engage in any of the research gaps that exist. Various stakeholder engagements are held nationwide to engage with the sector in all communities to best understand and update the National Research Agenda on the back of this.

The research deliverables over the next five-year period include:
• A varying number of reports which look at the review of government programmes, country briefs, and policy research reports.
• Commissioned research reports, which have recently looked at the implications of the 4th industrial revolution on the creative sector, especially on the impact of jobs. What the report outlines though is the way in which private and public can work together to produce the best outcome for jobs creation and the economy, to seamlessly integrate and respond to the new era of digital technology.
• Commissioned research reports including recent examples of the state of cultural tourism in South Africa.
• Mapping studies which give insight into the movements of the creative sector.
• KPI reports which monitor and evaluate projects and programmes that DSAC invests money into.
• Review of M&E framework, which is a tool that helps SACO evaluate the sector.

Slide 10 shows some of the deliverables that SACO has managed to produce and some of which are still being worked on.

Tools have been developed to understand, value and measure the intrinsic and economic impact. These include an Economic Impact Calculator, the monitoring and evaluation framework, social cohesion indicators. Policy reports that have been done, pertain to the impact and implications of the 4th Industrial Revolution, including legislation on intellectual property.

One of the most recent M&E reports is of the Maskandi music festival held in March this year in Durban, the organisers of which were running this for the very first time. Many reports have done in the past such as the Cape Town Carnival, the National Arts Festival and all these reports are on the SACO website and freely available.

When measuring cultural values there are several things that are looked at. Applications for funding from the department are critical, because as part of this process the applicants must include the reasons for why they think the event should go forward. There are further interviews with the applicants to understand what they want to achieve which have been successful in gaining greater understanding.

The main reasons that come from these interviews are:
• Human capital and capacity building,
• Inclusive economic growth within the region where the event is being held,
• Social cohesion and community development within the area and the opportunity for the community to gather together.
• Reflective and engaged citizens.

When this framework is used there is a need to apply these results. An example is the evaluation report on the Maskandi music festival in Durban. The University of KwaZulu Natal attended the event and conducted interviews, ran surveys and spoke to the organisers. Over 30 000 people attended, with over 23 000 tickets sold generating R3.5million in ticket sales. 11,000 visitors came into Durban from outside the city to attend the festival. 98% came to the location specifically because of the festival. The greater perception was a positive cultural influence and satisfactory festival experience by participants. The organisers spent over R11 million on the festival. R14.4 million was spent by visitors from outside Durban and injected into the local economy. There are a number of reports on various events that can be made available to the Committee.

One of the important items the research teams learned through evaluation is the economic impact these events have. It was then seen as necessary to develop the South African Festivals Economic Impact Calculator. This is a tool that practitioners can now use on their own to determine their own economic impact assessment.

Ms Lutshaba said the economic impact calculator has been created as otherwise it is too expensive to employ independent research staff to evaluate whether something is eligible for funding. This is a tool, available on the SACO website, for a company to produce their own economic impact projections.

There is a need to understand the people involved in this sector and their challenges. Much of this cannot be achieved from behind a computer and so there needs to be stakeholder engagement to understand what message the sector needs SACO to take to the Department.

Cultural diplomacy cultural briefs are not available on the SACO website, but they are made available to the Department, this is due to some sensitivities about the information contained therein.

40% of people working in SACO are interns, students who are working and still studying and this helps to capacitate them, so they have experience when they leave.

International organisations now recognise SACO and the Department because of its deep understanding and involvement in the sector.

There are universities across Africa coming to SACO in recognition of it being the first cultural observatory on the continent and asking to be guided in establishing something similar.

The budget for the first three-year contract was R43 million, the second five-year contract is R70 million. Taking inflation into account, SACO is now doing more work on a smaller budget.

Copyright Bill briefing
Dr Tapiwa Shumba, Senior Lecturer at University of Fort Hare (UFH), explained that together SACO and UFH run capacity building workshops, going across the country training artists about intellectual property. This includes many forms of copyright such as, trademarks, designs, patents and performance. As mentioned earlier, the Copyright Bill is before the President and has been passed by Parliament already.

Copyright is an exclusive right granted by law to an author for original work. It is legislation to protect creativity. The old Act was outdated and this Bill replaces it.

The Memorandum on the Copyright Bill states the creative industries have impacted upon educators who are hampered in carrying out their duties, researchers who are restricted in further developing research, and people with disabilities are severely impacted by having limited access to copyright. These are the issues the Bill seeks to address by giving educators, researchers and people with disabilities access.

The Bill seeks to introduce a regulated collection system for royalties for artists – this was a critical issue as it was identified that royalties were not being passed on to the creatives. There are also,
- New provisions on the protection of works and rights of authors in the digital environment.
- New provisions giving access to persons with disabilities.
- New provisions on resale royalties, which is critical because this was not part of the previous Act.
- New provisions on the reproduction of copyright material for certain uses.
The key issue on this Bill is the exceptions it provides, particularly the “Fair Use” approach. What this ensures though is that if it can be shown the work was used in fair use there are protections from copyright infringement.

Broadly speaking, the bulk of the new provisions provide for new exceptions to copyright protection. Thus, the Bill, whilst providing for new protection measures for authors through resale royalties and regulation of collecting agencies, has largely broadened the scope of access to copyright work.

No deep research has been done into this because SACO was not commissioned to do this. Of course, capacity building has been done at workshops where there is an opportunity to engage artists and practitioners and understand their views. This is not deep academic or empirical research but the views of different people. As explained previously the opinions are that those who do not like it, do not like it and those who do like it really want to see it go through. Without research there is no real conclusion that can be drawn as to whether to Bill is either good or bad.

The crux of the Bill is to try and balance social and economic development and protect the intellectual property of the artist. Some people believe the Bill as passed has fallen too far from the side of protecting the artists and this is the problem.

Discussion
Mr B Madlingozi (EFF) asked if in the research, there was a deeper look at the policies that produced the massive Afrikaans cultural movement that was so well organised.

Mr Madlingozi said that festival organisers, although they are pushing for community and social cohesion, are treating artists poorly. To properly promote social cohesion, this needs to change. Sensitivity around cultural diplomacy was spoken about. What sensitivity is beyond this Committee that cannot be spoken about, if it is sensitive, why mention it?

Mr Madlingozi said that the big earners are the producers, production companies and scriptwriters who are predominately white. The percentages that were spoken about do not seem to represent the real people that need to be benefiting from these changes.

Mr Madlingozi said that the “Fair Use” system is problematic for the artist. If an advertiser uses the first few seconds of a song and this is considered fair use and it generates revenue for the advertiser, that revenue is not seen by the artist. The Copyright Bill is now with the President. After engaging with various people in Parliament, it became very clear that many did not really understand what intellectual property is and what the Bill actually involved. However, a need to tow-the-party-line meant the Bill was rushed through. Those who voted against it understood there are black artists who will end up being poor for the rest of their lives. Those who are for the Bill know they are going to make money. There are some artists who sign contracts under duress because of the tactics of organisational bodies. Many artists do not know this Bill is in front of the President but when they have been made aware of it, they disagree with it because they know it will make it harder.

Mr L Ntshayisa (AIC) asked how SACO is going to assist in making inroads into other countries for the exportation of South African arts and culture.

Ms V van Dyk (DA) asked, since there is so much controversy about this Bill, is there a chance to send the Bill back to Parliament for further amendment and consideration? From a legal point of view, intellectual property is currently protected by the Constitution. The Bill in general seems to allow for expropriation without compensation of the work of artists. What are the objective safeguards for fair use. Is there still potential for exploitation of artists, writers and creators? It cannot be allowed to give away cultural creativity for free.

Ms van Dyk said that the Economic Impact Calculator is commendable. It is free to use but how many arts and culture festivals and events are using it? If it is not obligated to be used by all organisers, what is the purpose of it? Surely it needs to be used to ensure the databases are updated, and the information is relevant. Can a similar tool be developed with the information to promote greater cultural participation according to gender, ethnicity, disability, age, socio-economic level, and geographical location?

Ms V Malomane (ANC) said that before a Bill goes to the President there must be public hearings and consultation at every level. The Bill cannot sit with the President forever. If there are more questions and discussions, there is a need to understand these. She asked what the benefits are that are coming back from the list of countries that are being investigated for cultural exchange.

Mr M Seabi (ANC) asked for SACO’s definition of youth. Clarification is needed on the international trade of cultural goods and products. How does the Department go about implementing SACO’s recommendations? He commended SACO for 40% of their researchers being interns, as this is giving them valuable work experience.

Mr Seabi noted R70 million was the budget for the five-year period and asked how much of that goes directly to the Nelson Mandela University as the host. Is there an opportunity to raise more funds or does SACO rely entirely on Department funding? Does SACO need to comply with the PFMA?

Responses
Minister Mthethwa replied that in 2012 a citizens cultural diplomacy programme began where the Department engaged with other countries and a contingent of South African artists are sent to another country. France was the first country where artists were sent for a year travelling France exporting South African culture, goods and products. After this people who knew nothing about South Africa, through this programme, now knew about the culture. Then, French artists came to South Africa and engaged with the communities. Due to budget constraints, however, the year-long programme had to be cut and the last exchange to Russia was only six weeks. This was seen as important programme to continue but there was a need to look into BRICS and into the rest of the African continent. The more these programmes take place in various countries the more South Africa is exposed to the international stage. Especially in the case of other African nations, xenophobia can be minimised as South Africa shares in cultural exchanges as this creates a sense of shared culture, art and heritage.

If the President signs the Copyright Bill today, there will continue to be protests about its implementation and if it does not get signed, there will still be protests to sign it. The President is in a tough position: "He is doomed if he doesn’t, doomed if he does”. Many seasoned artists and leaders in the creative fields were engaged in the public hearings when the Bill first came to Parliament and so there is no concern about parliamentary ignorance at the time. The bigger issue is that currently the sector is heavily divided between those who want the Bill and those that do not. What is necessary is to find an outcome that unifies the sector, and this will come from all levels of the industry working seamlessly together. Of course, there are people inside and outside the industry with agendas, but the leaders of the industry need to bring people together for a solution. The way forward is for the industry to find a way to find each other.

Ms Lutshaba replied that SACO had not been commissioned by the Department to delve deeply into research on copyright law. However, it was deemed appropriate, in consideration of the interactions SACO has with artists, that this could be used as a platform to engage with artists and explain what copyright law is and how it can be used to protect intellectual property.

In terms of event organisers, it is not appropriate for SACO to comment on whether certain organisers should be removed, and others brought in.This is something though that the Department could look at when organisers apply for funding. Current research is being done into the role of live music and promoting what is happening within the music industry. The Department wants to understand any linkage between the choice of venue and the type of event. Perhaps some of the concerns that have been raised will come out in the recommendations of that research. SACO welcomes the comments and will discuss whether deeper research can be facilitated.

As far as the benefits of international relationships, when the Department first commissioned SACO, it approached UNESCO to understand how to develop the level of information it currently holds. SACO was referred to SINCA in Argentina which is a highly developed cultural research programme and SACO has been mentored along the way and has fostered long lasting South African-Argentinian bonds. SINCA and other international organisations continue to mentor SACO, and this is what has led to the research that now influences and informs policy within the Department.

SACO measures the intrinsic and economic value of the work being done in the sector. In understanding what organisers are trying to achieve, the issues of inclusive economic growth and economic impact continued to be raised. It was therefore seen as necessary to develop a tool that helps the sector complete their own economic impact without having to pay for it, as outside consultants can charge a lot of money. The Calculator was developed for this purpose, for whoever needs it, and it will generate a .PDF that can be submitted to whoever requires it. Though the tool is available on the website and there are manuals to understand the tool, SACO is constantly approached by practitioners to understand the tool and use it.

The contract was initiated in June but was not finalised until 26 September 2018 so five months have been lost on the first financial year. Deliverables for the first year were rolled over into the second year, so no targets have been missed. Policy research papers, commission research reports and monitoring of flagship events have been done. As an example, the Department has been funding students who are studying in the field of languages and has asked SACO to investigate what happens to these students after they graduate and whether they are seeing any benefits. SACO is currently evaluating National Book Week, which the Department has been funding for nearly 10 years. There are many others reports that are due by the end of this financial year.

Ms Lutshaba replied that youth are defined as people who are under 35. The budget of R75 million is over five years and the Nelson Mandela University receives 15% of that for the operational costs of running the project. The rest of the money goes toward creating the research.

Dr Liebenberg replied that cultural diplomacy is important in building people-to-people and economic relationships. The Department and the Minister need evidence before they make decisions about engaging with another country. A country brief is prepared in conjunction with the Department's needs when they are going to engage a country on a bilateral or multilateral forum. Within the report is evidence for any historical or cultural linkages, unpacking in detail the cultural and creative economy. The sensitive issues are in detailing how their government operates in terms of culture, and policy that guides that. Are there areas where these nations can learn from South Africa or areas where South African can learn from them, are there instances where the two nations might be in competition with each other? It would profile the key decision makers in other nations, their name, their position and their interests. This research would be part of the briefing package that would go with the Minister when travelling overseas to meet foreign leaders. It is not that the information is secret, but that it is not made public because it is used in sensitive negotiations.

Mr Madlingozi said that the information is deemed to be sensitive and therefore not open to the public. He asked if this Committee is considered to be the public.

Mr Vusi Mkhize, Department Director General, replied that the reason the information is not published and kept out of the public sphere is because it is information about other people from other countries and so you would need permission from the other countries to publish that information.

Dr Liebenberg replied that as a continent, to become more competitive, there is a need to share information. Therefore, there is a need to establish more cultural observatories on the continent to share ideas and resources. There would be great benefits to all in sharing information and expertise.

Mr Madlingozi asked for clarity on the 35% of people employed – are these specific to managerial levels where these top levels of the sector are predominantly white?

Dr Liebenberg replied that the production of labour market data is done by isolating the cultural and creative industry from the national labour market data. The 35% relates directly to young people who are employed in the sector. The question is asked: Of the 1 million people employed in the creative arts sector what percentage of those are under the age of 35? The job creation total looks at the 15 million people employed across South Africa and isolates that 1 million of them are employed within the creative arts sector. This covers people across all domains and racial groups.

The Director General, in response to what the Department does with the reports that come from SACO, said that the Department's Annual Performance Plan (APP) is generally guided by the research that SACO does.

Ms R Adams (ANC) asked if SACO is a private or public entity.

Ms Lutshaba explained that SACO is not a public entity or company as defined in the PFMA. It is a Department of Arts and Culture (DAC) project hosted by the university as per the service level agreement signed on 26 September 2018.

Dr Shumba replied that the crux of fair use is to try and leave an open-ended approach to allow for development and technology. There are safeguards within the legislation, such as the use must not substitute for the potential market. There are limitations already applied within the legislation for what can be considered fair use. On the Section 25 property clause, it will depend on the constitutional amendment that is passed. Expropriation of property would include intellectual property, and this will be different to expropriation of land.

Meeting adjourned.