MOSCOW - Attempts by the Russian authorities to bring order to royalty collection and payment have resulted in utter chaos with rights holders standing to lose significant revenue.
Under recent court orders state accreditations issued to VOIS (to collect neighboring rights royalties) and to RSP (to collect the levy surcharges), were canceled. The came after other candidates seeking royalty authorization complained about irregularities in the process. VOIS' certification was valid for 16 months and RSP for less than three months. In addition, the state agency in charge of accreditations, Rosokhrankultura (which is also in charge of protecting the country's cultural heritage) was disbanded, making the situation with royalty collection in the country even more tenuous.
Under current Russian law, only one collecting society accredited by the government has the right to collect royalties in each of the following three areas: authors' rights (music and lyric composers), neighboring rights (broadcast and performance rights) and the levy (home copying charges paid by producers and importers of blank CDs and DVDs and related equipment).
Rights holders fear this will have a negative impact on artists' incomes. While revenues of the most popular Russian artists are not normally disclosed, estimates are that some of the country's top artists, including Dima Bilan, Yuri Antonov or Valeriya, stand to lose at least 5 - 10% of their incomes. This could could amount to tens - if not hundreds -- of thousands of dollars for best selling artists.
A spokesperson for RSP wouldn't disclose to Billboard.biz how much the organization was able to collect in its 3 months of state accreditation "That time was mostly spent on informing importers and manufacturers about the levy," she said.
"This situation has primarily hit rights holders," Dmitry Konnov, general director of Universal Music Russia, told Billboard.biz. "I know that some radio stations have stopped paying royalties, taking advantage of this uncertain situation."
Konnov added that the timing for the decision to cancel the collecting societies' accreditation was especially bad. "The [system] had just begun working, and it could have been developed and moved towards more transparency and openness."