Ignoring streaming boom: COSOMA still relies on CD burning data for royalty payouts

Despite the rapid growth of YouTube and other digital streaming platforms, COSOMA says it still relies on CD burning data to determine how billions of kwacha in Blank Media Levy royalties are distributed.

The explanation emerged on Monday after a meeting between the Copyright Society of Malawi (COSOMA), Akometsi Ltd and Madness Entertainment finally took place following two previously failed attempts, providing answers to concerns surrounding the recent royalty distribution.

During the meeting, COSOMA made it clear that the BML distribution methodology is not based on digital consumption. Instead, distribution relies entirely on data collected from licensed CD and DVD burning centres.

COSOMA said this approach followed the rejection of a proposal by members during the Annual General Meeting (AGM), where participants had highlighted the need for digital methods of collecting music data.

“This means that billions of kwacha are still being distributed using an analogue data collection system, where licensed burning centres submit records of the songs customers request to have copied,” Sulungwe updated on his Facebook page on Monday.

COSOMA’s position has drawn concern, given that music consumption has largely shifted to streaming platforms, YouTube, digital downloads, and social media.

Akometsi Ltd and Madness Entertainment argue that the current methodology no longer reflects the realities of today’s music industry and are calling for an urgent review and modernisation of the system.

COSOMA also explained the financial structure of the Blank Media Levy. From the approximately K3 billion collected this year, K150 million (5%) goes to the Malawi Revenue Authority (MRA) as an administration fee, K150 million (5%) goes to the Government through the Ministry of Finance, K300 million (10%) goes to the Copyright Fund, and K1.8 billion (60%) is allocated to rights holders.

However, COSOMA noted that a further 20% (K360 million) is deducted as withholding tax from the K1.8 billion. This leaves approximately K1.44 billion to be shared among artists, record labels, and other rights holders.

In effect, rights holders receive about K1.44 billion (approximately 48% of the total pool), while the remaining 52% goes towards administration, statutory allocations, and taxes.

COSOMA further informed the companies that a 20% deduction shown on many royalty statements as an “Administration Fee” was the result of a system error.

The association clarified that the deduction is withholding tax, not an additional administrative charge by COSOMA, and it has committed to correcting how this appears on future royalty statements.

The companies also raised concerns regarding tax reconciliation. They argued that deductions should automatically reflect in rights holders’ tax accounts with the MRA.

COSOMA explained that this reconciliation is not automatic. Instead, it requires rights holders to obtain documentation from COSOMA and personally submit it to the MRA for reconciliation against their TPIN records.

Akometsi Ltd and Madness Entertainment argued that this process should be streamlined and automated to ensure taxes deducted at source are accurately reflected, thereby reducing the risk of double taxation or unreconciled tax records.

While the meeting clarified several lingering issues, it also confirmed that significant work remains.

A legal team representing Akometsi Ltd and Madness Entertainment will now prepare and formally submit recommendations, including the specific actions they expect COSOMA to take to address the concerns raised.

The companies reiterated that they remain committed to constructive engagement, but emphasized that the interests of artists, producers, composers, publishers, and record labels must be protected.