Imagine composing one hit song and living off the royalties for a lifetime. As ideal as this may sound, many individuals across the globe are doing just this; thanks not only to their ingenuity but also to their good business sense. For instance, every time popular TV show COPS airs in 120 countries, the songwriters of “Bad Boys”, Jamaican reggae group, Inner Circle cash in. Similarly, when a child watches a DVD of Disney’s “The Little Mermaid” in say, Japanese, Jimmy Cliff collects a cheque. However, such achievements would not be possible without the existence of global Collective Management Organizations (CMOs) whose role is still obscure, particularly for those outside the music industry.

Each time a song is composed, the writer has the opportunity to benefit from the use and/or reproduction of this “creation of the mind” through what is termed intellectual property (IP). But how can a songwriter ensure that no one steals their song and that they receive compensation for the use of their IP? As the presenters at a recent SSL investor forum highlighted, the process is not as arduous as one would think and, importantly, Jamaica has made strides over the past few decades via the establishment of a structure for the protection of local copyrights.

Essentially, CMOs like Jamaica Association of Composers, Authors and Publishers (JACAP), the Jamaican Copyright Licensing Agency (JAMCOPY) and Jamaica Music Society (JAMMS) act as middlemen to ensure that songwriters receive what is due to them for the use of their music. These non-profit organisations monitor the use of their members’ works, collect royalties accordingly and finally remit these funds to the songwriters, composers and publishers who have registered with them. These organisations also have a mandate to license songs and other original works, which makes the process of “keeping tabs” that much more efficient.

At this point it may be worth defining the term “music use”. Music use isn’t only defined as mechanical royalties or physical album sales. When it comes to IP, there are other revenue streams inclusive of performance royalties (live or broadcast on the radio), as well as synchronisation royalties (music fused with television or film). Therefore, CMOs also fill their coffers by collecting fees from music users such as nightclubs, hotels, party promoters and airlines. Any individual or institution that broadcasts music should, under Jamaican IP law, pay fees to JACAP.

It is also important to note that Jamaican CMOs do not operate as standalones. They are part of a global network of societies including the American Society of Composers, Authors and Publishers (ASCAP), “PRS for Music” in the UK, and the Society of Composers, Authors and Music Publishers of Canada (SOCAN). In a nutshell, our local agencies maintain reciprocal agreements with their international affiliates so that they may collect royalties globally on behalf of their members. Based on these reciprocal relationships, it follows that CMOs locally will also collect royalties for their members who are non-residents.

To put this into context, in 2010, JACAP paid out J$10.19 million for royalties collected in 2009. Of this amount, a paltry J$2.06 million or just over 20 per cent was distributed to the organisation’s local members. As such, there exists a space or real opportunity for music publishers to exploit (in a positive way) local and Caribbean songwriters and earn revenues. This is precisely the mandate of C2W Music Ltd, an intellectual property company, which is to be the first regulated, structured and transparent start-up to list on the Jamaica Stock Exchange (JSE) Junior Market.

Ivan Berry, C2W’s Chairman, said at the SSL event that the company will travel the Caribbean to identify the best songwriters and develop and market their songs to the biggest names in the music scene globally, particularly in North America and Europe. End users will know where to look for the next big chart topper because their names have been branded globally. C2W’s executives already boast experience in the area of music publishing. Berry has had a 30-year career as a music executive, notably heading up A&R at Sony BMG in Canada between 1999 and 2004 as well as being the senior partner for two successful music publishers also in Canada.

Overall, the directors of C2W, which lead broker, SSL aims to take to the market on or before October 31, 2011, seek to promote and encourage creativity across the region in a regulated, structured way. Undoubtedly, C2W will work closely with local and regional CMOs to ensure the collection of royalties globally for their signed songwriters and the distribution of same to the rightful owners. Moreover, with the emergence of the local IP industry, the mantra, “think globally, act locally” becomes even more relevant as C2W and CMOs make valuable economic and cultural contributions to the world of creativity.

Kimberly Thelwell is the Manager, Research & Analyst, Corporate Finance & Advisory Services at Stocks & Securities Ltd. You may contact her at kthelwell@sslinvest.com.