Daraine Luton, Senior Staff Reporter
LIKE MICHAEL Jackson and artistes of his ilk who have been able to access loans based on their music catalogue or future earnings, players in Jamaica's cultural sector have been served up a major opportunity to access capital without the use of hard collateral such as houses or lands.
The passage of the Security Interest in Personal Property (SIPP) in the Parliament will allow persons to use personal property such as intellectual property as collateral for loans.
Government Senator Sophia Frazer-Binns, in contributing to a debate on the bill in the upper House last Thursday, noted that despite Jamaica's music industry having a profound effect on the economy, the sector players had difficulty accessing loans because of collateral requirements.
"The passage of this act, which will impact the creative industry, is revolutionary," Frazer-Binns said.
She has called for a strengthening of the country's anti-piracy laws. According to the government senator, there is a need for a change in the mindset of the people for them to appreciate the economic value of intellectual property.
Junior Entertainment Minister Damion Crawford, in an interview with The Sunday Gleaner, noted that the SIPP is geared towards increasing access to credit by facilitating the use of movable property as collateral.
"This means that, presumably, one could use their ownership of copyright to obtain loans," Crawford said.
The ground being broken for the creative industries in Jamaica has been trod across many developed countries, such as the United States and Canada.
Frazer-Binns said Jamaica may be late in enacting such legislation, and pointed, for example, at Nickolas Ashford and Valerie Simpson, known for a number of hits, including Ain't No Mountain High Enough, who borrowed millions of dollars against their future music royalties.
The senator also pointed out that Jackson, the late 'King of Pop', had agreed to a deal with Sony in 1995 to merge his ATV Music with Sony's library of songs and sold Sony music publishing rights for $95 million, and subsequently used his half of the ATV assets as collateral to secure $200 million in loans from Bank of America.
Secure a loan
Frazer-Binns argued that with the passage of the SIPP, the Government is in effect "planting that seed to ensure that every person in the creative industry can now use that asset to secure a loan".
The senator referenced a 2007 study of the creative industries in Jamaica which found that for each $1 invested in entertainment there is $6.8 in return.
Crawford, meanwhile, has said many entertainers have complained about their inability to use their catalogue to secure loans. He said, however, that there was no resounding cry for the framework, which is now being put in place, but attributed the absence of such calls to the general informality of the sector, which has not allowed for effective lobbying.
He told The Sunday Gleaner that in putting the new law in place, owners of copyright are now able to engage financial institutions in a bid to secure loans for personal business or investment in their craft.
"Consider, for example, an entertainer who wants to go on a promotional tour. He could use his catalogue to secure a loan in a bid to market himself and his music," Crawford said.
But opposition senators have cautioned that persons like entertainers should not get carried away by the prospects of the bill.
Alexander Williams, for example, said the success of the bill depends on whether financial institutions are willing to accept collateral such as catalogues, crops, or items such as television sets.