WIREDGOV

The European Commission has yesterday proposed measures to modernise collecting societies and put in place incentives to promote their transparency and efficiency.

New digital technologies are opening up great opportunities for creators, consumers and businesses alike. Increased demand for online access to cultural content (e.g. music, films, books) does not recognise borders or national restrictions. Neither do the online services used to access them. This is where collecting societies come into play, in particular in the music sector, where they collectively manage the licensing of copyright-protected music tracks for online use on behalf of composers and lyricists and collect and redistribute to them corresponding royalties.

However, some collecting societies struggle to adapt to the requirements of the management of rights for online use of musical works, in particular in a cross-border context. As a result of today’s proposal, those collecting societies willing to engage in the multi-territorial licensing of their repertoire would therefore have to comply with European standards. This would make it easier for service providers to obtain the necessary licences for music to be distributed online across the EU and to ensure that revenue is correctly collected and fairly distributed to composers and lyricists.

More generally, collecting societies operating in all sectors would have to comply with new European standards providing for improved governance and greater transparency in the conduct of their activities. The need for a change of certain practices was highlighted by recent cases where royalties collected on behalf of rightholders were lost due to poor investment policies, but also by evidence of long-delayed payments of royalties to rightholders.

Commissioner for Internal Market and Services Michel Barnier said: "We need a European digital Single Market that works for creators, consumers and service providers. More efficient collecting societies would make it easier for service providers to roll out new services available across borders – something that serves both European consumers and cultural diversity." He added "More generally, all collecting societies should ensure that creators are rewarded more quickly for their work and must operate with full transparency. This is paramount to sustaining investment in creativity and innovation which will in turn lead to additional growth and increased competitiveness."

Key elements of the proposed Directive

Yesterday's proposal pursues two complementary objectives:

• To promote greater transparency and improved governance of collecting societies through strengthened reporting obligations and rightholders’ control over their activities, so as to create incentives for more innovative and better quality services.

• Building upon this – and more specifically – to encourage and facilitate multi-territorial and multi-repertoire licensing of authors' rights in musical works for online uses in the EU/EEA.

In practice:

• Rightholders would have a direct say in the management of their rights, be remunerated more quickly and their ability to choose the most efficient collecting society for their purposes would be enshrined in law. This would bring about better protection of rightholders' interests, as well as increased access to cultural content for consumers.

• The new rules would change the way in which collecting societies work across Europe, with new requirements such as improved management of repertoire, quicker payments to members, clarity in revenue streams from exploitation of rights, an annual transparency report and additional information provided directly to rightholders and business partners (such as other collecting societies). Member States would need to have mechanisms for solving disputes between collecting societies and rightholders. Improved standards and processes should result in better functioning collecting societies and more confidence surrounding their activities.

• The multi-territorial licensing of authors' rights for the use of music on the Internet across borders would be facilitated but also subjected to the demonstration of the technical capacity to perform this task efficiently. This would benefit authors, internet service providers and citizens alike.

Background

Collecting societies act as intermediaries between rightholders in the music industry but also in other art forms like books or films, and the service providers intending to use their works. They license rights, collect royalties, and redistribute revenue to the rightholders in circumstances where individually negotiating licences with individual creators would be impractical and entail high transaction costs. There are more than 250 collecting societies in the EU that manage revenues of around 6 billion euro annually. The use of rights in the music sector accounts for about 80% of the total revenue collected by collecting societies.

The collective management of rights is also important for the licensing of online music service providers (music download services, streaming services). This is particularly the case for the rights of those who compose the music or write the lyrics. Online service providers often want to cover a multitude of territories and a large catalogue of music. They also often want to test new business models. All this makes online licensing very demanding. Many collecting societies are not ready for these challenges and as a result, service providers face serious difficulties when trying to obtain the licences necessary to launch online music services across the EU. This results in fewer online music services available to consumers across the EU and a slower incorporation of innovative services.

The proposed Directive contributes to completing a Single Market for intellectual property and it is part of the 2011 Commission strategy on intellectual property:

http://ec.europa.eu/internal_market/top_layer/intellectual-property/index_en.htm

The Commission also identified this action in 2011 as an important contribution to growth in the European Single Market:

http://ec.europa.eu/internal_market/smact/index_en.htm

See also:

MEMO/12/545

More information

http://ec.europa.eu/internal_market/copyright/management/index_en.htm

Contacts :

Stefaan De Rynck (+32 2 296 34 21)

Carmel Dunne (+32 2 299 88 94)

Audrey Augier (+32 2 297 16 07)