Commission cracks down on music copyright managers

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Despite strong pressure, the European Commission decided to ban certain copyright handling practices, triggering angry reactions from rights managers.

Competition Commissioner Neelie Kroes yesterday (16 June) asked almost all the European collecting societies, which manage copyright on behalf of music authors, to scrap a clause from their contracts that prevents authors from choosing or moving to another collecting society.

The Commission claims that this move is in the interest of authors, who will be free to select Europe’s cheapest and most efficient collecting society. But CISAC, the organisation representing several European collecting societies, argues instead that “the principle that creators are free to join whatever society they choose is already well established and widely applied”. 

The commissioner also wants some territorial restrictions to be banned, notably those preventing collecting societies from offering licenses to commercial users outside their domestic territory. This practice brings with it burdensome administrative procedures for broadcasters, such as online or satellite media, which act at European level. Indeed, they must request licenses from the specific collecting societies of all the countries in which they broadcast.

From the CISAC point of view, this decision will instead “inevitably lead to a catastrophic fragmentation of repertoire and therefore to legal uncertainty for music users”. The Dutch collecting society BUMA-STEMRA instead backed the Commission’s decision, thus confirming the fracture between big and small collecting societies throughout the EU (EURACTIV 20/07/07).

On the other hand, ECSA, an association which represents several European music authors, criticised the Commission’s decision, labelling it “an attack on cultural diversity” because it would benefit multinational rights users while affecting small and medium-sized businesses and individual writers. At the beginning of July, ECSA threatened to “play havoc” with the music market if the Commission had decided to go ahead with the antitrust decision on collective societies (EURACTIV 04/07/08).

Kroes’s spokesperson accused ECSA of speaking on behalf of collecting societies while failing to represent the wider category of music authors. The founder of the Bee Gees, Robin Gibb, who speaks for ECSA, is indeed the president of CISAC too.

The Commission is also arguing that cultural diversity will be increased by this decision because “it will encourage collecting societies to be more efficient,” to the advantage of small authors. Moreover, the current strong demand at national level for local repertoires is considered by Brussels to be sufficient proof that the less famous authors will keep an audience in any circumstances.

The decision applies immediately but does not involve the imposition of fines on the collecting societies it targets. They have now 120 days to inform the Commission about the implementation of the measures requested.

In a parallel move, Brussels also decided yesterday to propose extending the duration of copyright protection for music performers from 50 to 95 years to address the financial problems faced by old retired singers. The associations representing European performers welcomed the initiative, despite underlining its partial scope. 

Competition Commissioner Neelie Kroes said: "This decision will benefit cultural diversity by encouraging collecting societies to offer composers and lyricists a better deal in terms of collecting the money to which they are entitled. It will also facilitate the development of satellite, cable and internet broadcasting, giving listeners more choice and giving authors more potential revenue."

CISAC regrets the overall decision, underlining that its main concern "lies in the way in which the Commission has responded to the territorial delineations within societies' reciprocal representation contracts," reads a press release.

"Whilst it is true that the decision's approach to territoriality will inevitably lead to a catastrophic fragmentation of repertoire and therefore to legal uncertainty for music users, it is the Commission's assertion that the decision is somehow in the creative community's interest which has been of particular surprise to CISAC," adds the statement.

The Ducth collective society BUMA/STEMRA opposed this line: "We back the decision to remove obstacles for competition between collecting societies. The decision is a logical and foreseeable change of the rules of the game in cross-border licensing of musical works" sayd Cees van Rij, Director of legal affairs and new business development for Buma/Stemra. BUMA/STEMRA went even further by officilally asking the Commission for a review of the clauses that facilitate deals between the three big EU collective societies, the German, the French and the British, a measure not taken into account bt the decision just announced. 

ECSA "condemned the European Commission's decision to declare current international agreements allowing cross-border collection of royalties as illegal". "Apart from the negative financial consequences, ECSA believes that the Commissions decision is an attack on cultural diversity," reads a press release 

"The fierce competition this decision will create will mean that smaller societies may no longer be viable and access to the market place may disappear for independent publishers and their writers from all European countries," concludes the press release.

Digital media welcomed the Commission's decision. "Reform of European licensing is critical to the development of the online music sector, to promoting European culture and to ensuring that consumers have access to a wide variety of content through legitimate services," said Andrew Cecil, the president of EDiMA, the association representing Music Choice Europe and several online giants such as Google, Microsoft, eBay, AOL and Yahoo!. 

"We welcome the Commission's decision in this regard and look forward to working with the collecting societies and publishers to promote a vibrant online music environment in Europe," he added.

On the Commission's other initiative relating to performers' rights, Luis Cobos, the president of the International Organisation of Performers Collecting Societies (GIART), said: "This is a great day for hundreds of thousands of performers who consistently contribute to Europe's exciting, diverse culture. However, we feel that the Commission's proposal must still be improved to ensure that all performers benefit from the extension of the term of protection of their rights." 

He added: "We also regret the non-inclusion of the 'clean-slate' provision, initially proposed by Commissioner McCreevy, in the proposal. This provision was essential for performers to enjoy all the royalties due to them for the extended period, against a refusal by labels, on grounds that advance payments to the artists have still not been recouped."

Nicolas Galibert, President of the International Confederation of Music Publishers (ICMP) welcomed the European Commission’s decision: "Composers and their publishers will continue to be able to take a pan-European approach to the way they promote and market their music. In choosing not to fine collecting societies the Commission has acknowledged that the funds of the societies are ultimately the property of the right holders and that it is their future that is being addressed in this ruling", he said in a statement. 

Collecting societies act at national level as the trustees of music copyright holders, collecting royalty payments from individuals and groups who perform their music in public arenas, including on the internet.

Following complaints from the digital music distribution platform Music Choice Europe and the broadcasting giant RTL, the Commission sent a formal statement of objections to the International Confederation of Societies of Authors and Composers (CISAC) in February 2006, stating that certain business practices enforced by the association of collecting societies were restrictive. 

In March 2007, CISAC proposed a set of draft commitments to bring an end to the Commission's proceedings. The EU executive decided on 14 June 2007 to market-test these commitments. 

But on 10 July 2007, a broad coalition of broadcasting corporations and telecoms providers sent a letter of protest to Commission President José Manuel Barroso and Competition Commissioner Neelie Kroes, urging the EU executive not to accept settlement proposals from CISAC (EURACTIV 12/07/07). 

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