Collecting societies split over online music royalties

Commitments signed earlier this month by CISAC, the global federation of copyright collecting societies that organise the collection of music royalties, have led to a split between large and small authors’ societies across Europe. 

On 12 July 2007, all collecting societies except the five ‘large’ ones (Germany, France, Spain, Italy and the UK) signed a joint position in which they comment on the future of royalty collection in Europe along mostly the same lines as the industry alliance had done two days earlier. 

The smaller collecting societies also endorse the position taken by the European Parliament in its March 2007 Resolution on collective cross-border management of copyright for online music services and the criticism of the earlier Commission Recommendation contained in that Resolution. 

In particular, they hold that: 

• The system of reciprocal agreements between collecting societies “has worked successfully for decades”, is “the best way to provide equal treatment and opportunities to all rights-holders and the preferable ‘one-stop-shop’ arrangement for all users” and “should [therefore] be maintained (albeit with some improvements)”. 
• “The entire world repertoire should remain available for all collecting societies (…) whether for their country of establishment (for traditional licensing) or for the entire European Economic Area (for on-line licensing).” Smaller collecting societies think that the Commission is moving away from its former policy of prohibiting exclusivity in reciprocal representation agreements between collecting societies, by now “allowing exclusive mandates between major rights-holders and a limited number of collecting societies for the direct collection of royalties in all member states. They express concern that “in the logic of business the process of selecting the societies will not be based on the relative efficiency of individual collective rights managers but on their size”.
• “The granting of exclusive mandates by major rights-holders in the context of collective management of online rights is undesirable and should be discouraged rather than stimulated. The signatories think that exclusive mandates will force users to make multiple deals with multiple collecting societies, thus resulting in higher costs for users and making rights management for rights-holders more expensive. They add that exclusive mandates may even “undermine the existence of certain small collecting societies by removing a significant amount of their turnover”.

The smaller collecting societies end with an appeal to the Commission to “issue a strong countersignal that the actions initiated are anti-competitive, inappropriate and unacceptable”, adding that the Commission “should do so rapidly before irreversible damage has occurred”.

Interestingly, most of the signatories who signed the joint position opposing the CISAC commitments have themselves also signed the commitment. People familiar with the case say that many smaller collecting societies have signed the commitments because that was the only way to avoid being fined by the Commission. Five small companies from new member states have not signed the commitments because they will have to pay fines only for the time after their countries’ joining the EU, which they consider a smaller drawback than the long-term competitive disadvantage that a signature would bring about. 

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