MEPs call for online-music directive

The Parliament has attacked the Commission on what it perceives as the “soft-law approach” that it chose to harmonise member states’ rules on copyright for online music services. 

  • The Parliament wants to make sure that provisions recommended by the Commission will not be extended to other copyright areas and apply “exclusively to online sales of music recordings“. 
  • It implicitly criticises the Commission of creating “downward pressure on authors’ revenues” and impeding “cultural diversity in Europe”, which, it says, “will be best served by the introduction of a fair and transparent competitive system”.
  • On the other hand, it seems to agree with the Commission’s main concern, when it concedes that it “understands and supports the provisions concerning the  existing possibility for right-holders to choose a collective rights manager, to determine the entrusted online rights and their territorial scope and the right to withdraw the rights from the CRM or to transfer them to another CRM, and stresses the importance of taking into consideration the efficiency of co-operation between CRMs in order also to preserve the interests of smaller and local right-holders and thus to safeguard cultural diversity”. 

The rapporteur, Katalina Lévai, said in her speech to Parliament: "The Commission has set a precedent in a very important and sensitive domain. By failing to consult Parliament and Council, it has bypassed the democratic process." She went on to speak of "undesirable implications - one could even say: negative effects - for cultural diversity of the European Commission's Recommendation". 

She added: "My proposal preserves the reciprocal system for collecting societies in Europe but makes sure that they all respect the principle of good governance. We will encourage the introduction of competition among collecting societies in a controlled manner, and not the 'big-bang' approach. 

"We will make sure that the few large rightholders cannot place the repertoire they control exclusively in the hands of a few large collecting societies, thereby creating an oligopoly situation in Europe." 

The EPP-ED shadow rapporteur, Hans-Peter Mayer, backed the rapporteur's criticism of the procedure chosen by the Commission, adding: "We therefore urge the Commission to present a proposal for a well-fitted legal instrument in the co-decision procedure." Mayer said: "The Recommendation poses numerous problems, because it safeguards neither artists' rights nor the diversity of the European music repertoire. The existing deficits and the necessary approaches to a solution are clearly outlined in the Parliament report." 

The question as to which country's copyright laws apply when music is sold in electronic format across borders arose with the emergence of the online music market and became more urgent with the huge success of Apple's iTunes music-download service. 

Previously, artists and publishers were forced into specific collecting societies, according to their country of residence and occasionally to the kind of artwork they were producing. Commercial music users were forced to pay royalties with the local collecting society - for music from another member state, collecting societies were balancing payments between each other. 

This approach led to huge differences in prices across member states, with some countries' collecting societies having a reputation of charging high royalties from users but paying comparitively little to artists, with the rest lost in bureaucracy. For online music, the approach resulted in market distortion, because an online music company could have established itself where royalties were lowest, thus gaining a competitive advantage over companies established elsewhere but competing for the same markets. 

Those issues were addressed in an October 2005 Recommendation to member states, in which the Commission suggested to partially open the online music market to competition between collecting societies, in order to allow artists and publishers as well as users the option of selecting the collecting society with the best pricing model and the highest service level, independent of where they were established. 

The Recommendation was widely regarded as a model of what a single market for copyright could look like. 

Since the Commission's recommendation is a non-legislative 'soft-law' proposal, neither the Council nor the Parliament had a say. The Parliament could only react with another non-legislative text, namely an own-initiative report. Katalin Lévai (PSE, Hungary) was named rapporteur for the Legal Affairs Committee, which presented its report on 27 February 2007. On 14 March 2007, the Parliament adopted the Committee's report without any amendments.

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