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European Commission adopts proposal for Directive on collective rights management and cross-border online music licensing
Practical Law UK Legal Update 6-520-3283 (Approx. 5 pages)
European Commission adopts proposal for Directive on collective rights management and cross-border online music licensing
by PLC IPIT & Communications
| Published on 12 Jul 2012 • European Union |
The European Commission has adopted a proposal for a Directive on collective rights management and multi-territorial licensing of rights in musical works for online uses. (Free access.)
Speedread
The European Commission has adopted a proposal for a Directive on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market. The aim of the Directive is to make the work of collecting societies more transparent and to facilitate the licensing across borders of rights in musical works for online uses. The Commission claims that 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 and an annual transparency report. Further, the multi-territorial licensing of authors' rights for the use of music on the internet across borders would be facilitated to the benefit of authors, internet service providers and consumers alike. The proposals have been welcomed by PRS for Music, but there are some concerns that the Commission is seeking increasingly to harmonise copyright across the EU.
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Background
In 2010, the European Commission consulted collecting societies and online music service providers. It also organised a public hearing on the governance of collective rights management in the EU. These consultations confirmed to the Commission what had been identified as deficiencies in the collective management of rights, the need to improve the governance and transparency standards of collecting societies, and to create a framework for facilitating the online licensing of musical works.
In May 2011, the Commission published its blueprint for intellectual property rights which was intended to revamp the EU legal framework in order to adapt and modernise it to reflect technological changes, in particular the growing importance of online activities. This included publishing a proposal for a legal instrument to create a European framework for collective management of copyright (see Legal update, European Commission publishes new strategy for IP rights).
Facts
The European Commission has adopted a proposal for a Directive to make the work of collecting societies more transparent and to facilitate the licensing across borders of rights in musical works for online uses. The proposal aims to put in place an appropriate legal framework for the collective management of rights that are administered by collecting societies on behalf of right-holders by providing for rules ensuring the better governance and greater transparency of all collecting societies, and also by encouraging and facilitating the multi-territorial licensing of the rights of authors in their musical works by collecting societies representing authors.
The key elements of the proposed Directive are summarised below.
Collecting societies
The Directive would apply to the management of copyright and related rights by collecting societies, irrespective of the sector in which the societies are active.
Chapter 1 provides for rules governing the membership and organisation of collecting societies. In particular:
- The Directive sets out requirements which should apply to the relations between collecting societies and rights-holders (Article 1).
- Collecting societies must act in the best interest of their members and not impose on rights-holders whose rights they manage any obligations which are not objectively necessary for the protection of the rights and interests of these rights-holders (Article 4).
- Rights-holders would have a direct say in the management of their rights, be remunerated more quickly and have the ability to choose the most efficient collecting society. (Article 5).
- Societies should base their rules on membership and participation in the internal decision-making on objective criteria (Article 6).
Rules on collecting societies' financial management are set out in Chapter 2 of the Directive, including separation of rights-holders' royalty income from the society's own assets (Article 10) and an obligation to pay amounts due to rights-holders accurately and without undue delay, and to make efforts to identify rights-holders (Article 12).
Chapter 3 establishes the non-discrimination requirement for the management by a collecting society of rights on behalf of another society pursuant to a representation agreement (Article 13). A society would not be permitted to deduct amounts which are due to another society without the latter's express consent and payments should be made accurately to other societies (Article 14).
Chapter 4 requires collecting societies and users to conduct negotiations in good faith. Tariffs should be based on objective criteria and reflect the value of the rights in trade and of the actual service provided by the society (Article 15).
Chapter 5 requires certain levels of disclosure by collecting societies, including an annual transparency report (Articles 16 to 20).
Multi-territorial licensing by collecting societies of online rights in musical works
Title III of the Directive establishes the conditions that an author's collecting society must respect when providing multi-territorial licensing services for online rights in musical works (Article 21), including:
- Being able to process efficiently and transparently the data needed for the exploitation of such licences (for example, identifying its music repertoire and monitoring its usage) by using a time-sensitive, authoritative database containing the necessary data (Article 22).
- Being transparent as regards the online music repertoire it represents (Article 23).
- Offering rights-holders and other societies the possibility to correct the relevant data and to ensure their accuracy (Article 24).
- Monitoring the actual usage of the works covered by the licences and being capable of processing usage reports and invoicing. Establishing procedures to enable the user to challenge the accuracy of invoices (Article 25).
- Paying rights-holders and other collecting societies without delay and providing them with information on works used and financial data related to their rights (Article 26).
Even where a collecting society decides not to grant multi-territorial licences for online rights in musical works, but continues to grant national licences, the Directive sets out specific safeguards that will apply to ensure that the repertoire of all societies have access to multi-territorial licensing. These include the following:
- A collecting society would be able to request another society granting multi-territorial multi-repertoire licences to have its repertoire represented on a non-discriminatory and non-exclusive basis for the purpose of multi-territorial licensing (Article 28). The society receiving the request would not be allowed to refuse it if it is already representing (or if it offers to represent) the repertoire of one or more collecting societies for the same purpose (Article 29).
- Following a transitional period, rights-holders would be able to grant licences (either directly or through another intermediary) for their own online rights if their collecting society does not grant multi-territorial licences, and if it does not enter into one of the agreements mentioned above (Article 30).
- To achieve the degree of flexibility required to encourage the granting of licences to innovative online services (ie those which have been available to the public for less than three years), collecting societies would be allowed to grant such licences without being required to use them as a precedent for the purposes of determining the terms of other licences (Article 32). By way of exception, collecting societies would not need to comply with Title III when granting multi-territorial licences to broadcasters for the online use of their radio or television programmes containing musical works (Article 33).
Enforcement measures
Title IV of the Directive would require collecting societies to make available to their members and rights-holders complaint and dispute resolution procedures (Article 34).
Mechanisms should also be available to settle disputes on licensing conditions between users and collecting societies (Article 35). Certain types of disputes, in relation to multi-territorial licensing, between collecting societies and users, rights-holders or other societies could be submitted to an independent and impartial alternative dispute resolution system (Article 36).
Comment
The Commission has said that changes to the laws governing collecting societies are necessary as 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.
The proposals have been welcomed by PRS for Music as providing the route to building further confidence in collective management. It also welcomes the standards-based approach to data and processing capability to support multi-territorial licensing, because it will provide the incentives for the market to develop and aggregate on a voluntary basis.
However, some commentators are suspicious that the Commission is seeking more and more to harmonise copyright across the EU. Although the Commissioner for Internal Market and Services, Michel Barnier, has denied that the Commission is pursuing full copyright harmonisation, he has stated the need to develop the digital single market, by addressing four main copyright-related challenges, namely collective rights management, orphan works, the online dissemination of audiovisual works, and the enforcement of rights.