On 11 July 2012, the European Commission has published a proposal for a Directive on collecting societies and multi-territorial licensing of rights in musical works for online uses in the internal market. The initiative is part of the 2011 Single Market for intellectual property strategy and follows from two observations:
1. In all sectors, collecting societies suffer from many dysfunctions: they raise concerns with regard to their accountability towards both their users and their members and they lack behind the development of new online services.
2. In the music sector in particular, difficulties of obtaining multi-territorial licences are known to be factors contributing to the territorial fragmentation of online music services. As a consequence, the works are often not as widely licensed or properly remunerated as they could be.
The ambition is hence twofold:
- on the one hand, improving transparency and governance of collecting societies, by means of common standards applicable irrespective of the sector concerned ;
- on the other hand, enhancing multi-territorial and multi-repertoire licensing of authors’ rights in musical works for online uses in the EU/EEA, by means of specific rules attached to this type of licensing.
1) General standards applicable in all sectors
The Commission proposes to set out common standards with regards to:
- the membership organisation of collecting societies ;
- financial management of collecting societies ;
- non-discrimination between a collecting societies’ own members and any rightholders whose rights it manages on behalf of another society pursuant to a representation agreement ;
- the relation between collecting societies and users ;
- transparency and reporting.
Regarding the relations with users, it is worth mentioning that, according to Article 15 of the proposal, “licensing terms shall be based on objective criteria, in particular in relation to tariffs”. Consequently, “tariffs for exclusive rights shall reflect the economic value of the rights in trade and of the service provided by the collecting society”. The provision adds that “in absence of any national law which establishes the amounts due to rightholders in respect of a right to remuneration and a right to compensation, the collecting society shall base its own determination of those amounts due, on the economic value of those rights in trade”.
These requirements fall in line with the case-law of the European Court of Justice in matters of abuse of dominant position by a collecting society (see case C-52/07, Kanal 5 and TV4, 11 December 2008, ECR, I-9275).
2) Conditions for multi-territorial licensing for online rights in musical works
In accordance with the proposal, collecting societies, who are willing to grant multiterritorial licences for online rights in musical works, would have to comply with the following requirements:
- having the capacity to process data efficiently and transparently ;
- being transparent as regards the online music repertoire it represents ;
- offering rightholders and other societies the possibility to correct the relevant data and to ensure their accuracy ;
- monitoring the actual usage of the licensed works, processing usage reports and invoicing, and enabling the user to challenge the accuracy of invoices (e.g. to avoid double invoicing) according to appropriate industry standards ;
- duly informing and paying rightholders and other collecting societies without delay.
These requirements would however not apply for the granting of multi-territorial licences to broadcasters for the communication or making available to the public of its radio and/or television programmes simultaneously with or after their initial broadcast, as well as of any other online material produced by the broadcaster which is ancillary to the initial broadcast.
Regarding reciprocal agreements, it is interesting to point out that a collecting society may decide not to grant multi-territorial licences for online rights in musical works. In such a case, it could continue to grant national licences for its own repertoire and/or national licences for the repertoire of other societies through these agreements. Its members would however have the right to grant their online rights in musical works to another collecting society or to grant a multi-territorial licence by themselves, without losing their membership.
Other options for a collecting society unwilling or unable to comply with the requirements would be:
- to outsource the back-office function or share costs and services with other collecting societies through a common subsidiary ;
- to mandate another collecting society (which is compliant, aggregates repertoire and grants multi-territorial licences) to licence its repertoire on its behalf. In the latter case, the chosen collecting society would be required to accept; no exclusive agreements would be allowed.
Finally, in order to achieve the degree of flexibility required to encourage the granting of licences to innovative online service (i.e. which have been available to the public for less than 3 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.
