The European Commission Proposal for a Directive on collective management of copyright
On July 11th The European Commission issued a proposal for a Directive on collective management of copyright and related rights and multi-territorial licensing. This proposal is part of the 2011 Commission strategy on intellectual property and provides specific solutions for some specific problems identified in the field of copyright licensing across Europe:
Transparency, governance and general handling of revenues.
The Commission points out the insufficient transparency and control of the way collecting societies are managed. It is therefore needed that they provide a more efficient service to right holders and users alike in terms of better collection and redistribution of revenue, accurate invoicing and more granting of multi-territorial licenses for aggregated repertoire.
Challenge embodied by online services.
Digital environment and online access provides copyright content providers with a new and multi territory dimension: these providers must have the option to get multi countries licenses that legitimate the services they provide online.
Nowadays many collecting societies are not yet ready to cope with this scenario: they do not have the capacity to process data from service providers on music downloads and streaming, or to match this data with their repertoire of songs. This can lead to service failures and inefficiencies such as incorrect or dual invoicing deriving in fewer music services available to consumers across the EU, a slower uptake of innovative services and poor allocation of revenue to right holders. With this scenario, collecting societies need to modernize their operations to improve the way they are managed by establishing common governance, increasing transparency and financial management standards, setting minimum standards for multi-territorial licensing and creating conditions that can expand the legal offer of online music.
In these terms, the proposed Directive envisages a set of measures that mainly tackle the above mentioned weak spots in 3 different ways:
1. Management Measures
– Right holders should be free to choose a collecting society to manage their rights (or categories of rights or types of works) regardless of the country of establishment of the collecting society or of their own residency.
– They should also be free to terminate the authorization they gave to a collecting society for the management of their rights or withdraw only some of their rights.
– Collecting societies should not discriminate between right holders.
– The general meeting of the members of a collecting society should decide on the key matters within the collecting society.
– Establish a supervisory board to monitor the activities of the management in the interest of the right-holders. Supervision could be carried out within the board by non-executive members or via a separate supervisory board.
– Provide their affiliates with accurate and updated information.
2. Financial Management Measures
– Keep and manage amounts received from affiliates separately from their own assets in such a way they cannot use them for their own account.
– Regularly and diligently pay royalties to right holders; due payments should be carried out no later than one year from the end of the financial year in which the amounts were collected.
3. Multi territory Online Licensing
– Setting some compulsory quality standards to collective societies willing to grant multi territory licenses: accurately identify to the service providers the music repertoire it licenses on a per-work basis, rapidly invoice online service providers on a per-work basis and pay the amounts due to each right-holder on time. This in turn will require the capacity to appropriately and accurately handle data electronically.
The fulfillment of these requirements will imply in some cases a remarkable investment on IT equipment; some collective societies might not be able to face that. In this event, collecting societies would have the possibility to aggregate their repertoire with the repertoire of a collecting society that complies with the minimum quality standards.
– Appoint relevant competent authorities to continuously monitor compliance with the requirements laid down in the proposed Directive by collecting societies established in their territory when granting multi-territorial licenses for online rights in musical works.
From Salvador Ferrandis and Partnerss, we very much welcome the Proposal for being the first serious attempt to adapt the legal regime of collecting societies to the existing online multi-territorial market of copyright contents. However, we are aware of the complaints raised in the past by collecting societies in certain countries of Europe. The discussion goes back to 2005 when the Commission issued a Recommendation in this field. The Directive will certainly raise hot discussions. Collecting societies must adapt their management to the new digital environment, but is the Commission proposal the best adaptation possible? Are other alternatives feasible?
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