British Music Rights representing British composers, music publishers and their collecting societies welcomes the innovative approaches to cross border collective management explored in the Staff Working Document. Composers, songwriters and music publishers, as the members of collecting societies, are clearly central to discussions on how to streamline the licensing of online services. Any course of action must ensure that they receive fair reward for their work and that any competition introduced between societies is geared towards maximising efficiency and transparency in the services they receive from the societies.

We welcome the opportunity to explore further the practicalities of option 3, but want to draw attention to initiatives of authors' societies enabling cross border licensing and our thoughts regarding the limited impact of option 3 on cultural diversity.

Option 3
We welcome in particular option 3, which would ensure that right holders have the ability to authorise the collecting society of their choice to manage their online rights for the entire EU. As the Commission appreciates, collecting societies owe a fiduciary duty to their members and any solution that proposes to introduce competition between societies for users by allowing "forum-shopping" would totally undermine that duty. We anticipate considerable challenges for our composers, music publishers and their collecting societies in the short term when putting into operation option 3. However, following a preliminary assessment we consider it possible that option 3 may provide right holders as well as users with the broad framework needed to achieve the two main objectives of any Commission activity, namely to:

(1) Enable EU Music Service Providers to prosper and compete with non-EU services by ensuring access to multi-territorial licences
(2) Ensure that the right holders are paid appropriately in a cross border licensing scenario

We have noted a number of misconceptions in the Staff Working Document but we believe these will be specifically dealt with in submissions by or on behalf of the collecting societies. We would, however, like to challenge the Working Document's suggestion that the alleged inadequacies of copyright licensing are largely responsible for any lack of growth in the EU's online market.

Online licences available from authors' societies nationally and internationally
The UK collecting societies MCPS and PRS have operated a Joint Online Licence since 2002 providing a one-stop-shop for the world-wide repertoire within the UK. The territorial restrictions are not imposed by national collecting societies but are based on the territorial nature of copyright which as a legal concept has not been harmonised at European level and which vary considerably in practice (e.g. regarding the existence of copyright, the exercise of copyright and moral rights).

The territorial nature of collective management has historically been a reaction to necessary practicalities rather then a desire to restrict the non-domestic administration of rights by collecting societies.

Collecting societies representing composers and publishers have been co-operating internationally to offer users a convenient way to licence not only a pan European repertoire but also throughout the EU territory, most notably during the Santiago and Barcelona agreements notified to the Commission in 2001. They already have the mandate from their members to license their works comprehensively, unlike societies administering the rights in sound recordings and performances. In fact, the simplicity of collective management of the mechanical and performing rights in musical works was a key driver of the development of the ring tones market. In the online space, users additionally need an individual licence for the sound recording which is mainly administered individually. We therefore challenge the notion in the Staff Working Document that collecting societies are solely responsible for territorial restrictions, especially in the light of ongoing endeavours in the copyright community. It is imperative that the Commission distinguishes between the various forms of copyright (authors' rights and related rights) and their respective collective management.

The market is maturing in the UK following the implementation of the Copyright Directive in October 2003 as evident from the figures provided in the Staff Working Paper. Any further activities must be carefully framed in order not to interfere with the further development of a nascent European market that is rapidly gaining on the lead established by the United States given their initial advance in technology and broadband roll-out.

Perspective of composer and music publishers
Any initiative dealing with collective management and collecting societies should primarily focus on the interests and concerns of the members of collecting societies, i.e. individual composers and music publishers; and not be limited to the views and needs of music service providers.

Cultural diversity
We understand that several respondents, in particular, smaller societies, opposed option 3 in view of concerns related to cultural diversity. We agree that this is a fundamental concern in a global and ever-converging digital world, but remain to be convinced about the negative impact of option 3 on smaller societies and therefore cultural diversity.

We do not envisage a scenario where pan-territorial licensing is viable without some form of engagement of the smaller societies. Many small right holders will remain loyal to their national collecting societies and this will put those societies in a strong position when negotiating representation of local repertoire with the larger societies. We know from experience that local repertoire is extremely attractive to licensees seeking to offer tailor-made services to national audiences. Furthermore, the smaller societies are likely to play a considerable role in the administration of the online rights in their territory as local contact or agent for the society chosen by the right holders to administer the online rights.

Insofar as initiatives on cultural diversity are pursued using cultural deductions, we have no reservations if these are approved by a representative Board of composers and music publishers and provided that deductions are made in a clear and transparent manner - in other words, not subsidies disguised as distribution rules which benefit only local repertoire.

Moreover, there may be more innovative ways of providing cultural assistance which could be discussed and agreed by the rights holder community. As an aside, we consider obscure social deductions as not acceptable.

We re-iterate that it should be the decision of the right holder members of the collecting societies, i.e. composers or music publishers how they want support cultural diversity, whether through the traditional society or directly or though the revenues obtained from online licensing. This decision will be one that will influence right holders' choice as to which collecting society they select for online licensing and should thus increase societies' transparency towards their members. Additionally, it will be key that clear rules on the governance of collecting societies are in place which will enable their members to agree collectively the best way forward.

We look forward to further more detailed discussions with the Commission and other stakeholders on the practical impact of option 3 and the specifics of its implementation.