Call for Comments requested by the European Commission in the light of Commission Recommendation on online music management for legitimate online services (2005/737/EC) of 12 October 2005
British Music Rights comments
July 2007
British Music Rights (BMR) was established in 1996 to speak on behalf of the UK’s songwriting, composing and music publishing community (see note 1).
Collecting societies play a key role in the process of licensing music, even more so in the digital online world. Any regulatory interference with cross border licensing in the still nascent online music management market further to the Recommendation (2005/737/EC) will not only confuse right holders and commercial users but hamper further developments and stop already well advanced initiatives.
Following the comprehensive impact assessment in July 2005 the Commission decided to recommend “option 3” which offers an incentive to music creators and publishers to streamline cross border licensing via their collecting societies whilst maintaining the value of music. “Option 3” is also the most likely way in which licensing music online would have evolved had the Commission chosen an “option 1” – do nothing approach.
The original “Option 2” which promoted competition between collecting societies for commercial users regarding the same repertoire (i.e. the global music industry repertoire) would have led to a downward spiral in the value of music given that any competition between collecting societies for commercial users would have been based mostly on price. We have never supported “option 2” because of its potentially negative impact on the value of music. Alternative options might have been possible and could still be developed by music creators and publishers via their collecting societies given the non mandatory nature of a Recommendation. It is ultimately for the music creator and publisher to decide on the way to exploit their works.
Our member organisations the Music Publishers Association and the MCPS-PRS Music Alliance have proactively embraced the Recommendation and invested considerable resources in developing solutions corresponding to the “option 3” model. We refer to the submission of the MCPS-PRS Music Alliance outlining the details of the relevant initiatives, in particular: CELAS and Alliance Digital. These already well advanced initiatives are not the only projects which are under way. Other collecting societies and music publishers are working on various different models in view of the non mandatory nature of the Recommendation, e.g. the Armonia project, the joint Nordic/ Baltic proposal, and the Pan – European Digital Licensing initiative. It is of paramount importance that the music industry be given the freedom to continue to develop further possible models for the benefit of music creators and publishers as well as the commercial users of music without regulatory interference regarding cross border licensing of music online which would not only be premature, but also potentially destroy the value of music.
NATURE OF THE INSTRUMENT
(1) Are legally binding rules on the following issues preferable: (1) licensing; (2) transparency and governance; (3) assignment; and (4) withdrawal of online rights?
Legally binding rules should not be considered at this stage:
(1) licensing: Initiatives to enable one stop shop cross border licensing are already well developed (n.b. CELAS, Alliance Digital - see note 2, Armonia, PEDL). Discussions on legally binding rules at this point in time will confuse all stakeholders (right holders as well as commercial users) and hamper further developments. A Recommendation is an appropriate and adequate approach to guide industry advances without prescribing any rules which in this fast developing market will be obsolete the moment they are adopted, if not before.
(2) transparency and governance: We question the practical need for any additional measures beyond those already addressed in the Recommendation. Market forces will demand increasing transparency and good governance by collecting societies: in the spirit of option 3 composers, songwriters and music publishers will choose the most transparent and best governed collecting society to administer their online rights since this will be to their benefit.
(3) assignment: We are not aware of any problems in existing Community law regarding the assignment of copyright which would justify further harmonisation. The different treatment of the specific rules on assignment in member states (see note 3)has not presented any practical problems. For example, UK law requires the assignment/ exclusive licence to be in writing (ss 90 (3) and 92 (1) CDPA respectively). In contrast, under German law it is not possible to assign copyrights (§ 29 UrhG).
(4) withdrawal of online rights: The withdrawal of rights has been addressed by the European Court of Justice in competition cases during the early 1970s. In a case concerning the German authors’ collecting society GEMA, the European Court of Justice confirmed that its members have the right (i) to entrust their rights entirely to GEMA or to divide them by category among several authors’ rights societies and (ii) to withdraw the administration of certain categories of rights after due notice without losing membership status or incurring penalties.
However, despite the clear legal situation, we suggest the Commission keeps a watching brief in this regard. There are different categories of rights ownership for each category of rights according to the source of the repertoire in question and this adds a degree of complexity to the withdrawal of rights. We refer to Case No COMP/M.4404 – Universal/BMG Music Publishing which accurately outlines the different approaches in some detail (paras 36 to 40) - see note 4.
EU WIDE LICENSING
(2) What are the tenders that are underway which envisage EU wide licence arrangements?
(3) What are the EU wide licensing arrangements that have been set up?
We refer to the submission of the MCPS- PRS Music Alliance which details current initiatives e.g. CELAS and Alliance Digital. There are various other models such as the Armonia Project presented by the French, Italian, and Spanish collecting societies, the Nordic/ Baltic proposal and the Pan – European Digital Licensing initiative proposed by Warner Chappell.
(4) Which online customers music service providers benefit from EU-wide licenses for their pan-European retail or other activities?
(5) What types of online services are most interested in obtaining EU-wide licenses?
Any service provider providing a service that includes music requires a licence and can benefit from the initiatives currently under way, including online music providers, mobile service providers, general website, and retailers.
(6) What legislative or other types of obstacles have been encountered in setting up EU-wide licensing arrangements?
The main challenges to the setting up of EU-wide licensing arrangements are of a practical nature, i.e. that it requires time and resources to withdraw the rights from the reciprocal system, to restructure sub-publishing arrangements and to withdraw and re-organise online rights.
SCOPE OF THE RECOMMENDATION
(7) Does the Recommendation correctly set out the rights of the various rightholders that are typically licensed for the provision of "online" services?
(8) For the purposes of the withdrawal of rights, should "online" rights be further defined by category according to use or form of exploitation?
(9) Alternatively, should rightholders be able to retain some types of use or forms of exploitation without assigning them to a collective rights manager?
The definitions provided for in the Recommendation are sufficient at this stage, in particular if read in context of the relevant decisions of the European Court of Justice (re GEMA) which gave right holders the freedom to entrust their rights entirely to a collecting society of their choice or to divide them by category among several collecting societies. Right holders are also able to withdraw the administration of certain categories of rights after due notice. It is clear that under the general law at European Level it is for the right holders to choose which rights they want to retain and for what uses without assigning them to a collecting society. The principle that right holders have the right to choose individual or collective management is also implicit in the Recommendation on online music management for legitimate online services
(10) How can the inclusion of equitable remuneration for record producers and performers be justified in contracts?
N/A
(11) Should it be mandatory to include niche repertoire in EU-wide licenses?
We are strongly opposed to any form of mandatory licensing because it deprives music creators and/ or their publisher of the right to control the exercise of their copyright. As far as niche repertoire is concerned, we are of the view that end consumers will demand a comprehensive global repertoire from commercial users; the market will create an environment which will stimulate creative production including of niche repertoire. In fact, the internet has already enabled niche repertoire to be far more readily available to the public. (the “long tail”) thus naturally promoting cultural diversity.
GOVERNANCE AND TRANSPARENCY
(12) Does the Recommendation bring about any changes in relation to transparency of rights management and increase the effectiveness of dispute resolution?
Yes. Competition between collecting societies for members under the option 3 model will force collecting societies to be more transparent since music creators and publishers will entrust their online rights to the collecting society which provides the most efficient and transparent service.
(13) Does the Recommendation bring about sufficient safeguards for individual rightsholders with respect to (1) tariffs; (2) licensing conditions; (3) entrustment; and (4) withdrawal of online rights?
Yes; the Recommendation and the existing European copyright framework contains sufficient safeguards for the rights of music creators and publishers with respect to (1) tariffs; (2) licensing conditions; (3) entrustment; and (4) withdrawal of online rights. In fact any interference with the licensing activities of collecting societies will jeopardise the position of individual rightsholders. However it is noteworthy that problems sometimes arise in practice with the withdrawal of rights from collecting societies. We would welcome the Commission keeping a watching brief to monitor the behaviour of societies in this regard..
(14) Should the Recommendation further address rightholders' participation in setting deductions for purposes other than for the management services provided?
The Recommendation contains useful general statements on rightholders' participation (Recommendation 13): it is important to keep in mind that ultimately it will be the decision of the right holder as to whether to allow deductions from online income. The existence of cultural and social deductions will be a decisive factor, alongside the quality of services offered, for the right holders when choosing a collecting society.
(15) Does the Recommendation provide sufficient safeguards for commercial users?
As far as the licensing process itself is concerned, the Recommendation is fit for the purpose of stimulating the European market for online music by reshaping and ultimately streamlining the process by which service providers can obtain music licences to cover the whole European territory while ensuring that value is returned to songwriters, composers and music publishers.
The ultimate objective of the Recommendation is to encourage one-stop shop licensing for commercial users in their territory. The Recommendation represents an important step towards achieving this goal but it must be recognised that the full implementation of the Recommendation will take time and is currently in a transitional phase.
It is key that music creators and publishers together with their collecting societies co-operate with commercial users to develop a convenient licensing mechanism without devaluing music. The Recommendation will contribute in that music creators and publishers will join the collecting society which provides commercial users with a convenient licensing system since it is in their genuine interests to make their music available to as many commercial users as possible.
(16) Should applicable rules and principles in relation to dispute resolution be strengthened in the future?
In our view, mechanisms for dispute resolution are already available and we would not recommend further harmonisation. Given the mechanisms already in place at national level we suggest that dispute resolution regarding tariffs should continue to be conducted nationally. We do not think that legislation establishing a European body for supervision of collective management societies is appropriate in view of the different legal traditions across the European Union, and the general opposition of national courts/ tribunals to hand over powers to supra national bodies.
British Music Rights, British Music House, 26 Berners Street, London W1T 3LR. Tel: 0044 207 306 4446; Fax: 0044 207 306 4449. www.bmr.org
Notes
1. BMR comprises four member organisations: the British Academy of Composers & Songwriters, the Mechanical-Copyright Protection Society (MCPS), the Music Publishers Association (MPA) and the Performing Right Society (PRS). BMR acts as the single consensus voice for more than 50,000 composers, songwriters, music publishers, and their UK collecting societies.
2. As outlined in the submission of the MCPS- PRS Music Alliance
3. in particular the different conditions for assignment in common law and civil law systems
4. www.ec.europa.eu/comm/competition/mergers/
cases/decisions/m4404_20070522_20600_en.pdf