1709 Blog: for all the copyright community

Thursday, 2 January 2014

Copyright Tribunal settles Welsh music dispute

In January 2013, Welsh language music ceased to be played on BBC Radio Cymru when the BBC lost the right to use the music in a row with Eos, the then newly formed collection society set up by the Welsh Music Publishers and Composers Alliance (Y Gynghrair)  to represent Welsh sonqwriters and composers in the broadcast environment.  The WMPCA had said that changes to PRS for Music's distribution policies meant that most Welsh language composers had "lost around 85% on average of their royalties" and Eos attracted 297 composers and 34 publishing companies as new members, who 'opted out' of PRS for Music, transferring the broadcast rights to some 30,000 works into Eos. Eos did reach agreement with S4C - Channel 4 in Wales before the end of December 2012. 

The Welsh music, previously core to the BBC's Welsh services, went off air for just over a month, making it hard for the national broadcaster to meet Welsh language targets – and of course with Welsh music not being played on the radio in Wales, Eos's songwriters and publishers were not getting paid either - and nor were the performers of the songs getting any 'needletime'. By February 2013, the two sides had agreed to a short term solution with Rhodri Talfan Davies, Director of BBC Cymru Wales, saying "I am delighted that Eos has agreed to allow Radio Cymru to play its members' music once again. Indeed the BBC said it had set aside £50,000 to support Eos' legal costs "so that its members' arguments over the commercial value of its broadcasting rights could be properly heard". And so they were - as the case headed to the Copyright Tribunal.

In June and before an interim hearing, the BBC and EOS agreed an interim licence in the BBC's favour, for £10,000 per month. The Tribunal, noting that it had a wide discretion, took into account what would happen if the amount it ordered by way of a provisional fee turned out to be wrong. Since Eos was in financial difficulties, any overpayment might be difficult for the BBC to recover. Bearing this in mind, the balance of justice was best served by maintaining the status quo by ordering an interim licence fee of £10,000 per month. The BBC said that "The parties have widely divergent views on what a reasonable licence fee should be -- the BBC says it should be £100,000 per annum and Eos says it should be £1.5m per annum. We are not in a position to pre-judge the final outcome of this matter and cannot now conclude with any certainty what the final fee may be".

The Tribunal has now reached its final decision and in a 25-page ruling the Copyright Tribunal has settled amount and terms of BBC's licence fee to Eos, under section 125 of the Copyright, Designs and Patents Act 1998.  It seems to follow the BBC's thinking - and the Tribunal said that it was clear from earlier case law that although it should take comparators into account, it was for the Tribunal to adapt them to the case, taking account of any special circumstances. It found the BBC's methodology to be logical and helpful in establishing a baseline licence fee of £46,000 per year. This methodology relied on the BBC's earlier licence agreement with the PRS (Performing Right Society Ltd) and MCPS (Mechanical-Copyright Protection Society) for Welsh language music as a comparator and then applied the "audience consumption model" (based on listener hours) to determine an allocation of that fee. The Tribunal concluded that £100,000 per year represented a reasonable licence fee, applying a generous uplift to take account of the sensitivities in the model, the uniqueness of Welsh language music and its relationship with the BBC. It held that the licence should run from 1 February 2013 until 31 December 2015, and the fee should be paid monthly in advance. 

Hard on the heels of the news that the Educational Rights Collective of Canada (ERCC), the non-profit Canadian copyright collective society that administers the Educational Rights Tariff, which collected just $10,000 per annum, had somehow amassed debts of $830,000, the Eos decision does beg the question about the effectiveness of a collection society administering such a (relatively) small sum of money. Surely it could be argued that Welsh songwriters would have been better served, financially at least, by staying within the fold of PRS for Music - as funding a new collection society was never going to be cost effective. That said, the case also shows that whilst there are distinct advantages in having 'monopoly' national collection societies, when [some] members become frustrated with their society, the obvious disadvantage is there is nowhere else to turn, something that that has been troubling competition regulators in the United Kingdom, Europe and elsewhere for some time, and which finally prompted a decision by the General Court in Case T-442/08 CISAC v European Commission where the Court held that ""the structures for collective copyright management in respect of the forms of exploitation covered by the contested decision [of the Commission] originated in the structures used for traditional forms of exploitation, with regard to which the national territorial limitations are not considered by the Commission to constitute an infringement of competition rules".  But a solution to this thorny issue? That is less clear.

BBC v Eos, CT 121/13, 16 December 2013.  http://www.ipo.gov.uk/ct12113-dec13.pdf 

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