New Spanish decision might offer support for 'direct licensing'

Mark Knopfler live in Bilbao by Aherrero

Most venues and festivals have a blanket annual licence with their local music collection society, and would pay a percentage of their box office revenues to compensate composers and lyricists, and their music publishers, for the use of music. In the UK that rate (Tariff LP) is currently 3% of box office paid to PRS for Music (this Tariff is under review). This rate is meant to cover ALL music used - the only exception in the past used to be the exclusion of the 'grand right' for dramatico-musical works which were intended to be accompanied in performance by dramatic action(for example opera and musicals) where the right was usually directly licensed by music publishers on behalf of authors.  

A Spanish court has ruled against collection society SGAE in favour of a venue which had negotiated to pay performance royalties directly to artists. The ruling, by Judge Pedro Macías in the commercial court of Badajoz in Extremadura, centres on two shows by veteran Spanish rock group Asfalto and comedian Pablo Carbonell at Badajoz’s 325 capacity Sala Mercantil venue in 2010.

When SGAE (Sociedad General de Autores y Editores) noted that the usual fees for the concerts had not been paid, it announced its intention to collect, only to be told that  “the artists had reached a private agreement between them” and the Mercantil, according the venues legal team, OpenLaw. Judge Macías’s affirmed the composers “exclusive rights to the exploitation of the work, without any limitations other than those established by law” 

“The owners of these rights are the authors, so they are the ones who should be able decide what to do with them,” comments OpenLaw’s Andrés Marín. “If a composer and performer negotiate directly with a third party and agree to give away or even collect their copyrights directly, the SGAE has no right to try to collect, or recover, the rights the artist has not claimed.

The ruling certainly supports the developing practice of 'direct licensing' where performing artists who compose their own material are choosing to bypass their local performing right organisations (PROs) in favour of collecting performing right royalties directly. At last year's International Live Music Conference, Mark Knopfler's manager Paul Crockford highlighted the efficiency of self collection for Knopfler - and the practice of (large) discounts some collection societies were giving to promoters to assist in the collection of these revenues. 

However, a spokeswoman for SGAE said that that the PRO’s lawsuit was aimed at the Mercantil, not the performers, and that Judge Macías displayed a “clear misunderstanding” of copyright law by failing to distinguish between the rights of performers, composers and publishers: “The performers said to the court that they’d received their royalties, and the court understood that to mean the composers had, too,” she told IQ magazine. “It was a clear misunderstanding of Spanish copyright law, which distinguishes between the rights of composers and artists.” (In both cases, it should be noted, the composers and performers were one and the same). She said that Spanish creators can, if they wish, opt out of SGAE’s collective licensing (in the UK this is called a Clause 7G arrangement) but that in the case of the two disputed shows, neither performer had done so. “If any of our members want to withdraw certain rights, there’s a procedure for it,” she explains. “But what we can’t do is have both systems: If they have a blanket licence, they can’t then administer their rights directly as well, it would be chaos for us.”

OpenLaw, said the decision shows traditional collection societies are ultimately subordinate to the wishes of copyright holders – and demonstrates a “clear victory over the unjustified position of dominance that SGAE exerts over many of Spain’s music venues and artists”.

The  Court of Justice of the European Union recently decided in Soulier and Doke, C-301/15 that the InfoSoc Directive grants a 'high level of protection' to is authors. That case concerned a reference for a preliminary ruling from the French Conseil d’État (Council of State) to clarify if a legal framework intended to encourage the digital exploitation of literary works (books) published in France before the 1st January 2001 and which were no longer commercially distributed by a publisher and are not published in print or digital format was compatible with Article 2(a) and Article 3(1) of the Directive. The court held that the Directive must be interpreted as precluding national legislation that gave an approved collecting society the right to authorise the reproduction and communication to the public in digital form of ‘out-of-print’ books. Despite contrasting hints in the past in which the CJEU appeared to employ the terms 'authors' and 'rightholders' interchangeably, the Court reinforced the idea that who the InfoSoc Directive intends to grant a 'high level of protection' to is authors. It would appear that, post-Soulier and lacking specific 'EU-endorsed authorisation' to the contrary, national legislative initiatives (including licensing schemes) that fail to incorporate appropriate and streamlined procedures to (i) inform authors of possible future uses of their works, and (ii) obtain their relevant, individual, consent are likely to be regarded as incompatible with EU law.

This year's International Live Music Conference is hosting a panel titled "Direct Licensing: Rates, Rights and Wrongs on Thursday March 9th chaired by Jon Webster from the Music Managers Forum, and with representatives from direct licensing agency PACE, collection societies PRS for Music and Buma Stemra and from Yourope, the European festivals association and explains the panel as: "The widespread system of promoter rebates given by some PROs (performance royalty organisations) came under scrutiny at ILMC last year. As a result, several artists are now choosing to license their songwriting performance royalties directly, a situation that left promoters facing unexpected licensing fees during the 2016 festival season. The upshot is a three-way conversation between performance royalty organisations, promoters, and artists, as existing relatively simple administrative models are reviewed making the whole process more complicated for all. Add in various tariff updates, and performance royalties is an interesting area right now. Jon Webster invites specialists and guest speakers to help clarify the current situation and what the solutions might be."

http://www.iq-mag.net/2017/02/landmark-legal-victory-direct-licensing-mercantil-asfalto/#.WKYeuW-LSM9

http://the1709blog.blogspot.co.uk/2016/11/the-cjeu-decision-in-soulier-what-does.html

http://the1709blog.blogspot.co.uk/2016/03/live-music-sector-put-cmo-kickbacks.html