Can we always trust copyright licensing?

The 1709's knowledgeable readership will be well aware that royalties are the lifeblood of the copyright 'promise'. In exchange for cultural enrichment, society grants authors, artists and musicians a legally enforceable set of rights which constrain how the works they create may be exploited. Very few of these creators receive just a single lump sum in exchange for releasing these rights, and indeed the whole idea of the lifetime plus 70 years duration of these rights in predicated upon a steady stream of royalties making up the lion's share of a successful author or artist's income. Behind this relatively simple concept lies a truly labyrinthine web of organisations which are responsible for assessing, collecting, apportioning and generally administering these various fees, royalties and other disbursements. Of course many copyright holders are large or SME companies, who generally have gained their rights through section 11(2) CDPA which covers works made by individuals in the course of their employment. For various reasons, including the fact that these companies are, or should be, resourced to administer their rights in a businesslike manner, this article does not consider this group of rightholders further.

Be it tiny fractions of a penny for each Spotify download, or seemingly generous advance fees running to many thousands of pounds paid to best-selling authors, the money comes almost by magic, from a veritable alphabet soup of abbreviations, acronyms and occasionally organisations with real names. Among these are the CMOs or Collective Management Organisations, often referred to as Copyright Collecting Societies. Each creative discipline has its own CMO, or for instance like the music industry, several. These are generally not-for-profit limited companies. Added to these are many other intermediary bodies, such as publishers (literary and music), agents, management, record companies, and even government sponsored bodies such as the Public Lending Right Office (PLR is not technically a copyright issue, but it works in a very similar manner to a CMO) and of course the IPO itself falls under this heading because it collects fees in respect of orphan works. And if the UK ever embraces a private copying levy, that strand will also need to be added to the existing skein - although skein perhaps implies an order which is wholly absent from the vast range of intermediaries who service the copyright 'industry'. Organisations and companies in this second, non-CMO, group which are manifestly run for profit are termed independent management entities (IMEs) in the jargon, and this distinction becomes significant when we look later at some of the legislative initiatives in this area.

The whole system runs on trust. There are few true audits, and most importantly, the author or artist who lies at the far end of this chain of beneficence has virtually no means of verifying that the amounts he or she receives are the correct ones. Even in the world of highly detailed contracts such as in the music business, what the artist receives in royalties is virtually impossible to confirm independently, given the complexity of the supply chains, including the reciprocal links between various CMOs worldwide. This is one of the reasons for bodies which represent the interests of their particular creative groupings, such the Musicians Union, the Society of Authors, the Featured Artists Coalition, the Association of Photographers and many others. Like the more traditional labour unions, these bodies advocate on behalf of their members and attempt to get improvements in their income. But even they have to assume a certain amount of trust that the system is working both efficiently and honestly. And at a time when so many other institutions have proved unworthy of the trust placed in them, be it banks or sport governing bodies, pharmaceutical giants, motor manufacturers or high street supermarkets, it would be wise to be a little sceptical about all this when it comes to copyright revenues. Whether it's cockup or conspiracy, the opportunities for the money which rightly belongs to the creators to go astray are enormous. As are the sums involved. The International Confederation of Societies of Authors and Composers (CISAC) reported that for 2014, the total revenue collected by its members worldwide was €7.9 billion (£5.8 Billion), while the figure for the UK alone was €635M (£470M).

These figures underline the need for financial probity, especially where the recipients of these sums (after administrative expenses have been deducted) are by definition self-employed individuals (albeit possibly registered companies for tax efficiency purposes) who have neither the time nor the expertise to hold their paymasters to account. This is the fundamental reason for the EU Directive 2014/26 EU on collective rights management, which required member states, inter alia, to supervise the running of CMOs and introduce a code of practice to apply best practice and provide greater transparency for rightholders. The UK Statutory Instrument (SI 2014/898) which transposes the Directive into UK law is not yet fully in force. However the SI lays out the criteria for the CMOs to incorporate into their codes of practice, which if they are judged to be inadequate, can result in a more suitable code being imposed on the society concerned. And there are financial penalties for CMOs which fail to abide by their own or an imposed code.

So with all that in mind, what are we to make of a serious breakdown in the system which goes to the very heart of the trust which it relies on? This autumn a body which represents some photographers, EPUK, discovered that someone at the previously well-respected picture agency, Rex Features, had been forging the signatures of photographers on mandate forms in order to claim a share in the payouts from the Payback scheme run by the CMO Design and Artists Copyright Society (DACS). EPUK estimate that the Payback scheme would have paid around £400,000 to Rex during 2014, although how much of this was based on the fraudulent mandates is not known at this stage. Readers are invited to read both the EPUK press release, and the DACS release, in order to get more details on the matter. What is clear is that if the system can break down in this way once, what are the chances that something similar is going on elsewhere, as yet undetected? As far as is known, the fake mandates related to real people, who in fact got payments they weren't expecting (albeit after Rex appears to have taken out an unjustified administration fee), however exactly the same process could have been used to divert funds to bogus individuals. So how will the EU Directive and the UK implementation of it, prevent this kind of behaviour in the future? It remains to be seen, but what is significant about this allegation is that Rex is not a CMO, but an IME as explained in paragraph 2 above. Thus vast chunks of the EU Directive do not apply to them as an IME and under the SI as it stands, while IMEs appear to be included under the heading of 'relevant licensing body', the criteria for the codes of practice fail to include anything on the integrity of the staff, or on safeguards against outright fraud (I don't think "act in the best interests of its members" really covers it with sufficient vigour). This incident therefore should act as a wake up call that more is still required to bolster trust.

The good intentions of the EU Directive and the IPO's secondary legislation are laudable but until we can have genuine trust in the vast machinery which monetises copyright, all talk about reforming other parts of copyright is rather like building a house on sand.

Digitised out-of-print books and authors' rights: a new question for the CJEU

Case C-301/15 Soulier et Doke is on its way from France to Luxembourg for a ruling by the Court of Justice of the European Union (CJEU). The topic involves collecting societies and the right to authorise the reproduction and the representation in digital form of out-of-print books. The court asks:

Do the provisions ... of Directive 2001/29 [the InfoSoc Directive] preclude legislation… that gives approved collecting societies the right to authorise the reproduction and the representation in digital form of ‘out-of-print books’, while allowing the authors of those books, or their successors in title, to oppose or put an end to that practice, on the conditions that it lays down?

As usual, the UK Intellectual Property Office has to take a position on whether the government should be advised to enter the fray or not. Your opinion may therefore be helpful. If you would like to comment on this case, just email policy@ipo.gov.uk by no later than Friday 7 August 2015.

Collective Copyright Trolling?

Just over a week ago Australia elected a new Federal Government, and many people are watching closely to see how copyright policy will change under the new regime. It's a particularly sensitive time as the Australian Law Reform Commission is in the final stages of an inquiry into the adequacy and appropriateness of current exceptions and statutory licences, with its report due by late November.

Given this context, it's highly interesting that the Copyright Agency Ltd has gone on the front foot with an aggressive marketing campaign. CAL is "the peak Australian body for licensing the rights to copy and communicate published material", and apparently it would like to drum up some new business in the form of more licences - and more prosecutions.

These ads were published about a week ago in the broadsheet press, encouraging employees to anonymously dob in their bosses for copyright infringements:

Using the slogan, "it's easy to infringe - easier to be licenced" CAL notes that "most" workplaces are infringing copyright. There's no doubt that that's true. There's probably millions of infringements every year by businesses and employees who would likely be outraged to discover their activity is infringing.  Australian copyright law relies on a system of narrow purpose-based exceptions, and many surprising situations fall outside them. For example, operating a search engine from Australia would almost certainly involve wholesale infringement.  Consumers can copy music from a CD to their tablets - but not from DVDs. Mashups and remixes aren't permitted unless they happen to also fall within one of the purpose-based exceptions, such as the one permitting fair dealing for parody or satire. Libraries can make copies of a published work for the purposes of replacing a work…but only after that work has been lost or stolen. Australians had no right to time-shift television until 2006, and even now it doesn't extend to current-generation timeshifting technologies (as I've written about here). And it's OK for teachers to write a poem on a blackboard, but writing the same poem on an interactive whiteboard will incur a fee. (More examples can be found on the Australian Digital Alliance's Copywrong website. Disclosure: I'm a member of the ADA's board.)

In light of CAL's strongly-worded position in favour of new licences over new exceptions, it will be interesting to see whether drawing attention to the ease with which copyright can be infringed under the existing law was really the best strategy.

By the way, before you decide to dob in your employer, bear in mind that there's a few catches. Monetary rewards will only be offered if your tip leads to a successful prosecution or a new licence - and their amount and payment are solely at CAL's discretion.

UK Government launches public consultation on regulation of licensing bodies

Lovely friends, mouth-watering food and 
a 4-hour discussion on licensing bodies and 
UK Government consultation = THE perfect night

Are licensing bodies your favourite topic of conversation, even at social gatherings or dinner parties? Do you care about the way they operate and how this can be improved? 

Great: here's your chance to have your say!

You will remember that, back in 2011 the Hargreaves Review in the UK recommended that collecting societies "should be required by law to adopt codes of practice, approved by the IPO and the UK competition authorities, to ensure that they operate in a way that is consistent with the further development of efficient, open markets”. 

UK Government accepted this recommendation and, following a public consultation, in July 2012 it published a policy statement, in which it clarified its intention to bring forward legislation to regulate collecting societies.

The Government's policy intention was to strengthen confidence in the operation of collecting societies. To do this, it took a power in the recently adopted Enterprise and Regulatory Reform Act that requires collecting societies to self-regulate in the first instance. The power also allows the Government to make secondary legislation to correct and, where warranted, penalise failures in self-regulation. 

Today the the Government has launched a consultation on draft secondary legislation that will be known as The Copyright (Regulation of relevant licensing bodies) Regulations 2014 and will serve to remedy gaps in self-regulation by collecting societies. 

You have time until 7 October 2013 to submit "substantive comments" on the legal effectiveness of the Regulations (only these, as the policy itself is out of the scope of the consultation). Do let the IPO know what you think by filling out the relevant form.

Breaking news: CISAC, others, gain partial cancellation of Commission decision

The General Court (Sixth Chamber) of the European Union has just given its keenly-awaited judgment in Case T‑442/08 International Confederation of Societies of Authors and Composers (CISAC), supported by European Broadcasting Union (EBU) v European Commission. According to the Curia media release:

The General Court partially annuls the Commission decision finding anti-competitive conduct on the part of copyright collecting societies

The International Confederation of Societies of Authors and Composers (CISAC) is a non-profit non-governmental organisation which represents, in over a hundred countries, collecting societies managing copyright relating to, inter alia, musical works.

The collecting societies acquire the management of those rights either by direct transfer from the authors or by transmission from another collecting society managing the same categories of rights in another country. They grant exploitation licences to commercial users, such as broadcasting undertakings or organisers of live shows. The prices of those licences are the source of the royalties that the authors receive, after the management expenses of those collecting societies have been deducted.

In 1936, CISAC drew up a model contract for reciprocal representation agreements between its members. That contract serves as a non-binding model for reciprocal representation agreements concluded between its members for the purposes of conferring licences covering public performance rights of musical works. Each collecting society agrees, reciprocally, to confer the rights over its repertoire to all of the other collecting societies for the purposes of their exploitation in the respective territories of those collecting societies. Because of the network created by all of those reciprocal representation agreements, each collecting society can propose a worldwide portfolio of musical works to commercial users, but only for use in its own territory. In 2000, RTL lodged a complaint with the Commission against a member of CISAC concerning its refusal to grant it a Community-wide licence for its music broadcasting activities. In 2003, Music Choice Europe, which provides radio and television broadcasting services on the internet, lodged a second complaint against CISAC concerning its model contract.

By its decision of 16 July 20081, the Commission prohibited 24 European collecting societies from restricting competition, in particular by limiting their ability to offer their services to authors and commercial users outside their domestic territory. The Commission decision, which concerns solely the exploitation of copyright via the internet, satellite and cable retransmission, does not call into question the very existence of reciprocal representation agreements. It does, however, prohibit: - membership clauses: clauses in the model contract which restrict authors’ ability to affiliate freely to the collecting society of their choice;

- exclusivity clauses: clauses in the model contract which have the effect of providing all collecting societies, in the territory in which they are established, with absolute territorial protection vis-à-vis other collecting societies as regards the grant of licences to commercial users;

- a concerted practice which was found to exist between the collecting societies and by which each collecting society limits, in the reciprocal representation agreements, the right to grant licences relating to its repertoire in the territory of another collecting society party to the agreement.

The Commission did not impose fines on the collecting societies but did require that they remove the clauses in question from the model contract and bring an end to the concerted practice. Most of the collecting societies concerned and CISAC brought an action before the General Court of the European Union against the Commission’s decision.

By today’s judgments, the General Court annuls, for CISAC and for 20 of the collecting societies concerned, the Commission’s decision in respect of the finding of the concerted practice [nb At the end of the media release, but not reproduced here, is a list of the outcomes of all 22 actions consolidated in this action, together with a 'scorecard' indicating the outcome. In that respect, the General Court considers that the Commission has not provided sufficient evidence. The Commission, first, did not have documents proving the existence of concertation between the collecting societies as regards the territorial scope of the mandates which they grant each other and, secondly, did not render implausible the applicants’ explanation that the parallel conduct of the collecting societies at issue was not the result of concertation, but rather of the need to fight effectively against the unauthorised use of musical works.

The General Court rejected the applications in so far as they sought the annulment of the Commission decision in respect of the membership and exclusivity clauses.

As regards the Stim case, the General Court rejected all of the arguments put forward by that collecting society, which had not raised in sufficient time the issue of the lack of proof of the concerted practice.

PRS For Music Launches new Code of Conduct

PRS for Music, the not for profit organisation that represents 95,000 songwriters, composers and music publishers in the UK, has launched a revised Code of Conduct for its members and over 350,000 existing customers. 

The code follows the British Copyright Council Principles of Good Governance for Collective Management Organisations and also takes into account the recently published Intellectual Property Office Minimum Standards for UK Collecting Societies (October 2012). It outlines how PRS for Music will seek to achieve best practice by "responding to the needs of members and licensees alike and conduct its licensing business fairly and transparently". Detailed in the code are commitments to: 

- Provide information about the general governance, licensing and membership activities of PRS for Music 
- Set standards of conduct that members and licensees can expect from the society 
- Set standards for transparency
- Outline the complaints procedure for members and customers 
-  Provide an independent ombudsman for complaint resolution 

The PRS say that the introduction of the Code follows a consultation period with members, customers groups, trade associations and other stakeholders. 

The PRS for Music Code of Conduct can be viewed at http://www.prsformusic.com/codeofconduct

Google fights proposed charge on news snippets and headlines

News aggregation sites: newspapers can't live with them and can't live without them.

Is the newspaper a dying breed?

In June, the German government published draft legislation which would require news aggregation sites to pay royalties on the snippets and headlines that they publish. These royalties would be paid to a new collecting society which would distribute them to the publishers.

According to Information Week, a recent revision to the draft legislation has limited the scope of the copyright proposal. The first draft included a new "ancillary copyright" that would have required companies to pay licensing fees for any published work used in a commercial setting. This would have meant companies payinig a licensing fee for any published works (including online news) consumed in the work place. The most recent draft, which remains under discussion, seems to relate only to snippets and headlines on news aggregation websites. This blogger cannot however find a copy of the draft legislation so is unable to provide further details.

Unsurprisingly, Google is fighting back. Yesterday Kay Oberbeck, Google's Director of Communications and Public Affairs for Germany, commented on the proposed amendments on his blog. His post is in German, however according to Google Translate he is of the view that the bill is "A law to the detriment of all".

Oberbeck has also said:

"Nobody sees a real reason why this should be implemented. It's really harmful, not just for users who wouldn't find as much information as they find now, but such a law is also not justified for economic reasons or judicial reasons."

Further, Oberbeck points out that Google send readers to the publishers' site and that anyone who doesn’t want their content to be indexed by Google use a robots.txt file.

This may sound very familiar: English readers will know that a similar battle is currently being fought in the UK. The Newspaper Licensing Agency took Meltwater, a paid-for news aggregation site, to the High Court and the Court of Appeal to confirm that both paid-for news aggregation sites and their commercial users need to pay royalties for the headlines and snippets of articles consumed. The case proceeds to the Supreme Court on the very narrow issue of whether the copies of the articles viewed by users are temporary copies under s.28A CDPA 1988, however for the time being both news aggregators and users are required to pay licensing fees.

This has proved to be an unsurprisingly unpopular decision for news aggregators, however interestingly the Newspaper Licensing Agency is not charging free news aggregation sites, so Google remains unaffected in the UK.

Will the bill be passed in Germany? The German federal elections are just over a year away and opponents of the neighbouring right are expected to challenge successive sets of proposals. The fact that the two sides appear to take conflicting views on the bill means that anything could happen.

According to Kay Oberbeck "It is absurd that, of all people search engines should be addressees of the law. Such a law protects no one and hurts everyone - users, publishers, search engines, and the German economy."

Another question: collecting societies and payment thresholds

This blogger is just starting to get a few emails trickling in by way of response to yesterday's request for recommended reading material on copyright protection of algorithms -- and now there's already another request for information.

One of our readers wants to know about the thresholds beneath which copyright collecting societies, citing administrative costs or other reasons, do not make payments to rights holders. It seems that some collecting societies are quite open about their thresholds, while others are a bit coy. There doesn't seem to be a distribution threshold 'league table' and the value of such a table might in any event be dubious, given the different levels of activity, opportunities for economies of scale and local banking and administrative costs of distributing the collected income. Even so, any relevant information and comment is welcomed, particularly if it can be verified (eg links to collecting society web pages, posted as Comments below). Thanks!

Easy Music Licensing: or will it be ...?

Last week the 1709 Blog briefly mentioned the draft EU Directive on Music Licensing and Collecting Societies. Phil Sherrell (Bird & Bird LLP) has subsequently circulated some thoughts on the draft Directive, which he is happy for us to share with our readers. Phil's comments on enforcement and the proposal's likely consequences appear below, with this blogger's comments in red:

"Enforcement

A potentially significant development in respect of enforcement is the requirement that licensees (or potential licensees) be able to submit disputes with licensing bodies to a court. Such disputes are currently referred to a variety of bodies across different member states, some of which are unlikely to satisfy this requirement. The Directive and its recitals are currently silent as to what will constitute a court for these purposes, but in many member states this is likely to lead to a greater ability on the part of licensees to challenge the terms of licences offered by collecting societies [the UK's Copyright Tribunal has done a great deal to improve its performance in the past few years but it's still handicapped by the need to adjudicate on matters that require economic and financial as well as legal competence. Once the regime for the resolution of licence disputes becomes part of harmonised EU law, one imagines that a significant number of difficult disputes will be kicked into the long grass of Court of Justice references].

Member States will also have to provide an additional alternative dispute resolution procedure for disputes between collecting societies and their users, members and other collecting societies regarding multi-territorial licences of online rights in musical works.

Consequences of the Directive

Some musical rights collecting societies have already taken significant steps towards facilitating pan-European licensing of online rights. If passed, the Directive should reinforce this trend, leading to greater availability of collective licences which meet the needs of pan-European music service providers. The larger societies are likely to take on greater responsibility for cross-border licensing, creating a more streamlined licensing market.

It remains very unlikely, however, that any society will be in a position in the future to offer a pan-European licence for the repertoire of all or even most of the EU collecting societies. The proposal expressly rules out the enforced creation of a one-stop shop of this kind on competition grounds [it's difficult to imagine that many collecting societies -- even small ones -- will be in a hurry to vote or negotiate themselves out of existence, especially those that provide the only effective voice for articulating their members' anxieties and making themselves heard at national level].

A side-effect of the increased regulation of all collecting societies is likely to be an increase in disputes between members and users of smaller collecting societies, many of whose procedures are likely to fall short of those required by the Directive [this should only be a short-term side-effect, as the publication of the results of the resolution of the first round of disputes is likely to give firm pointers as to what procedures, and what level of performance within them, is likely to be regarded as satisfactory or otherwise]".

For more information please contact: phil.sherrell@twobirds.om Patrick Charnley

"Easier music licensing": today's proposals

Here it is, hot off the press, thanks to the vigilant Magali Delhaye who spotted it first -- it's the media release on the new Commission proposal (mentioned earlier today here) for what it calls "easier music licensing" (though others on all sides of the topic may have different names for it).  Lacking time to read it it and comment, I'm posting it as it stands. It's a certainty that readers will have their say.

Copyright: Commission proposes easier music licensing in the Single Market

The European Commission has today proposed measures to modernise collecting societies and put in place incentives to promote their transparency and efficiency.

New digital technologies are opening up great opportunities for creators, consumers and businesses alike. Increased demand for online access to cultural content (e.g. music, films, books) does not recognise borders or national restrictions. Neither do the online services used to access them. This is where collecting societies come into play, in particular in the music sector, where they collectively manage the licensing of copyright-protected music tracks for online use on behalf of composers and lyricists and collect and redistribute to them corresponding royalties.

However, some collecting societies struggle to adapt to the requirements of the management of rights for online use of musical works, in particular in a cross-border context. As a result of today’s proposal, those collecting societies willing to engage in the multi-territorial licensing of their repertoire would therefore have to comply with European standards. This would make it easier for service providers to obtain the necessary licences for music to be distributed online across the EU and to ensure that revenue is correctly collected and fairly distributed to composers and lyricists.

More generally, collecting societies operating in all sectors would have to comply with new European standards providing for improved governance and greater transparency in the conduct of their activities. The need for a change of certain practices was highlighted by recent cases where royalties collected on behalf of rightholders were lost due to poor investment policies, but also by evidence of long-delayed payments of royalties to rightholders.

Commissioner for Internal Market and Services Michel Barnier said: "We need a European digital Single Market that works for creators, consumers and service providers. More efficient collecting societies would make it easier for service providers to roll out new services available across borders – something that serves both European consumers and cultural diversity." He added "More generally, all collecting societies should ensure that creators are rewarded more quickly for their work and must operate with full transparency. This is paramount to sustaining investment in creativity and innovation which will in turn lead to additional growth and increased competitiveness."

Key elements of the proposed Directive

Today's proposal pursues two complementary objectives:

• To promote greater transparency and improved governance of collecting societies through strengthened reporting obligations and rightholders’ control over their activities, so as to create incentives for more innovative and better quality services.
• Building upon this – and more specifically – to encourage and facilitate multi-territorial and multi-repertoire licensing of authors' rights in musical works for online uses in the EU/EEA.

In practice:

• Rightholders would have a direct say in the management of their rights, be remunerated more quickly and their ability to choose the most efficient collecting society for their purposes would be enshrined in law. This would bring about better protection of rightholders' interests, as well as increased access to cultural content for consumers.
• The new rules would change the way in which collecting societies work across Europe, with new requirements such as improved management of repertoire, quicker payments to members, clarity in revenue streams from exploitation of rights, an annual transparency report and additional information provided directly to rightholders and business partners (such as other collecting societies). Member States would need to have mechanisms for solving disputes between collecting societies and rightholders. Improved standards and processes should result in better functioning collecting societies and more confidence surrounding their activities.
• The multi-territorial licensing of authors' rights for the use of music on the Internet across borders would be facilitated but also subjected to the demonstration of the technical capacity to perform this task efficiently. This would benefit authors, internet service providers and citizens alike.

Background

Collecting societies act as intermediaries between rightholders in the music industry but also in other art forms like books or films, and the service providers intending to use their works. They license rights, collect royalties, and redistribute revenue to the rightholders in circumstances where individually negotiating licences with individual creators would be impractical and entail high transaction costs. There are more than 250 collecting societies in the EU that manage revenues of around 6 billion euro annually. The use of rights in the music sector accounts for about 80% of the total revenue collected by collecting societies.

The collective management of rights is also important for the licensing of online music service providers (music download services, streaming services). This is particularly the case for the rights of those who compose the music or write the lyrics. Online service providers often want to cover a multitude of territories and a large catalogue of music. They also often want to test new business models. All this makes online licensing very demanding. Many collecting societies are not ready for these challenges and as a result, service providers face serious difficulties when trying to obtain the licences necessary to launch online music services across the EU. This results in fewer online music services available to consumers across the EU and a slower incorporation of innovative services.

The proposed Directive contributes to completing a Single Market for intellectual property and it is part of the 2011 Commission strategy on intellectual property:

http://ec.europa.eu/internal_market/top_layer/intellectual-property/index_en.htm

The Commission also identified this action in 2011 as an important contribution to growth in the European Single Market:

http://ec.europa.eu/internal_market/smact/index_en.htm

See also: MEMO/12/545

The Commission v The Collecting Societies: this week's hearing

This week's Curia agenda contained the following item on Monday:

Hearing: Joined cases

T-413/08  SOZA v Commission 

T-414/08  Autortiesību un komunicēšanās konsultāciju aģentūra v Latvijas Autoru apvienība / Commission

T-415/08  Irish Music Rights Organisation v Commission

T-416/08  Eesti Autorite Ühing v Commission 

T-417/08  Sociedade Portuguesa de Autores v Commission 

T-418/08 OSA v Commission 

T-419/08  LATGA-A v Commission 

T-420/08 Sazas v Commission 

Annulment of Commission Decision C(2008) 3435 final of 16 July 2008 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement (Case COMP/C2/38.698 – CISAC), concerning an agreement in connection with the conditions of management and licensing of public performance rights for musical works by collecting societies relating to the use, in reciprocal representation agreements, of the membership restrictions contained in the model contract of the International Confederation of Societies of Authors and Composers (‘the CISAC model contract’), or the de facto application of those membership restrictions 

Were any 1709 Blog readers there? Can they give us a blow-by-blow account of what was said at the hearing?

Is it time for a super society?

Some of the criticsms levelled at the music industry in the digital age have been those directed at outdated and ineffective licensing models - especially where internet start ups are looking at a global market, whereas as rights owners, often territorially limited collection societies, are mandated to licence within their national borders only. Early entrants in the music sphere spoke of the need to negotiate with hundreds of different organisations each offering 'blanket' licences for just one country - to run a global music streaming service. It took Spotify two years to negotiate basic clearances - as the pirates made merry!


The problem has not escaped the European Commission  who are keen to promote (at least) pan-European licensing regimes: Digital Commissioner Neelie Kroes recently said Digitisation has fundamentally changed content industries, but licensing models simply have not kept up with this. National licensing can create a series of Berlin cultural walls. The price, both in pounds and frustration, is all too real, as creators are stifled and consumers are left empty-handed. It is time for this dysfunction to end. We need a simple, consumer-friendly legal framework for making digital content available across borders in the EU". 


Problems with digital licensing have also not escaped the attention of the UK government, currently advancing plans for the 'Digital Rights Exchange' proposed in the Hargreaves Report. But in my own opinion even a pan-European licensing regime is of little real use or relevance in the digital age. Surely a UK 'licence' for the digital age is becoming more and more redundant! 


To solve Neelie Kroes' concerns, surely just one European society for, say, music might well be an effective solution - at least for potential licensees - as a 'one stop shop': BUT, a sole player might not be so good for content owners such as songwriters (who can presently shop around the various music collection societies such as PRS, GEMA and SACEM), or for the board members, or the staff at individual existing societies - although at least some of the latter could and would (I imagine) be redeployed.  And I have some real concerns on behalf of the end users - customers. Actually, it will be the board members who offer the most resistance as they see their cosseted positions at certain societies threatened by  the threat of closure, merger or takeover; but the conundrum that remains is one of competition law.


In 2005 when this who area was looked at, The EC's three solutions were (a) to do nothing (b) allow the existing (then 24) societies to offer pan-European licences in competition with each other (prompting speculation that this will just encourage a 'race to the bottom' on licensing tariffs or (c) allow rights holders to choose one EU online rights manager. At the moment the EC is waiting for the Court of Justice to determine the way forward in the CISAC case: where it stands now is that there is an order in place prohibiting the 24 European collecting societies from restricting competition by limiting their ability to offer their services to authors and commercial users outside their domestic territory BUT the decision allowed collecting societies to maintain their current system of bi-lateral agreements and to keep their right to set levels of royalty payments due within their domestic territory. 


Why bother with all that - lets go for efficiency! Lets have just the one society! A super society! Digital start ups - especially offering content - want access to ALL content in their sector (whether its films, music, books, news content, whatever) and almost always want to be able to offer and sell that content Worldwide. Whilst  I am sure that the EU would need to consider consumers as a sole European collection society  would be a monopoly - and a monopoly based on the 'monopoly' of music copyrights (if you want Kylie's songs - you can only come to us)  surely one society is a potential solution? Just one collection society for recorded music and just one for songs in Europe - or even just one covering all music rights - at least the EC could potentially regulate this, possibly in the same way the Copyright Tribunal  reviews licensing schemes in the United Kingdom. But globally, now that is a bit more tricky  .....


Europe good - global better? Surely any solution has got be be global? If we have leant nothing else in the last 10 years, we have learnt that this is a 'must have' generation of consumers - if they can't get content legally - they will get it illegally. 


The Universal Music Group's proposed acquisition of EMI's recorded music division from Citigroup has again focussed thoughts on global licensing, with some supporters of the merger pointing to the fact that with a near 50% combined market share, a combined Universal-EMI could be an effective one stop shop on its own for licensing recorded music content, There is the counter argument of course - a combined UMG-EMI (or indeed in the publishing world a combined SonyATV-EMI music publishing)  could equally block any new entrant if they so wanted which must surely be an issue worrying competition regulators. 


One problem is that the music industry's record on anti-competitive (antitrust) behaviour is not wonderful,  not least because of that nagging antitrust case called Starr v Sony  which I am sure the labels would like everyone (including the US courts to forget) about; it's all about the major labels madcap digital start-ups all those years ago called PressPlay and MusicNet. On top of that there is the rather public 2002 settlement by the majors and three of the biggest high street retailers in the USA for price fixing of CDs - and two separate 2005 and 2007 settlements for payola. That said, the recorded music industry is a significantly different business than it was ten years ago – and whatever your views are on digital piracy – it cannot be ignored – and nor can the rise of new independent distribution systems such as Apple’s iTunes, and streaming services such as Spotify.  But whether that justifies the creation of a dominant player with a possible 50% market share is debatable. But at least the concentration of rights into one 'manager' makes licensing easier - and payment possible - doesn't it ..... ?

But that got me thinking, and as I am very uneasy about having just two 'super-majors' in the music industry, surely to prevent further consolidation in the recorded music sector and yet allow for effective licensing, it would be better for Sony, EMI, Warners and UMG along with the independent record sector (represented perhaps by Merlin) to form their own 'super society' to collectively licence ALL recorded music on a global basis. Then potential licensees could have their much wanted 'one stop shop' - and consumers would have legal access to to the World's music. Perfect eh?


Except it would be a super monopoly ....... so I am back to the problem the EC faces trying to balance the need to have effective licensing and the need to have a competitive market place (and we know post MPS v Murphy competition law trumps copyright!). But at least within Europe there is at least the potential for a mechanism to regulate such a monopoly - even if it were a European wide Digital Rights Exchange. But with a global super society .......  who would be the 'World Police'?


Anyway, thoughtful comments would be MOST WELCOME ......



The CISAC case: COMP/C2/38.698 CISAC and CISAC v. Commission; Case T442/08


Starr v. Sony BMG Music Entertainment, 592 F. 3d 314 - Court of Appeals, 2nd Circuit 2010


Karen Murphy v Media Production Services / Football Association Premier League Ltd v QC Leisure and others  joined cases C-403/08 and 429/08

YouTube needs a Monitor

YouTube today lost a dispute before the Regional Court of Hamburg (LG Hamburg) against German collecting society GEMA (court press release here, and some media reports here, here, here). YouTube was held liable under the principle of 'Störerhaftung' ('disturbance liability' - secondary liability for contributing to someone else's breach of a third party's rights) and was issued with a permanent injunction to take down a number of songs in which GEMA administers the making available rights, and to ensure that the songs in question do not reappear on the platform in the future. 

At the preliminary stage of the proceedings in 2010, the court had refused to issue an injunction. The only reason for that was lack of urgency, though, so today's judgment is hardly surprising. What is interesting, however, is the rhetoric surrounding the case. Apparently, GEMA, YouTube and the Bundesverband Musikindustrie (Federal Association of the Music Industry) all expected great things from the judges.  According to an article in the FAZ (here), they were all hoping for clarification of the complex legal area of copyright, collecting societies and the Internet. What the court did do was point out that, upon being informed of a particular infringement, YouTube not only had to take down the file in question, but also use its Content-ID program and a word filter to monitor possible future reappearances of the respective song and take them down as well. Simply telling the copyright owners to do their own monitoring for repeat infringements did not suffice to avert liability.

To my mind, the judgment is fair enough, but Internet forum reactions to the judgment of course display the usual mix of cries over going back to the digital stone age, Internet censorship, content mafia, etc. Personally, while I admit to feeling a bit miffed when I want to watch a video on YouTube and cannot because 'this content is not available in your country', I have never had the impression that the ready availability of pop songs on YouTube is a precondition for the pursuit of happiness in general and freedom of speech and information in particular - but maybe I'm just weird that way...

In any case, it will be interesting to see whether YouTube and GEMA will resume negotiations now and finally come to a sensible agreement, with or without the help of the Arbitration Board under the Copyright Administration Act (see here), or continue their dispute through the instances for the next two to five years - after which they will probably need to go to the Arbitration Board anyway, which will then decide what a reasonable payment scheme would be. Intriguingly, GEMA does have per-click payment schemes agreed with streaming services Simfy and Deezer (see FAZ article here), which makes the assertions by YouTube/Google representatives that GEMA's claims are ludicrously overpriced a bit less easy to believe.

PM Monti opens the Italian market for neighbouring rights

Prof Monti explaining the reforms
included in the Decreto Liberalizzazioni

Here's some news from the Italian side of the world of collecting societies. 

On 20 January the new Italian government led by Prof Mario Monti passed a reform (known as "Decreto Liberalizzazioni", which is available in full here) aimed at boosting the Bel Paese's suffering economy, in particular by promoting the value of competition (our English-speaking readers may access details here). 

"The Italian economy has been held back for decades. More competition means more openness, more space for young people, less space for privileges and rent-seeking, more space for merit" said the Prime Minister.

Since his appointment in November 2011, Prof Monti has indeed made no secret of the fact that liberalisation of services is to be pursued wherever possible (you can read his interview with The Economist here).

Sectors involved in the liberalizzazione are - inter alia - taxis, pharmacies, local public transport, petrol stations, lawyers, MDs, dentists and ... the Italian collecting society SIAE (Società Italiana degli Autori ed Editori).

According to Article 39(2) of the Decreto Liberalizzazioni (the translation is mine),

Candidates for intermediary
positions are ready for interviews

"To favour the creation of new undertakings aimed at protecting the rights of artists, performers and executors, by enhancing competitive pluralism and allowing for a more economic-oriented management, as well as by favouring the actual involvement and control by rights owners, administration and intermediation activities relating to neighbouring rights, pursuant to the Italian Copyright Act - no matter how these are carried out - are free."

As some of our readers may remember, Article 180 of the Italian Copyright Act provided for intermediation activities in the field of neighbouring rights be carried out exclusively by SIAE.

It will be interesting to see, also in light of the recent ruling of the CJEU in Murphy (discussed in this Blog here and here and by the IPKat here), how things develop further, now that the Italian market for neighbouring rights seems open to competition by Italian and foreign intermediaries alike.

Less admin, more cash? Viscopy hands operations to CAL

The 1709 Blog has learned from its Australian friend John Walker that Viscopy (the Australian sister to the UK's Design and Artists Collection Society ) is effectively ceasing to operate as an organisation in its own right: its management functions are to be taken over by Copyright Agency Limited -- a body which was appointed by the Commonwealth Attorney General and the Copyright Tribunal to manage various statutory licences. According to a statement released by Viscopy:

"We are contacting you to let you know that Viscopy and Copyright Agency have entered into a services agreement whereby Copyright Agency will provide all services to Viscopy’s members and licensees. Viscopy will retain its board and its membership.

We anticipate the agreement will result in additional income to artists through reduction of administrative fees and expanded licensing services, and simplify the licensing processes for text and images.

The agreement is anticipated to take effect by mid 2012 subject to regulatory approval, and will be reviewed by both organisations in three years. ...."

Keep in Touch With the Dutch

Melchior the Magi

Torrent Freak reports a sad tale about Netherlands collecting society BUMA/Stemra which does little credit to either the society or a board member of that society - one Jochem Gerrits.

The tale involves a Dutch composer, Melchior Reitveldt, who wrote a work for an anti-piracy campaign being run by BREIN. The video was shown at a film fesival - so far, so worthy. But then our hero found the video turning up on other commercial DVDs including such slow sellers as Harry Potter! No money was paid to Melchior so he alerted his local collecting society BUMAS/Stemra - expecting their aid. Aid turned up all right in the shape of caped crusader, and BUMA/Stemra Board member Jochem Gerrits. The proposal was this.......can you see where this is going, oh jaded music industry types? Idealists, look away now.

Gerrits offered to help on condition of Melchior assigning the copyright to Gerrits and thus entitling Gerrits to 1/3 of the revenue. (How Gerrits found out about our hero's problem is a complete mystery!) Torrent Freak provides all those interested with a delicious link to a POWNews recorded conversation between Melchior's financial adviser and his would-be saviour.

Melchior Reitveldt is claiming Euros 1.3 million. Jocchem Gerrits is claiming he can help.

BUMA/Stenmra quote of the week: "1 euro in, 1 euro out. Like all associations, Buma is not about making profits. The same applies to Stemra. Our exclusive function is to represent the interests of music authors"

Make Mine a Brazilian

To add to Ben Challis’ report from Portcullis House, the event attendees were provided with a useful four page leaflet produced by Pictfor, co-the organisers of the event, for Consumer Focus . It led with the reminder that Recommendation 3 of Professor Hargreaves Report recommended that codes of practice for societies be introduced on the basis that the UK should be supporting moves in Europe for "a framework for cross border copyright licensing". Chris Johnstone from Music Choice, explained that the 2003 Music Choice complaint to Europe had been based upon a European licensing situation whereby potential digital users had to acquire licences for musical works from 4 j-v digital licensing bodies and 27 societies – and that is before one begins on the record labels. And British Copyright Council President, Maureen Duffy, reminded us that that the UK cannot possibly address this without reference to the plethora of international treaties and bodies (and anagrams) that operate in the sphere of IP regulation. Frances Lowe from PRS for Music, stressed that there was transparency of licensing tariff calculation – for users – and transparency of revenue calculations – for right owners. These are both commercially sensitive and need to be considered separately. These monopolies are managing a few strands of monopolistic rights and they have to serve both the user and the owner constituencies all the while balancing competition considerations against the demands of the single market.

So, for the benefit of those few collecting society junkies across the globe, who cannot get this subject entirely off their minds, Jeremy Silver’s answer to his own question deserves a wider airing. Silver reminded the gathering of the competition/single market balancing act and asked how we should proceed in the future – seeming to imply a rejection of new wine in old bottles as a solution. He endorsed the public need for public access to rights ownership – access which would make life simpler for would be licensees. This access to ownership data in the music publishing industry is being addressed by the Global Repertoire Database initiative. But, suggested Silver, the should be a detachment between the function of data gathering and management and the function of licensing, royalty collection and distribution. Those junkies should consider the model operating in Brazil. The CISAC website shows 11 collecting societies of varying stripes in Brazil. But the satellite system of membership bodies are circling a centralised data management system. I am sure there are readers of this blog who will be able to comment on issues such as transparency, competition for members, and probity (go, on, you know who you are), but Jeremy Silver’s wine bottle is out there, down in South America, just waiting for the Europeans to adopt for their terroir.