By Tom Frederikse, solicitor, Clintons
2008 brought huge changes to the UK music publishing industry. Following years of failed attempts to create a pan-European licensing regime, all four major publishers have now withdrawn their exclusive digital distribution rights from the MCPS (as well as from the other European collection societies), leaving the UK mechanical society with less than one-fourth of the key repertoire for all digital uses.
The UK publishing industry had established itself as a global leader early in this decade when the PRS and the MCPS joined forces to create “The Alliance” – cannily anticipating the now-settled pan-European legal position that internet distribution involves both a “mechanical right” (i.e. a copy) and a “performance right” (i.e. a communication to the public) in every transaction. The resulting “Joint Online Licence” was an innovation that allowed any online music service to operate in the UK under one agreement – whether it streamed music, offered downloads or provided subscription access. The “JOL” was copied by many other societies and – aside from various challenges to the headline royalty, such as the infamous UK Copyright Tribunal fight that confirmed the basic 8% rate – the publishing industry seemed settled into a regime under which an online music service needed just one licence for each Member State in which it operated.
In the midst of what was intended to be a further simplification through the creation of a “one stop shop” for a single pan-European licence, the existing system instead collapsed. EMI Music was the first publisher to go it alone by setting up a “joint venture” between itself, the Alliance and the German society, GEMA. Calling itself “CELAS”, this new body exclusively offered the digital rights of EMI Anglo-American repertoire on a pan-European basis. Many held out hope that the other major publishers might also join CELAS (or some similar body), thereby creating a true “one stop shop” (i.e., a pan-European licensing body for digital publishing rights). Unfortunately, this did not happen and. Moreover, the other major publishers have now also withdrawn their digital rights from the MCPS and each now operates its own pan-European licensing company (in tandem with a chosen collecting society) for its own (Anglo American and “non-BIEM”) repertoire. Sony ATV has joined forces with GEMA in Germany to form “PAECOL”, Universal has joined with SACEM in France in an as-yet-unnamed venture, and Warner Chappell has tried a slightly-different experiment with each of The Alliance, SACEM and Sweden’s STIM to offer its own non-BIEM repertoire on a non-exclusive pan-European basis through any of those three societies (called “PEDL” or “Pan European Digital Licensing”).
The position now, for anyone wishing to offer an online service of any kind involving music, is that it must obtain a licence from each of CELAS, PAECOL, Universal and PEDL for the majority of the main commercial works, as well as a licence from each of the national societies – as before, but now for only the rights in each society’s (non-major) members’ works.
Rather than creating a “one stop shop”, the result of these changes is something like a thirty-stop shop. An online company wishing to offer a music (or “music-related”) service, even if only in the UK, must now negotiate with and obtain separate licences from all of these licensors. To add further difficulty for UK companies (not to mention further costs) only two of these many licensing bodies use English law.
Worse still, due to the historically-separate nature of “performing” and “mechanical” rights societies, new digital services in most cases must now obtain separate licences for each of mechanical and performing rights. This complex new system has created a substantial “barrier to entry” for new online music providers which may prove (and in some cases has already proved) too expensive for all but the biggest players.
In light of these developments, the role of The Alliance is now leaning increasingly towards the licensing of performing rights – because the PRS (with its un-withdrawn “performing” rights) remains as it was before, albeit with the exception of the performing rights in the works of EMI (which CELAS offers). Whatever happens now, with the major publishers having already set up their digital shops in France and Germany, the resulting concern must be that the centre of any (still hoped-for) pan-European “one stop shop” may not be the UK.
This article contains general information about English (or other) law. It does not contain legal advice. This article can be found in full at www.clintons.co.uk.