European Commission Seeks to Regulate Collection Societies

June 2004

Record Labels, Music Publishers

The European Commission has launched consultations with a view to regulate collection societies which manage the marketing of copyrighted products such as CDs and DVDs. Collection societies act as trustees for rights holders, but the way they function may vary considerably within the EU and is an obstacle for businesses, the Commission said. This view is supported by the European ICT industry association (EICTA) which says many collection societies are actually slowing down businesses that distribute content online because they have to negotiate with one or more collecting societies in each country to obtain the rights to use content in that territory. EICTA is advocating official recognition and large-scale adoption of Digital Rights Management (DRM) systems. DRMs are used to protect and secure payments of online material such as music. They are based on direct licensing agreements which means that collecting houses could end up being bypassed because the products’ copyright would be managed directly by software. But the Commission paper says that those technologies have not yet been developed to a satisfactory level. It states that “a necessary pre-condition for their development is their interoperability and acceptance by all stakeholders, including consumers”. The EICTA have said that interoperability of DRMs should be left to market forces to decide and that regulatory decisions were not welcome in this matter. The recording industry association IFPI also looks to DRMs as a great opportunity for developing safe online music distribution and feels DRM standards should emerge from the market alone, not regulation. Civil liberties’ groups have warned that DRMs could hamper competition if they are developed by inter-industry cartels seeking to monopolise the market. By calling for DRMs to become interoperable, the Commission is seeking to avoid just that.


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