The European Commission has announced that it has opened an “in-depth investigation” into the planned joint venture between three of Europe’s biggest song-right collecting societies, Germany’s GEMA, Sweden’s STIM and the UK’s PRS For Music.
The three societies announced their alliance last June, expanding on an existing partnership between PRS and STIM built around the International Copyright Enterprise (ICE). The rights organisations, which each represent a large collective of songwriters and publishers, said in a statement: “The hub aims to create easier access for digital music services to clear music rights, and faster and more precise payments of royalties to rights holders. PRS for Music, STIM, and GEMA had planned to begin launching services from the hub in early 2015, subject to competition clearance. Notwithstanding this delay, the partners remain committed to bringing their new service offerings to the market as soon as possible, once the approval of the European Commission has been obtained.” Adding “The collective rights management organisations behind the venture are confident that their vision for a new licensing and processing hub will benefit the market and look forward to providing the European Commission with further analysis and market data” and “The hub is set to be the first multi-repertoire hub to provide integrated ‘back office’ data processing services and ‘front office’ digital multi-territory licensing services to authors, publishers, other collective rights management organisations and digital service providers (DSPs). The joint venture has been developed in order to reduce licensing and distribution challenges currently inherent in the digital market place.
The EC wants the music publishing sector to make cross-border licensing more simple, but it also wants the collecting societies of Europe to compete more, both for members and licensees but this EC objective may itself fall foul of the EC’s competition policies and the Commission said “[Our] preliminary investigation indicated that the combination of the music repertoires currently controlled by each of PRSfM, STIM and GEMA could result in higher prices and worsened commercial conditions for digital service providers in the European Economic Area. This could lead, ultimately, to higher prices and less choice for European consumers of digital music”.
The Commission also noted that while the major music publishers were now licensing the ‘mechanical’ element of the song copyright to streaming services directly, they then employed the services of a collecting society to manage royalty collection day-to-day. Commissioners fear that the PRS/STIM/GEMA alliance will also reduce competition in the market for this kind of rights administration.
CMU Daily reports that the EC now has until the end of May to investigate in more detail the proposed joint venture and to consider whether it is inline with European merger regulations. The Commission notes this week’s decision does not “prejudge the outcome of the investigation”, while PRS said that the instigation of the in-depth review was simply a “procedural step”. Though the move will seemingly delay the planned launch of the alliance, which the three participating societies had hoped could get underway early this year.
PRS CEO Robert Ashcroft said: “Given the complexity of the multi-territory digital market place and the scale and scope of the ground breaking solution that we are bringing to the table, it is understandable that our joint venture is subject to an in-depth assessment. We will continue to co-operate fully with the European Commission and look forward to a successful resolution of the process”and Harald Heker, CEO of GEMA stated: “This hub is a response to, and fully in line with, the objectives of the CRM Directive which encourages the aggregation of repertoires for pan-European licences in order to simplify the licensing process for DSPs. We’ve designed it from the ground up to bring benefits to both rightsholders, including authors, publishers and smaller collection societies, and DSPs.”