European competition regulators to look at music collection societies again

March 2006


In October 2005 The European Commission adopted a recommendation on the management of online rights in musical works. The recommendation puts forward measures for improving the EU-wide licensing of copyright for online services. Improvements were deemed necessary because new Internet-based services such as webcasting or on on-demand music downloads needed a license that covers their activities throughout the EU. The absence of EU wide copyright licenses were held to have been one factor that has made it difficult for new Internet-based music services to develop their full potential. Internal Market and Services Commissioner Charlie McCreevy said at the time : “Today we have made workable proposals on how licensing of musical work for the Internet can be improved. I want to foster a climate where EU-wide licenses are more readily available for legitimate online music service providers. These licenses will make it easier for new European-based online services to take off. I believe that this recommendation strikes the right balance between ease of licensing and maintaining the value of copyright protected works so that content is not available on the cheap. In the interests of better regulation, for the time being and as a first step, I am making a recommendation as to how the market should develop. I will be monitoring the situation closely and, if I am not satisfied that sufficient progress is being made, I will take tougher action”. And last month (see Law Updates Archive February 2006) we reported on the MCPS-PRS Alliance’s moves to spearhead their position as pan-European licensors, following the third suggestion from the EU’s pathways which were (1) Do nothing; (2) improve cooperation among collecting societies allowing each society in the EU to grant a EU-wide license covering the other societies’ repertoires; or (3) give right-holders the choice to appoint a collective rights manager for the online use of their musical works across the entire EU (“EU-wide direct licensing”). But it is clear that collection societies will have to work very hard indeed as the same European Union regulators have accused the same music royalty collection societies of breaking competition rules by restricting broadcasters from obtaining pan-European copyright licences.

The European Commission has also said national monopolies that manage copyright licenses are hurting competition through exclusive national contracts. The commission’s move follows a complaint by RTL Group SA, Europe’s biggest broadcaster and a unit of Germany’s Bertelsmann AG. The collection societies have now received a Statement of Objections from the EC and now have two months to respond. They can call for a hearing on the matters raised.

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