Collection Society reform gathers pace

March 2014

Music publishing, recorded music


CISAC, the International Confederation of Authors and Composers Societies have announced some of the key findings from its Global Royalty Collections report, based on 2012 figures: Gross royalty collections achieved a new record high of € 7.8 billion, an increase of 2% over 2011. 58,8% of global collections were generated in Europe (€4.6 billion)  87% of collections were accounted for by the musical repertoire 75% of collections were from public performance royalties 4% of collections coming from digital (€ 301 million) There was a 5.1% decline in mechanical reproduction royalties. The report itself is “Sustaining Creativity: Growth in Creators’ Royalties as Markets Go Digital”.

MEPs have strongly backed a new bill that will allow music download sites to secure single music rights licences from collective management organisations that are valid across the EU, voting 640-18 in favour of adopting the Collective Rights Management Directive. Organisations managing authors’ works will be required to prove that they can process data from service providers showing when music is downloaded or streamed online, and that they can match this data to the music by their clients. MEPs say the law should stimulate the development of EU-wide online music services and that lower licensing costs will mean cheaper prices and greater access for consumers. Meanwhile, collective rights societies will be required to pay artists within nine months of the end of each financial year to ensure that artists’ performing rights are paid out faster. The EU recorded music market was worth around €4.1 billion in 2012, while the industry is also responsible for an estimated 6.7 million jobs. The European Commission, which proposed the law, says this should facilitate the rolling out of new online services and Single Market Commissioner Michel Barnier described the bill as “a cornerstone of the digital single market,” adding that it would “contribute to wider availability and better choice of offers of online music in Europe.” The new Directive, due to come into force in 2016, has now been approved by the European Council. As the Council recalled in its press release, this new directive pursues two complementary objectives: To increase transparency and efficiency in the functioning of copyright collective management organisations, and to facilitate the granting of cross-border licensing of authors’ rights in online music.


The main elements of the new rules have been summarised [and emphasised] by Commissioner Barnier as follows:

(1)  Clear description of rightholders’ rights; including their free choice of a collective management organisation and of the scope of authorisation (rights, categories of rights and types of works of their choice; territories of their choice);

(2)  Minimum requirements relating to a collective management organisation’s governance structure, eg the obligation on the collective management organisation to have a supervisory function to supervise management, provisions relating to voting rights of rightholders and their rights to give a proxy to a representative to exercise their right to vote at the general assembly;

(3)  Time limits regarding the payment made to rightholders by a collective management organisation [9 months], as well as rules regarding the use of the amounts which cannot be distributed;

(4)  Rules regarding the relation with users and criteria for setting up tariffs;

(5)  Transparency requirements towards rightholders, other collective management organisations, users and the public;

(6)  Establishment of criteria a collective management organisation has to fulfil to grant multi-territorial licenses for authors’ rights in musical works for online use;

(7)  Rules on representation agreements between collective management organisations for the purposes of multi-territorial licensing, in particular criteria for when a collective management organisation has an obligation to represent another organisation;

(8)   Provisions on dispute resolution, such as an alternative dispute resolution procedure for certain disputes relating to multi-territorial licensing.


In particular, it is believed that the latter will allow consumers to enjoy a much wider choice to download music or to listen to it in streaming mode, while also encouraging the development of new models of music access. The development of legal online music services across the EU will also contribute “to better fight against online infringements of copyright.”

Member states will have to incorporate the new provisions into domestic law 24 months after the entry into force of the Directive at the latest.  There are currently more than 250 collective management organizations in the E.U.

And in the UK Slowly, the Hargreaves Report implementation creeps forward, with the latest laws heading for the statute book.   On this occasion, it must be asked whether the new laws will actually change behaviour or help anyone or – well, mean anything really.
The IPO have very helpfully provided on their website a detailed explanation of what has happened, to which there is little to add other than a touch of commentary:

Today (6 February 2014) draft secondary legislation, to be known as The Copyright (Regulation of relevant licensing bodies) Regulations 2014 along with an Explanatory Memorandum and revised Impact Assessment have been laid in Parliament. These draft Regulations have been made using a power in the Enterprise and Regulatory Reform Act. They are intended to support a system of self regulation by collecting societies (the “relevant licensing bodies” in the regulations) by giving Government powers to close any gaps that may emerge in the self-regulatory framework. This should improve the efficiency of collective licensing and strengthen confidence in the operation of collecting societies, delivering benefits for members and users of collecting

The draft regulations have been updated to take account of feedback received from the technical review and further legal scrutiny. The main changes are:

– The ability to require a licensing body to modify only parts of a code of practice rather than having to compile a completely new code (Regulation 2).

– A new condition which gives the licensing body an opportunity to amend its code of practice within 49 days after being notified that it does not comply with the specified criteria. (Regulation 3).

– The time available to a collecting society to submit a compliant code after a direction has been issued by the Secretary of State has been extended to 49 days from 28 days (Regulation 4).

– Clarification of the total amount payable in default fines (Regulation 10).

– The addition of new appeal right which allows an appeal to be made against the imposition of a financial penalty as well as the amount (Regulation 12).

The draft Regulations will be subject to the ‘affirmative’ approval procedure. This means that they will only become law after they have been debated and approved by both Houses of Parliament. The exact timing of this process will depend on parliamentary workload, but we anticipate the Regulations will come into force on the 6th April 2014 (the common commencement date). 


And a member of U.S. Congress has introduced legislation this morning aimed at ensuring that the Copyright Royalty Board also consider fair market value when setting songwriter mechanical royalty rates for digital services. The legislation was introduced by Rep. Doug Collins (R-GA), a member of the House Committee on the Judiciary, carrying the name the Songwriter Equity Act. Its purpose is to update provisions in sections 114 and 115 of the Copyright Act to level the playing field for songwriter, composers and publishers to receive fair compensation for the use of their intellectual property – and move towards parity with payments for the use of sound recording. and and from Eleonora Rosati on the 1709 Copyright Blog

The update on Hargreaves from John Enser on the 1709 Copyright Blog and more from the USA

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