Collective Licensing: Promises and Pitfalls

 

Looking at the current state of trans-border licensing of music inEurope, the European example can teach mainly what to avoid. Even more so, many of the issues discussed in the EU might even be totally irrelevant for Canada. Unlike Canada, the EU currently consists of 27 member states, and as of today, there is no unified EU copyright code.

As a starting point, it has to be stated, that since the beginning of the new millennium no workable mechanism has been achieved for the music sector to provide easy, centralised Pan-European access to the full scope of licenses needed for on-demand offers of music. Investigating this issue a bit closer, it becomes evident however, that the problems are limited almost entirely to the licensing of copyrights for works of musical authors, namely the rights of composers and lyricists. In contrast, the EU-wide licensing of the rights vested in producers of sound recordings and in performing artists functions relatively smoothly without any fundamental problems arising.

In the “Barcelona-Agreement” and “Santiago-Agreement” authors’ societies, organised in CISAC, chose a type of reciprocal representation agreement containing a restriction whereby only the society at which the user was located should be responsible (and qualified) for licensing. This restrictive policy lead to antitrust investigations with the Directorate General (DG) Competition at the EU Commission and an administrative ruling against CISAC and the member companies concerned. This matter (OJ C [2008] 323/08) is currently subject of a lawsuit before of the ECJ, effectively resulting in a breakdown of the system of reciprocal representation concerning online rights of musical authors.

Subsequently, encouraged by an official yet non-binding recommendation by the EU Commission (DG Markt) (2005/737/EG) which was intended to facilitate and speed up pan-European licensing of rights, most of the big music publishing companies have withdrawn the mechanical rights concerning the US repertoire from the network of European collecting societies, in order to administer these rights by themselves.

This fact has shown to have serious consequences – and not at all the ones intended by the EU Commission: While withdrawing US-repertoire from collective licensing, all other parts of the overall repertoire of music remained within the collecting societies. The same applied to the “making available” right. If an online service like iTunes is interested in licensing a sound recording of a US author, he not only requires a license of the record company but needs to establish licensing relations with collecting societies of musical authors, too, and, last but not least, with the respective music publishers insofar as their rights are not represented by those societies. In effect, not two, but three different types of contracts are required for using a single song in an online service (while not a single such contract was needed for a traditional retailer to re-sell CDs) – theoretically to be concluded on a country by country basis.

These problems are basically home made by the music publishing industry and should not be used as an argument against the viability of the EU Copyright System as it stands.

 

Dr. Jur. Martin Schaefer began his career as assistant to his mentor, Prof. Dr. Wilhelm Nordemann. From the beginning of the 1990s, Dr. Schaefer was employed by the German national group of the recording industry association, IFPI (Bundesverband der Phonographischen Wirtschaft und Deutsche Landesgruppe der IFPI). As inhouse counsel, and from 1998 as Managing Director, Dr. Schaefer was responsible for such areas as combating piracy, representing industry interests in the making of government copyright policy, and the development of future oriented industry projects. In 2001, he moved to BMG (Bertelsmann Music Group) as Vice President, Legal Counsel Europe. In this position, he was integrated into the European management team before leaving the company at the beginning of 2004 in order to apply his knowledge and experience as lawyer. He has specialized in copyright law with an emphasis on music industry matters, collective and individual administration of rights and electronic media law.

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