The European Commission yesterday published its
proposal for a Directive on (i) the collective
management of copyright and related rights and (ii)
multi-territorial licensing of rights in musical
works for online uses in the internal market. The
draft Directive follows the Commission’s 2011
Blueprint for Intellectual Property Rights in
which the Commission expressed an intention to
introduce measures to improve multi-territory
The aims of the Directive
The Commission has two main aims which it hopes to
achieve through the Directive. First, it intends to
improve the standard of the service provided to
members and users by collecting societies, through
increased efficiency, accuracy, transparency and
accountability. The second aim is to address
difficulties faced by those seeking licences to
musical repertoire for the territories of more than
one Member State. At present, a person seeking a
licence to provide, for example, a mobile music
service in more than one Member State would have to
contact a number of different licensing bodies.
The Commission considers that the existing
fragmentation of the EU market for these services
has resulted in authors’ musical works not being as
widely licensed or properly remunerated as they
Multi-territory music licensing
draft Directive sets out four main principles in
respect of multi-territory licensing. These
provisions only apply to the licensing of online
rights in musical works by collecting societies. The
four principles are:
Collecting societies will only
be permitted to grant multi-territorial licences for online rights in
musical works if they meet minimum conditions concerning their capacity to
process the data needed for the administration of such licences (draft
Article 22). This derives from concerns that certain societies are unable to
accept detailed digital sales data from online service providers, making
them harder to do business with and compromising accurate accounting to
right holders. The conditions include the collecting society being able to
identify accurately the repertoire that it is authorised to license, and the
rights and right holders in that repertoire in each of the Member States to
which the authorisation applies. Collecting societies granting
multi-territorial licences must also provide to members and users up-to-date
information, by electronic means, on the repertoire they represent and must
provide timely payments to members.
A collecting society may
outsource services relating to the multi-territorial licences it grants, so
long as it does not affect the liability of the society to its members,
users, and to other collecting societies (draft Article 27).
One collecting society may
mandate another to grant multi-territorial licences on a non-exclusive basis
and the mandated society must manage those rights on non-discriminatory
terms. The mandated society must comply with the requirements of the
Directive for multi-territory licensing (draft Article 29(1)).
Societies may team up to create
joint licensing entities to represent their repertoire for multi-territory
Crucially, if a collecting
society (or a joint licensing entity) is already offering to grant
multi-territorial licences for the musical works of one or more other collecting
societies, it cannot refuse a request from another collecting society to offer
such licences on its behalf (draft Article 29(2)). This unusual provision seems
designed to ensure that the repertoire of smaller societies (which perhaps will
not be able to afford to comply with the mandatory requirements for
multi-territory licensing) will not be excluded from the market as a result –
they can require societies which are already actively granting such licences to
do it for them. The requested collecting society may charge a management fee to
the requesting society but it must not exceed the costs reasonably incurred in
managing the repertoire and a reasonable profit margin.
Collecting societies are
incentivised to participate by the requirement that, if a society does not offer
multi-territorial licences in online rights either itself or through another
society by one year after transposition of the Directive, Member States have to
permit right holders to grant multi-territorial licences themselves or through
another collecting society.
The likely effect of these
provisions is market consolidation, as the larger collecting societies (some of
which are already offer multi-territory licences in respect of some repertoire),
take on more rights on behalf of the smaller societies which do not have such
Unlike the provisions
for multi-territorial licences, which apply only to the licensing of rights in
musical works for online uses, the governance provisions apply to all
collecting societies. This is significant, as it will likely require the vast
majority of the more than 250 European collecting societies to change their
systems and practices, in particular the smaller societies.
The provisions regarding
Right holders must be permitted
to authorise a collecting society (or societies) of their choice,
irrespective of the domicile of the collecting society or right holder.
A requirement to put in place
objective membership criteria.
An obligation to make timely
distribution payments to members.
transparency and reporting by electronic means.
significant development in respect of enforcement is the requirement that
licensees (or potential licensees) be able to submit disputes with licensing
bodies to a court. Such disputes are currently referred to a variety of bodies
across different member states, some of which are unlikely to satisfy this
requirement. The Directive and its recitals are currently silent as to what will
constitute a court for these purposes, but in many member states this is likely
to lead to a greater ability on the part of licensees to challenge the terms of
licences offered by collecting societies.
Member States will also have
to provide an additional alternative dispute resolution procedure for disputes
between collecting societies and their users, members and other collecting
societies regarding multi-territorial licences of online rights in musical
Consequences of the
rights collecting societies have already taken significant steps towards
facilitating pan-European licensing of online rights. If passed, the Directive
should reinforce this trend, leading to greater availability of collective
licences which meet the needs of pan-European music service providers. The
larger societies are likely to take on greater responsibility for cross-border
licensing, creating a more streamlined licensing market.
It remains very unlikely,
however, that any society will be in a position in the future to offer a
pan-European licence for the repertoire of all or even most of the EU collecting
societies. The proposal expressly rules out the enforced creation of a one-stop
shop of this kind on competition grounds.
A side-effect of the
increased regulation of all collecting societies is likely to be an increase in
disputes between members and users of smaller collecting societies, many of
whose procedures are likely to fall short of those required by the Directive.
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