Fordham International Intellectual Property Conference, Copyright/Competition Panel: Music Distribution/Collecting Societies
— Not a verbatim transcription —
[Ceceilio Madero Villarejo]
In 2008, the commission adopted a directive that prohibited the collecting societies from restricting cross-border licensing. So it hindered the marketplace.
The commission issued first decision in Denmark case in 1971.
(1) The CISAC decision prohibits membership crosses both offline and online. The crosses have to be removed immediately; (2) Prohibits the perpetuation of local monopolies, the domestic territorialization. This also covers the online, cable, satellite markets.
Given 120 days to cease.
It doesn’t call into question the network of reciprocal agreements.
It doesn’t effect the small collecting societies’ ability to collect.
What do we expect to be the future? As a result of the removal of the membership clause, it is easier for an author to select which society will manage his public performance royalties. The uncontested removal of the clause allows collecting societies to license the catalogue in other society’s territory.
This improves prospects for commercial uses — to receive multi-territorial licenses. This makes it easier to bring new products to market. By opening up market to new competition between society, the decision makes an incentive for societies to improve efficiency.
There is still a window for implementation by the collecting societies. Not yet at the point of enforcing noncompliance.
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[Prof. Silke von Lewinski]
No big deal going on, no big idea coming out of the 2005 recommendation.
Final Report of the Inquiry Commission of the German Parliament “Culture in Germany” — inquiry established in 2005, report issued in 2007.
Consequences raises issue of fundamental difference between copyright system vs. authors rights system. The concept of CMOs … so it will make no more or less protection for popular works or less-popular works. So de facto protection for less popular works.
The recommendation: German parliament should defend the existing system of management.
We’ll see next year what comes out of the deliberations next year.
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Nokia has started some innovation in this area …
We need creativity and innovation.
“Comes With Music” is the model Nokia has launched in several countries. It delivers consumers music in a unique way. If you buy a device, you get a certain amount of free downloads on the phone and the PC. You don’t have to pay for downloads or individual albums — and it is completely legal.
How did it work? Signed up all the major labels as a consequence of this. Extensive licensing — can’t downplay that issue.
Nokia is creating benefits from the stakeholders. Have to make sure that the law encourages business investment and innovation in this space.
If a private copy levy model becomes a reality as a revenue source, then this sort of business model is at risk. Have to make the choice between the two.
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[Sebastien Evrard] Increasingly difficult for distributors of digital music.
In early days, clearing mechanical and performance rights were simple — ex. you go to SACEM in France, they give all the rights you needed. In the wake of the 2005 recommendation [on collective cross-border management of copyright and related rights for legitimate online music
services], it has been increasingly difficult: The major publishers have removed the rights from the agencies, and are administrating themselves.
Consequences. Need to enter into additional agreements to get music online.
This is likely to deter new entrants. contrary to the policy of promoting pan-european licenses.
Solutions? (1) Economic. Merge the collecting societies. Keep the biggest five. (2) Modify the regulatory framework; (3) Competition solution. force the major publishers to license their repetoires to the other agencies. So each one could be a one-stop shop. The application of Art. 82 would require a finding that they are dominant… Also, could have a partial inclusion of rights. Once user has acquired the rights from one country, it could use in the other countries.
(4) Industry solution. Sit down and make a new framework. This is what Commissioner Crue wants to happen.
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[Mihaly Ficsor] Discussing proposal that mandatory collective management is the solution to the internet problem:
Warning that there is a danger that the proponents of mandatory collective management will use tactics that will create big hurdles (a contrario?).
The idea that an owner of exclusive rights will be forced to license as a condition of the application of an exclusive right.
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[Francis Lowe] Compliance with CISAC.
Must look to the interest of members. This might mean not licensing everything on a multi-territory basis.
Extent of decision, what does it mean for compliance? It can’t dictate how to amend the business practice. Practical issue, but must look for the most efficient and transparent way to license the rights mandated by the members.
Of course PRS has the right to license direct.
There will be further complexity: 24×24 mosaic reviews. Some societies will have global, some with conditions. Only applies to EEA repetoire. Some have included worldwide.
Many societies allege disruptive effect on diversity.
The publishers have withdrawn their Anglo-american mechanical rights for societies who don’t comply.
Must take account of the market developments. can’t see it as flowing independently. We have to allow time for the transition.
What is at stake? Economic benefits to the aggregation of rights. Providing a 2-sided market; reducing costs. Unlike classic clearinghouses, the societies owe a duty to the market.
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[John Temple Lang]
Disagreement on what societies need to do to comply with CISAC decision.
Perception that decision only affects the CISAC model agreement, not the clauses in the bilateral reciprocal representation agreements. Accepted by Dutch court, being appealed.
Possible future procedural developments: May be a need to take action to enforce by commission. Unclear what action it would be.
Presumed Commission objectives: to ensure compliance. To ensure competition in multi-territory, multi-repetoire licenses for online use. To ensure users have a choice between one-stop shops. Prevent reprisals for competing aggressively.
Possible future substantive developments: Four possibilities. (1) Big Publishers may give different societies de facto exclusive rights. (2) Big publishers may give right to license to all societies that want it. (3) If societies do comply, they may set up a central agency to allocate licensing for online use. (4)societies that comply could agree to mandate each other reciprocally to grant multi-territory, multi-repetoire licenses for online distribution.