Commission Smacks Down Music Rights Collectors

Michael Hedges July 17, 2008

The European Commission has snapped music rights collecting societies confiscatory hold over cross border broadcasting. But the music people vow “havoc” on broadcasters

The EC DG Competition decision (July 16) effectively prevents national music rights collecting societies from forcing pan-European broadcasters to pay rights fees in several countries. Internet, satellite and cable broadcasters can shop for the best music rights deal. Yes, it also means the Rolling Stones can shop for the best deal. Competition Commissioner Neelie Kroes does not approve of cartels.

Prohibited by the Competition Commission decision are reciprocal agreements among members of the International Confederation of Societies of Authors and Composers (CISAC). The 24 CISAC members have 120 days to ditch their cross-border deals. The decision ends the national collecting societies power to force artists into agreements based on nationality. Commissioner Kroes did not, yet, impose a fine.

“This decision will benefit cultural diversity by encouraging collecting societies to offer composers and lyricists a better deal in terms of collecting the money to which they are entitled. It will also facilitate the development of satellite, cable and Internet broadcasting, giving listeners more choice and giving authors more potential revenue,” said Commissioner Kroes’ statement.

Commissioner Kroes wants the collecting societies to compete to become more efficient and offer better quality service to the music industry and broadcasters. Collecting societies in Spain and Portugal have been investigated in their respective countries for financial improprieties. The collecting agents can continue beating up every hair salon and bar from Antwerp to Vienna for having the radio on.

The biggest beneficiary is likely to be online music retailers like Apple and, truly, the musicians, singers, composers and authors. Online music sales in Europe is a fraction of that in the US, largely because of the difficulty (read: cost) of obtaining music rights in each of the 27 countries. Apple’s iTunes, a major sales point for online music, has yet to rollout across Europe, largely because of rights fees. The Commission’s decision opens that market, certainly benefiting the music people.

Broadcaster RTL Group brought a complaint to the EC in 2000 charging that German music rights fee collector GEMA made obtaining pan-European rights impossible. Online retailer Music Choice Europe registered a similar complaint in 2003 against CISAC. DG Competition merged the complaints into a single investigation. In early 2006 CISAC and all national rights collecting agents received an official Statement of Objections from Commissioner Kroes office saying that “certain clauses in public performance contracts… contain anti-competitive elements.” CISAC proposed a compromise. A year ago (July 2007) the Commission received an open letter from nearly every major broadcaster and telecom urging the Commission to reject CISAC’s proposal. Further negotiations with CISAC failed.

CISAC then tried stomping their feet. They clearly knew anti-cartel law could and would be applied and they appealed to DG Info Society and Media Commissioner Viviane Reding, DG Education and Culture Jan Figel and DG Internal Markets Commissioner Charlie McCreevy. Other Commissioners, they felt, would be more “understanding.”

The European Composer and Songwriter Alliance (ECSA) went even further in demonstrating the hubris afflicting the music industry.  In a letter to Commission President José Manuel Barroso ECSC threatened to “bring war to the Commission.”  

After a meeting with Commissioners earlier this month (July 3) ECSA spokesperson David Ferguson told a press conference that the Commission should rethink its rapidly hardening position, "Otherwise we could decide to withdraw our catalogues. We can play havoc with radio stations."

Indeed, they can. And this, too, should be tested in court. In the small print of nearly every broadcasters music rights licensing agreement with its national collecting society their lies a clause allowing that collecting society to withdraw any music catalogue item from a radio stations’ play list. With yesterdays ruling this cannot happen to internet, satellite and cable broadcasters but the national collecting societies still maintain monopolies within their national boundaries.      

Related to the rights of artists, singers, authors and composers, the Commission adopted (July 16) changes in copyright terms for recorded performances from 50 to 95 years. “I am committed to concentrate all necessary efforts to ensure that performers have a decent income and that there will be a European-based music industry in the years to come,” said Internal Markets Commissioner McCreevy. This means, of course, that Mick and Keith will have income well into the 22nd century.