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EU Commission proposes law to modernise online music licensing


The European Commission has proposed new legislation to facilitate the development of online music in the European Union.  The draft Directive would facilitate the ability of online music users, such as online radio stations and music streaming services, to broadcast music across a number of EU countries by obtaining multi-territorial licences from collecting societies.  In addition, the draft Directive would modernise the way in which collecting societies are governed in order to give rightholders a much greater say in their operation.

The use of music requires a copyright licence from the relevant rightholders (such as authors, performers and producers).  The management of these licences and collection of royalties are usually carried out by collecting societies which have been mandated by large numbers of rightholders to manage music licences on their behalf.

Collecting societies traditionally provide their services in only one Member State.  However, the licensing of music online across the European Union requires the clearing of the relevant copyrights across the twenty-seven EU Member States.  As a result, according to the draft Directive, “while the internet knows no borders, the online market for music services in the EU is still fragmented and a single market has still not been achieved”.  It is this problem which the draft Directive is seeking to address by facilitating territorial licensing in particular through the following proposals:

- Member States have to ensure that collecting societies have sufficient capacity to process multi-territorial licences if they are providing these services;

- Collecting societies have the right to outsource the services to provide multi-territorial licences;

- A collecting society which is unable to provide a multi-territorial licence (or outsource this service) has the right to request that another collecting society, which does provide multi-territorial licensing, to provide the service on its behalf – provided the representation is on a non-exclusive basis;

- Collecting societies should provide regular up-to-date information on the repertoire of musical works which it is entitled to licence on a multi-territorial basis;

- Rightholders should receive transparent accounts concerning the royalties and deductions made (in particular relating to social and educational functions of the collecting society).

In addition, the draft Directive proposes a number of changes to the governance of collecting societies in order to give rightholders a greater say over their management including:

- Rightholders should have the right to choose which collecting society manages their rights and to terminate this authorisation;

- Rightholders should be given the express right to consent over each of the different rights which the collecting society can manage on their behalf;

- Royalties should be paid in a timely fashion and no later than 12 months from the end of the financial year in which the royalty was collected;

- The annual general meeting should agree such matters as: the rules on the distribution of the royalties due to rightholders, deductions from royalties, and salaries of the collecting society’s management;

- The activities of the collecting society should also be monitored by a supervisory body.

The draft Directive also proposes a new dispute resolution procedure to be put in place for rightholders and users.  The dispute resolution procedure should deal with disputes concerning such matters as rightholders’ royalties, tariffs, deductions from royalties, refusal to grant licences to users, licensing conditions, termination of licenses, and membership terms.  Disputes should be handled by an impartial dispute resolution body.

The draft legislation has been sent to the European Parliament and the EU Council which will now consider whether to enact the draft Directive into legislation.  The European Parliament has announced that Marielle Gallo MEP (centre-right political group) is its rapporteur.  She will be responsible for coordinating the position of the European Parliament to the draft Directive.

The Commission’s proposal is available here.

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