The European Commission has proposed measures to modernise collecting societies and put in place incentives to promote their transparency and efficiency.

Although noting that digital technologies open up opportunities for creators of works, the EC acknowledges that collecting societies struggle to adapt to the requirements of the management of rights for online use of musical works, in particular in a cross-border context.

The EC suggests that as a result of its proposal, those collecting societies willing to engage in the multi-territorial licensing of their repertoire would therefore have to comply with European standards. This would make it easier for service providers to obtain the necessary licences for music to be distributed online across the EU and to ensure that revenue is correctly collected and fairly distributed to composers and lyricists.

More generally, collecting societies operating in all sectors would have to comply with new European standards providing for improved governance and greater transparency in the conduct of their activities. The need for a change of certain practices was highlighted by recent cases where royalties collected on behalf of rightholders were lost due to poor investment policies, but also by evidence of long-delayed payments of royalties to rightholders.

Commissioner for Internal Market and Services Michel Barnier said: “We need a European digital Single Market that works for creators, consumers and service providers. More efficient collecting societies would make it easier for service providers to roll out new services available across borders – something that serves both European consumers and cultural diversity.” He added “More generally, all collecting societies should ensure that creators are rewarded more quickly for their work and must operate with full transparency. This is paramount to sustaining investment in creativity and innovation which will in turn lead to additional growth and increased competitiveness.”

The proposals would aim:
– To promote greater transparency and improved governance of collecting societies through strengthened reporting obligations and rightholders’ control over their activities, so as to create incentives for more innovative and better quality services.
– Building upon this – and more specifically – to encourage and facilitate multi-territorial and multi-repertoire licensing of authors’ rights in musical works for online uses in the EU/EEA.

In practice:
– Rightholders would have a direct say in the management of their rights, be remunerated more quickly and their ability to choose the most efficient collecting society for their purposes would be enshrined in law. This would bring about better protection of rightholders’ interests, as well as increased access to cultural content for consumers.
– The new rules would change the way in which collecting societies work across Europe, with new requirements such as improved management of repertoire, quicker payments to members, clarity in revenue streams from exploitation of rights, an annual transparency report and additional information provided directly to rightholders and business partners (such as other collecting societies). Member States would need to have mechanisms for solving disputes between collecting societies and rightholders. Improved standards and processes should result in better functioning collecting societies and more confidence surrounding their activities.
– The multi-territorial licensing of authors’ rights for the use of music on the Internet across borders would be facilitated but also subjected to the demonstration of the technical capacity to perform this task efficiently. This would benefit authors, internet service providers and citizens alike.

The proposed Directive contributes to completing a Single Market for intellectual property and it is part of the 2011 Commission strategy on intellectual property:

Writing in a Digital Agenda blog, EC Vice President Neelie Kroes noted that the European Parliament’s rejection of copyright protection measure ACTA, although hardly a surprise for those who had been following – was a reminder about the big debate currently going on, about how to balance intellectual property rights with Internet freedoms

“For me it’s about making it easier for artists to promote their work widely, and make a living from it: without constraining the immense innovation of the online world. And, for me, the current copyright system achieves all of those objectives poorly,” she declared.

“That’s why I’m convinced we need to reform copyright for the digital age. For me, merely making enforcement more and more heavy-handed is not the solution – especially if it results in draconian measures like cutting off Internet access. But a good start – and I hope a principle on which everybody could agree – is that we should make it easier to legally access the content you love,” she continued.

“Currently that’s harder than it should be. If you’re in Belgium, for example, licensing restrictions often prevent you legally buying MP3 downloads from other EU countries – even though you could buy the physical CD online and have it posted. Those restrictions to buying cross-border are not just a barrier to our single market: they’re also frustrating for citizens, they prevent artists getting proper reward and recognition, and they make it harder for new ideas like Spotify to spread across the EU,” she noted.

“Quite a lot of people within the content industry are also waking up to this need to change. And today the European Commission proposed a reform of licensing rules to help get over it,” she said.

“This doesn’t immediately solve the problem. For a start, our proposal needs to be agreed by the European Parliament and Council. Some previous attempts by us to modernise copyright rules – like our relatively modest proposal on orphan works – were significantly watered down by the legislator. This time I hope the Parliament and Council are more aware of the views citizens have expressed: that people love the openness of the Internet, and want easier access to more content. And I hope they realise that reforms to licensing within our single market are a good way to start, while also ensuring that artists benefit,” she stated.

“Even then, today’s legislation isn’t the end of the story. It only concerns music, and only concerns licensing: whereas the European Council called for a more general modernisation of copyright in last month’s Compact for Growth and Jobs,” she noted.

She noted that when the 2001 Copyright Directive was agreed, videosharing sites there was no YouTube or Dailymotion; online cultural heritage like Europeana; social networks such as Facebook; music and audiovisual services such as Shazam, iTunes, Spotify or Netflix; new concepts such as datamining or the cloud; new devices such as the e-Book and smartphone. “Those things barely existed in 2001. In that regard, we will be looking at the 2001 Copyright Directive by the end of this year and legislating to reform copyright levies next year,” she confirmed.

“But today’s proposal is a very positive start: and I hope the Parliament and Council can also support it and adopt it quickly: and send the right signal that we’re prepared for our copyright system to adapt to digital realities,” she concluded.

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