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IRIS 2005-10:5/5

European Commission

Recommendation on Management of Online Rights in Musical Works

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Margreet Groenenboom

Institute for Information Law (IViR), University of Amsterdam

In July 2005, the European Commission proposed in the staff working document "Study on a community initiative on the cross border collective management of copyright" (see IRIS 2005-8:8) three options to improve the cross-border licensing of music to online music stores: 1) do nothing; 2) suggest ways in which cross-border cooperation between national collecting societies in the 25 Member States can be improved; 3) give rights-holders the additional choice to authorise a collective rights manager for the online use of their musical works across the entire EU.

In the Study, the European Commission favoured option 3 for two main reasons: firstly, option 3 enables rightsholders to choose which collecting society they want to join; secondly, this option enables competition between collecting societies, and, as a result, would lead to the improvement of services offered by collecting societies.

In the Impact Assessment (October 2005), the European Commission collected the opinions of 85 stakeholders who submitted their opinions on the Study. The stakeholders agree that option 1 is not an feasible option. However, when considering options 2 and 3, not all stakeholders favour the same option. According to the Impact Assessment, Option 2 is favoured by major record companies, record producer societies, radio broadcasters, niche European cross-border television channels (e.g. MTV), online music providers and the European Consumers' Organisation (BEUC). The majority of collective rights managers favour modified versions of Option 2. Option 3 is favoured by the music publishers' community, the independent record labels and certain collective rights managers.

In the Recommendation, the European Commission recommends a reform package that enables the parallel deployment of the business models embedded in options 2 and 3. The Recommendation proposes to eliminate territorial restrictions and customer allocation provisions in existing reciprocal representation agreements. Furthermore, rights-holders who do not wish to make use of reciprocal agreements to manage their repertoire would be offered the additional option to tender their repertoire for EU-wide direct licensing. The Recommendation also introduces rules on governance, transparency, equitable distribution of royalties, non-discrimination of representation, dispute settlement and accountability of collective rights managers, whether they manage rights according to Option 2 or Option 3. Transparency could be achieved by introducing governance rules setting out the duties that collective rights managers owe to both rightsholders and users.

Recommendation of the European Commission on collective cross-border management of copyright and related rights for legitimate online music services, 30 September 2005 EN
Commission Staff Working Document - Annex to the Recommendation of the European Commission on collective cross-border management of copyright and related rights for legitimate online music services - Impact Assessment {C(2005)3764 final} SEC(2005) 1254 EN