Yesterday, the European Commission announced a new proposal to simplify the way companies pay licensing fees in the EU. The proposal mainly focuses on regulating collecting societies — the middlemen between licensors and artists. Under the new legislation the societies would be tightly controlled to ensure they aren't investing funds for personal gain, are making an effort to track down artists that are owed royalties, and are facilitating online music services to gain multi-territorial licenses for content. Collection societies will be forced to submit a yearly transparency report to the commission to ensure that they are adhering to the new guidelines.
While the EC says the proposal will enable "better protection of rightholders' interests," a group of artists have reacted angrily, claiming the legislation cares more about labels and music services than it does musicians. We spoke with Stefaan De Rynck, the European Commission's spokesperson for Internal Market and Services, to find out how the proposed legislation will affect users.
De Rynck explains that today, if an online music service such as Rdio wants to offer a track for streaming in any EU member state it needs to obtain licenses from three separate agencies: the track's author, producer, and performer. Collecting societies were established in each country to manage author's rights, while the producer would usually take care of both its and the performers' royalties on a multi-territory basis. The EC doesn't intend to rock the boat — this system will largely remain the same — instead, it plans to impose rules and strict criteria that collecting agencies must adhere to.
If the legislation is ratified by the European Parliament it will facilitate multi-territorial licensing of rights for online use as service providers would have to deal with "far less licensors" to strike content deals. While it will still be down to collecting societies to negotiate the terms of licensing, the society will have to comply with competition laws when settings fees. De Rynck pointed out that the commission won't intervene in business decisions — it has no influence over what will be licensed and how much service providers will charge for it.
"Collecting societies need to adapt to the digital world."
The EC says the proposed legislation is necessary because some collecting societies simply aren't doing a good enough job. The EC is concerned about societies' transparency, governance and handling of revenues collected on behalf of rights holders. Currently, collecting societies either refuse to license on a multi-territorial basis or do not do it in an accurate or fast enough manner. "Collecting societies need to adapt to the digital world and stop licensing on a single territory basis only," says De Rynck. Companies like Spotify, Rdio, and Deezer have relatively new business models, and they want to cover a multitude of territories with the same large catalogue of music. "This makes online licensing very demanding, and many collecting societies today are not ready for this." Apparently it's common for societies to invoice service providers incorrectly, doubly, and sometimes not at all. De Rynck hopes the legislation will fix these issues and kick the collecting societies into the 21st century.
Not everyone is pleased with the proposal, however. A number of artists, including Pink Floyd's Nick Mason and Radiohead's Ed O'Brien, have collectively written a letter to the commission in collaboration with the director of Younison, an artists lobby. They describe themselves as "deeply disappointed" by the commission's proposal, saying the EC has chosen "to defend the interests of a minority of managers and stakeholders."
"You stole our hopes. You have broken your promises."
"You stole our hopes. You have broken your promises and encourage the management of collecting societies to keep the fruits of our creativity." Much of the artists' anger is directed at a clause that allows collecting societies to keep "unidentified" royalties after five years. The letter claims the clause legitimizes "one of the most problematic forms of embezzlement adopted by some collecting societies in Europe."
De Rynck tells us that the legislation should be voted on by EU member states in the next 12 months. It's not set in stone and there is the potential that tweaks and changes to the proposal may be made to appease everyone involved.