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ABSTRACT
This paper examines the implications for European music culture of the European Union’s (EU) Digital Single Market strategy. It focuses on the regulatory framework being created for the management of copyright policy, and in particular the role played by collective management organisations (CMOs or collecting societies). One of the many new opportunities created by digitalisation has been the music streaming services. These depend on consumers being able to access music wherever they are, but such a system runs counter to the management of rights on a national basis and through collecting organisations which act as monopolies within their own territories. The result has been ‘geo-blocking’. The EU has attempted to resolve this problem in a variety of ways, most recently in a Directive designed to reform the CMOs. In this paper, we document these various efforts, showing them to be motivated by a deep-seated and persisting belief in the capacity of ‘competition’ to resolve problems that, we argue, actually lie elsewhere – in copyright policy itself. The result is that the EU’s intervention fails to address its core concern and threatens the diversity of European music culture by rewarding those who are already commercially successful.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes on contributors
Simone Schroff is an associated researcher with the RCUK Centre for Copyright and New Business Models in the Creative Economy (CREATe) and a member of the Institute for Information Law, University of Amsterdam [email: [email protected]].
John Street is a member of CREATe, the Centre for Competition Policy and the School of Politics, Philosophy, Language and Communication Studies at the University of East Anglia [email: [email protected]].
Notes
1 A similar approach was taken to the evolution of U.S. and Canadian copyright law by Haggart (Citation2014).
2 A song as it sold contains three sets of rights. First, there are the musical composition and lyrics which are protected by copyright. The right is by default owned by the authors (creators) and commonly assigned to a music publisher when the song is commercially exploited. When the song is for example played in public or streamed, all three share the revenues collected by CMOs. In addition to copyrights in the music itself, the recording of the song as such is also protected but by a different right: the phonogram right. This right is owned by the producer, usually the music label. These rights are managed separately either directly by the label or via a separate CMO. It is important to note that the CMO Directive and this article do not affect the management of the phonogram rights as the market situation differs significantly from the licencing issues affecting music copyrights. For a more detailed explanation of how the two markets differ and the challenges they face, see Galuszka (Citation2015), pp. 260–265.
3 This ‘requirement’ can be either defined by statute but also by tradition. Even if a CMO is not legally required to provide social benefits to its members, it may be expected to do by its members.
4 Some limited areas such as the term of protection and neighbouring rights were subject to EU regulation, however the scope was too narrow to consider copyright an area of EU competence.
5 Kretschmer (Citation2005b) also summarises the relevant case law in this area.
6 A reciprocal agreement is concluded bilaterally between two CMOs. Its terms permit CMO A to license the repertoire of CMO B within the jurisdiction of CMO A and vice versa. In practice, CMO A has this kind of agreement with CMOs in nearly all other states. As a result, CMO A is in effect able to license the world-wide repertoire to users active in its own jurisdiction. See also Mazziotti (Citation2011), p. 763.
7 For a sceptical overview of these claims, see Marshall (Citation2015).
8 GEMA is the German CMO licensing the rights in a musical work and the lyrics.
9 Copyright laws often contain legal provisions protecting the creator against third parties. For example, civil law countries often restrict the contractual freedom of creators to assign their copyrights in an effort to protect them. However, even common law countries tend to interpret contracts narrowly. See for example: Robin Ray v Classic FM [1998] E.C.C. 488, at 489; Gribrook v MGN [2011] E.C.D.R. 4, at 104–105.
10 For a detailed discussion of how the interests of ‘right holders’ vary, see section ‘The limits of the competition solution’.
11 See section ‘The limits of the competition solution’.
12 CISAC is the global umbrella organisation for CMOs. It facilitates the cooperation between national CMOs, not least by providing them with a model contract that regulates the terms and conditions CMOs apply to their reciprocal agreements between each other.
13 For a detailed description of the underlying issues, see the later section on ‘The limits to competition as a policy tool’.
14 The danger of these pressures was raised early on; see for example Kretschmer (Citation2005b).
15 In general, member states had until 10 April 2016 to implement the CMO Directive, meaning that changes are likely to bring the governance of CMOs into line with EU requirements.
16 It is not clear how the competition between CMOs affects withdrawal periods at this point.
17 For a detailed account of how the administration cost is related to success, please see section ‘The limits of the competition solution’.
18 The cooperation between CMOs have been continuously scrutinised by the EU as breaches of competition, not least in the online domain. Most notably, the model contract that structured bilateral agreements was found contrary to competition by the Commission (CISAC case). Particularly relevant here are the clauses on membership restrictions (CMOs can only accept members from its own jurisdiction, leading to essentially national repertoires), national allocation (CMOs can only provide licenses for their own territory) and non-intervention clause (CMOs are only available in their own jurisdiction, defined at the national territory) (European Commission, Citation2008, pp. 126, 140–141, 207). On appeal, the CJEU permitted the national delineation of CMO activities (CISAC, Citation2013). Since then, the status quo has not been subject to major changes, explaining the need for the CMO Directive in the first place. As a result, it cannot be presumed that CMOs seek to compete with each other.
19 On the relevance of the administration cost as well as how it affects CMOs, see section ‘The limits of the competition issues’.
20 This percentage was calculated from the membership information published by GEMA in its Yearbook (Citation2013, p. 45).
21 Only GEMA and PRS publish the details Full membership of GEMA, for example, is subject to an income threshold (€30,000 in 5 years and a minimum per year (GEMA, Citation2013, pp. 168–169); Full membership of PRS requires an income of €27,627 over 3 years in 2013. In SACEM, full members, the income threshold is twice that of professional members (SACEM, Citation2012, p. 37).
22 A CMO has to be owned/controlled by its members and/or organised on a non-profit basis. The directive also allows for Independent Management Organisations which are for profit and/or neither owned or controlled by its members (European Union, Citation2014, article 3).
23 For example, a fall in the sale of CDs as a result of piracy/home taping is mainly a problem for popular musicians and does not affect every artist to the same extent (Litman, Citation1987).
24 This is most evident in that copyright does not protect ideas but only the expression of them. This idea–expression dichotomy ensures that information and knowledge which are essential to the creation of new works can spread freely while at the same time preventing free-riding on the author’s work.
25 The conflict between publishers and authors also naturally limits the function of CMOs to act like trade unions for its creative members.
26 For a detailed description of how popular works cross-subside less well-known ones, see especially Kretschmer, Klimis, & Wallis (Citation1999, p. 183); Handke and Towse (Citation2007, p. 10) and Mazziotti (Citation2011, pp. 791–793).
27 This issue is most visible in the ‘social deductions’ that CMOs have to fund their social policies. While these are already subject to debate domestically, applying social deduction to the repertoire of other CMOs is highly contentious. After all, these foreign artists cannot benefit from the social provisions. The issue has proven highly contentious over the years and the CISAC model contract, which underlies most reciprocal agreements, currently permits for 10% social purpose deductions.
28 The more services you provide, the more administration is required and therefore the higher your administration rate.