3 Regulating collecting societies
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12669/12
COM(12) 372
+ ADDs 1-2
| Draft Directive on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market
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| Legal base | Article 50(2)(g), 53 and 62 TFEU; co-decision; QMV
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| Department | Business, Innovation and Skills
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| Basis of consideration | Minister's letter of 10 May 2013
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| Previous Committee Report | HC 86-xvi (2012-13), chapter 4 (24 October 2012)
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| To be discussed in Council | 30 May 2013
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| Committee's assessment | Legally important
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| Committee's decision | Not cleared; further information requested
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Background
3.1 The rights granted to a copyright owner (the rightsholder)
are exclusive. This means that the rightsholder alone has control
over certain uses of their works. Anyone wanting to use the works
concerned would need the rightsholder's permission to do so. This
can be obtained directly from the rightsholder; but more usually
it is in the form of a licence from a collecting society.
3.2 The objective of the Directive is to put
in place a legal framework for more efficient collective management
of copyright by collecting societies. It aims to do so by providing
rules for better governance and transparency and by facilitating
multi-territorial licensing of rights managed by them. It proposes
a core set of rules that apply to all collecting societies and
an additional set that applies to collecting societies involved
in multi-territorial licensing.
3.3 Our previous Report published in October
2012 sets out the proposal, and the Government's approach to it,
in greater detail.
Minister's letter
3.4 The Parliamentary Under-Secretary of State
for Business, Innovation and Skills (Lord Younger), writes with
an update on the negotiations, as we requested.
3.5 He explains that the relevant Council working
group has completed its initial line-by-line discussions of the
draft Directive and has started to consider the Irish Presidency's
compromise proposals, published on 5 April and attached to his
letter. Separately, the rapporteur for the European Parliament's
Legal Affairs Committee (JURI), published a draft report on the
dossier on 4 March 2013. There will be an exchange of views on
her draft report at the next JURI meeting on 29/30 May 2013. The
proposal will be presented as an information point at the Competitiveness
Council meeting on 30 May 2013, which Lord Green will attend.
The Commission will maintain a reserve on the compromise text
during first reading discussions. Timetabling has yet to be confirmed
but the European Parliament is pushing for swift negotiation and
agreement before the end of its current term, preferably by November.
GENERAL PROVISIONS (ARTICLES 1-3)
3.6 The proposed definition in Article 3(a) of
a 'collecting society'[38]
— based on the collective management of rights on behalf
of members and a body that is owned or controlled by its members
— has generated considerable debate. The definition, which
reflects the classic structure of a collective management organisation,
brings into scope most, but not all collecting societies.
3.7 There is growing support for modification
to the definition so that it captures the realities of the way
in which the market works. For example, some Member States have
indicated that many commercial organisations or agents carry out
similar activities in collective rights management in competition
with collecting societies. The Commission, the Presidency and
the European Parliament are looking at solutions that would keep
the level playing field intact. The UK welcomes this approach.
REPRESENTATION OF RIGHTSHOLDERS, MEMBERSHIP AND ORGANISATION
OF COLLECTIVE MANAGEMENT ORGANISATIONS (ARTICLES 4-9)
3.8 The Directive includes specific proposals
for rules governing the relationship between collecting societies
and rightsholders. These include measures designed to ensure that
rightsholders can authorise the collecting society of their choice
to manage rights and to withdraw such authorisation partially
or completely (Article 5). This is essentially a codification
of principles and jurisprudence developed by the Court of Justice
of the EU.
3.9 The proposals that collecting societies should
act in the best interests both of their rightholders and their
members, with fair and balanced representation of members in the
monitoring of the collecting society's activities and decision
making reflect the general principles required by the Government's
minimum standards for collecting societies. It anticipates the
more detailed proposals to be without prejudice to, and not interfere
with, existing legal forms.
MANAGEMENT OF RIGHTS REVENUE (ARTICLES 10-12)
3.10 The UK supports the principle of having
a framework for the collection and use of rights revenue and investments
pending distribution (Article 10), which takes into account the
interests of rightsholders.
3.11 The proposals around the distribution of
the amounts due to rightsholders (Article 12) merit further consideration.
Distribution is one of the most important issues for the protection
of rightsholders' interests. The suggestion that funds should
be distributed on at least an annual basis — or even more
frequently if the rapporteur's suggested six months is taken on
board — could be an improvement for EU rightsholders in
terms of recouping monies from collecting societies in the EU
that distribute funds less frequently.
3.12 The current proposal is that, after three
years, decisions about what happens to undistributed funds can
be made by the general assembly (broadly speaking the membership)
of the collecting society. This means that it might be possible
for the funds to be retained by the collecting society, possibly
for distribution to its members. This approach differs from the
UK's approach on undistributed funds in other policy areas where
the Government has steered away from the retention of funds by
the collecting society being the default option. Ideally there
would be a range of options about how to handle undistributed
funds, in accordance with national rules.
RELATIONS WITH USERS (ARTICLE 15)
3.13 The proposals for objective, clear and transparent
licensing criteria broadly align with the Government's minimum
standards for collecting societies. This requirement, in the
UK's case, is without prejudice to the collecting society's freedom
to propose differential tariffs to commercial users. Should there
be a dispute between commercial licensees and collecting societies
about the rates, it is open to the licensee to refer the case
to the Copyright Tribunal for adjudication.
3.14 The proposed amendment to extend the provision
of information obligations to users is interesting, the Minister
comments. This would make more robust provision for collecting
societies to receive the information that they need to comply
with the Directive. The UK is exploring in discussion whether
it would be possible to manage the flow of information between
rightsholders and collecting societies through contractual obligations
alone.
TITLE III — MULTI-TERRITORIAL LICENSING OF
ONLINE RIGHTS IN MUSICAL WORKS BY COLLECTING SOCIETIES
3.15 Title III of the Directive establishes the
conditions that an author's collecting society must respect when
providing multi-territorial licensing services for online rights
in musical works. These include requirements for the efficient
and transparent processing of data. There are also specific safeguards
to ensure that the repertoires of all societies can be licensed
across borders.
3.16 There is some concern on behalf of smaller
collecting societies and/or smaller Member States that the effect
of Title III could be to create a smaller number of licensing
hubs, which could incentivise the aggregation of rights and potentially
swallow up the smaller repertoires. The rapporteur has highlighted
the need to strike a balance between the different objectives
of the Directive, in particular that the obligation in Article
29 to represent another collective management organisation for
multi-territorial licensing should take into account the need
to maintain cultural diversity.
3.17 Insofar as the proposals should result in
improvements in databases, invoicing procedures and the like,
they should generate efficiencies which could help reduce barriers
to entry for business. Only those societies with systems and data
that are capable of processing licences quickly and efficiently
will be permitted to license these rights. These societies will
be obliged to represent other collecting societies' repertoires
if requested (if already offering or granting licenses of the
same type).
3.18 The proposed derogation for online music
rights required for radio and television and broadcasting programmes
(Article 33) is of interest insofar as the UK would welcome a
provision that is technology neutral in its effect. Given that
the line between broadcast and non-broadcast services has become
increasingly blurred — as highlighted in the Commission's
recent Green Paper on the online distribution of audio visual
works[39] — there
is some discussion about whether the proposed derogation fully
captures the actual and future scope of broadcast activities.
BETTER REGULATION PRIORITIES
3.19 A priority objective for the UK is to seek
to reduce overall EU regulatory burdens. The Commission's proposal
to exempt micro-entities from specific requirements in relation
to supervision (Article 8(3)) and transparency (Article 20(5))
is in line with its commitment (which is not unqualified) to include
exemptions for micros/lighter treatment for SMEs in existing and
new proposals. The European Parliament is united in its opinion
that exemptions are not appropriate in this case as the provisions
relate to the exercising of rights — a view reflected in
proposed amendments to remove both exemptions.
Conclusion
3.20 We thank the Minister for this update,
and take note of the progress made in negotiations and of areas
which remain to be resolved.
3.21 We ask that he write to us again towards
the conclusion of the first reading negotiations with a final
update, which we will consider before deciding whether to clear
the proposal. Our decision will be influenced by the burden imposed
by the proposal on SMEs and micro-entities.
3.22 Until then, the draft Directive remains
under scrutiny.
38 The term 'collecting society' is replaced by 'collective
management organisation' throughout the Presidency compromise
proposal text. Back
39
http://ec.europa.eu/internal_market/consultations/docs/2011/audiovisual/green_paper_COM2011_427_en.pdf Back
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