11 Regulating collecting societies
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12669/12
+ ADDs 1-2
COM(12) 372
| 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 12 November 2013
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| Previous Committee Reports | HC 83-iii (2013-14), chapter 3 (21 May 2013); HC 86-xvi (2012-13), chapter 4 (24 October 2012)
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| Discussion in Council | February 2014
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| Committee's assessment | Legally important
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| Committee's decision | Cleared
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Background
11.1 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.
11.2 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.
11.3 Our previous Reports set out the proposal, and
the Government's approach to it, in greater detail. In our last
Report was asked the Government to update us towards the end of
the first-reading negotiations with the European Parliament.
Minister's letter of 12 November 2013
11.4 The Parliamentary Under-Secretary of State for
Business, Innovation and Skills (Lord Younger) writes to say that,
although the Council and European Parliament negotiators have
informally approved the proposals in a final draft Presidency
text, this still needs to be adopted formally by Parliament and
EU Ministers. Ambassadors voted on the text at Coreper on 13
November and the European Parliament's Legal Affairs Committee
(JURI) on 26 November. The JURI committee has already made a public
statement indicating that the final draft text is likely to be
acceptable. The dossier therefore appears to be on course to meet
the indicative timetable for adoption by the plenary of the European
Parliament on 3 February 2014. Although the timing has yet to
be agreed, the Minister anticipates that the Council will vote
shortly afterwards.
11.5 Overall the Minister believes the final dossier
will be a good outcome for the UK as it should rectify concerns
about continental collecting societies, which may not have been
paying British creators their fair share of licensing revenues,
whilst requiring minimal additional regulation in the UK over
the self-regulatory regime currently being put in place by the
Government.
GENERAL PROVISIONS
11.6 The scope of the Directive has been widened
in part to capture those entities that behave like and carry out
the functions of a collective management organisation (CMO). This
should create a more level playing field, help prevent distortions
in the market and provide contingency against a CMO trying to
change its legal form to escape regulation. This is likely to
work in UK rightsholders' interests as they seek to claim monies
from CMOs in other Member States, the Minister says.
REPRESENTATION OF RIGHTSHOLDERS
11.7 The revised text includes measures designed
to ensure that CMOs act in the best interests of the rightsholders
they represent and do not impose any unnecessary obligations on
them. For example, rightsholders should have the right to authorise
a CMO of their choice to manage their rights; and to withdraw
that authorisation either partially or completely, upon reasonable
notice.
DISTRIBUTION
11.8 Distribution is one of the most important issues
for the protection of creators' interests. The revised text contains
several measures designed to safeguard rightsholders, particularly
in relation to undistributed funds. These include:
· a requirement that CMOs distribute and
pay sums due no later than nine months after the end of the relevant
financial year — three months quicker than originally proposed;
· a new requirement that undistributed sums
be maintained in a separate account;
· strengthened transparency requirements,
including obligations on CMOs to publish comprehensive information
to rightsholders, their representatives and to the general public
about unidentified material. This will help reunite creators
with the rewards from licensing their work;
· a new requirement that CMOs formally declare
monies as 'non-distributable' amounts after three years;
· a provision whereby the General Assembly
of members may decide on the use of such funds, subject to a Member
State's laws on the statute of limitation claims; notwithstanding
a rightsholder's right to claim such funds retrospectively; and
· a new provision allowing Member States
to consider a number of options to limit or determine the use
of undistributable amounts: including use in a separate and independent
way to fund social, cultural and educational activities for the
benefit of rightsholders.
11.9 The provision for Member States to limit or
determine the uses of non-distributable amounts is an important
principle in relation to the protection of non-members' interests,
according to the Minister: for example when a CMO is authorised
to operate an extended collective licensing (ECL) scheme or where
money is inadvertently collected on behalf of a non-member rights
holder in the context of a collective licence. There are no grounds
for the CMO or its General Assembly to claim title or decide what
should happen with the undistributed amounts that belong to non-members.
In the UK, this would be a matter for the Crown after the expiry
of the statute of limitation period.
11.10 The Minister states that in the round these
provisions should make it easier to recoup monies from CMOs elsewhere
that distribute funds less frequently and to identity funds that
are due. Should there be concerns about the way in which a Member
State is handling undistributed funds, the Directive establishes
both an expert group (on which the UK will sit) and provision
for information exchanges between the relevant competent authorities.
This provides a route to curb any ongoing abuses.
RELATIONS WITH USERS
11.11 In line with UK objectives, the final draft
texts in Recital 18a and Article 15a that cover users' information
requirements now achieve a reasonable balance between a CMO's
need for timely, relevant information on rights usage on the one
part and the need to avoid imposing disproportionate burdens on
users, particularly small and medium sized enterprises. The information
must be limited to what is reasonable, necessary and at the user's
disposal and must take into account the specific situation of
small and medium sized enterprises.
MULTI-TERRITORIAL LICENSING
11.12 The JURI committee has welcomed the revised
proposals for multi-territorial licensing. The aim is to ensure
that service providers such as Spotify and Amazon are able to
obtain licenses from a small number of CMOs operating across EU
borders, instead of having to deal with separate organisations
potentially in each and every EU member state.
11.13 The UK has continuously sought for a technologically
neutral approach to the licensing of online music rights required
for radio and broadcasting programmes (Article 33), which is not
fully achieved in the final text. When transposing the Directive,
the UK will therefore need to consider carefully how best to align
the derogation with UK domestic policy priorities.
BETTER REGULATION PRIORITIES
11.14 Throughout the negotiations the UK has maintained
a strong line on its priority objective to reduce overall EU regulatory
burdens, for example in relation to user information requirements
(Article 15a) as outlined above.
11.15 A difficult balance had to be struck here on
the issue of exempting micro-entities from specific supervision
and transparency requirements. This was included in the original
proposals but not in the final compromise text.
11.16 In general the Government would support such
exemptions, but in this instance there are good reasons for not
doing so. The licensing activities of CMOs also create burdens
on business; CMO transactions in some sectors generate a disproportionate
number of complaints from UK small and micro businesses, with
associated costs to all parties involved. The issue of copyright
licensing thus featured very highly in the red tape challenge
launched by the Government in 2010, which sought to reduce the
regulatory burden on business.
11.17 On balance, therefore, the Minister states,
the possible advantages of a micro-business exemption to the handful
of the UK's 15 or so CMOs that are micro businesses are outweighed
by the benefits to UK small and micro licensees and by the benefits
to UK creators from ensuring small non-UK CMOs do not slip through
the regulatory net and underpay UK rights owners.
Conclusion
11.18 We thank the Minister for his helpful update.
Overall the Minister believes the final result will be a good
outcome for the UK: it should rectify concerns about continental
collecting societies, which may not have been paying British creators
their fair share of licensing revenues, whilst requiring minimal
additional regulation in the UK over the self-regulatory regime
currently being put in place by the Government.
11.19 We agree with his assessment of progress
made in the negotiations and now clear the document from scrutiny.
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