European Officials Eye Pan-European Passport For Collective Copyright LicencingPublished on 8 November 2010 @ 6:43 pm
By William New, Intellectual Property Watch
The European Commission is considering a proposal in the coming months to create a pan-European “passport” for collective music licensing intended to overcome stifling difficulties of 27 national collecting societies, a top official has told Intellectual Property Watch in the context of a meeting on copyright and competition.
Tilman Lüder, head of the European Commission Copyright Unit, said the EU is preparing to introduce a framework directive and is looking at options. He cited the idea of a passport in particular.
Lüder was at World Intellectual Property Organization to speak at the 4-5 November meeting entitled, Facilitating Access to Culture in the Digital Age – WIPO Global Meeting on Emerging Copyright Licensing Modalities. Tilman addressed the WIPO conference on own behalf.
He gave a comparative example of the ‘making available’ right [pdf], which, according to the international music industry group IFPI, is “an exclusive right for authors, performers and ‘phonogram producers’ to authorise or prohibit the dissemination of their works and other protected material through interactive networks such as the internet.” This exclusive right is “one of the most important achievements of the WIPO treaties and constitutes a basic requirement for the development of electronic commerce,” they said.
Lüder told the meeting that when the EU implemented the 1996 Copyright Treaty, especially the interactive making available right, which did not exist in any of the national laws, it “would have been a brilliant stroke of genius” to say at that time that it would be introduced on a pan-European basis, as a European making available title. It would have allowed the sale of the right, but not just from one European national market to another, so it would have reduced fragmentation, covering all Europe with one transaction. It would have created a European title for copyright as exists for trademark and is being worked on for some other areas. Instead, as a result of the fragmentation, “copyright is a bit the poor cousin of the industrial property,” he said.
Lüder said there is also an ongoing struggle on direct licensing across the region, with territorial collective licensing. The “nightmare” situation, he said, would be to replace 27 collective societies with a single society. The best way to re-aggregate content is to create a single monopoly licensing entity. But most people think a monopoly would be a bad idea, as it would lead to many tariff negotiations, and it would react slowly to requests. The other worst case situation would be to only have direct licensing deals, individual collecting societies, with total fragmentation.
“That is why my commissioner has proposed a framework directive,” he said.
In an interview, Lüder said stakeholder consultations showed that internet music services have found it hard to negotiate with collecting societies to get an early rate agreement. “The Commission takes these concerns very seriously,” he said, adding that most of the pan-European services are operated by American companies.
This led the Commission to work on the framework directive. Lüder told Intellectual Property Watch that a legislative framework would make it possible to licence across territories. “At the moment we have 27 national laws, some of them stipulating you need a licence in that territory with a local monopoly,” he said. There have been cases where a pan-European approach was tried but it conflicted with national laws and so could not go through. Cross-border licensing should be legal in all territories, he said.
The Commission is conducting a regulatory impact assessment, assessing different options. Lüder specifically cited one option to create a “passport” to recognise a licence granted in one EU country across all 27 countries. There would be a need for information technology infrastructure and the ability to monitor usage, as well as a set of minimum criteria, he said. But the idea is once having obtained the passport, it would not allow contrary national laws to stop you from operating. There is a model for this in the EU involving hedge funds, he said.
In the context of the EU Digital Agenda, the Commission is likely to propose the passport idea in the first half of 2011, he indicated. Also being addressed are orphan works and digital libraries. The passport is intended to help create more legally licensed music-sharing, and to create a dynamic of more local companies.
The passport could also help with enforcement, he said, as it could allow a kind of mutual recognition of decisions rather than fighting in each country’s court.
Lüder gave the idea a better chance of passage now than five years ago when collecting societies felt they could maintain their monopolies. It is now widely accepted, he said, that “no one’s going to win from continued fragmentation” of the Union.
Albert Pastore, senior legal counsel for music at Nokia, supported the passport idea, telling Intellectual Property Watch, “From Nokia’s perspective, we would like governments to create a framework that creates dynamism in the market and enables the licensing of new services. We should consider regional solutions for licensing such as pan-European licensing.” The new approach should encourage multiple licensors offering varied repertoires for the whole of the European market. “We have the view that the digital ecosystem should be viewed holistically,” he said, looking at issues such as licensing, cultural diversity, and piracy. Nokia operates in 190 countries and offers innovative music services such as Ovi.
Collecting Society Rebuttal
“The truth is we all have nightmares,” Pablo Hernández, deputy director general of the Sociedad de Autores y Editores (SGAE) in Madrid, told the WIPO meeting. Copyright has always been the nightmare for competition, he said, but [both] seek to build an innovative world where there is investment in new ideas, ideas that are used to obtain a social benefit, to create new music.
“Collective management solves the problem of who to ask the licence from,” Hernández said. Individually obtaining licences and enforcing respect for the work would make the cost much higher. There is also a cultural advantage, as the user can use repertoire easily, he said, and it also helps bring attention to lesser known artists. The blanket licence promotes new public through market niches, which also promotes cultural diversity, he added. If new music is just put on the internet, it would not be found as few people go past the third page of Google search results.
When the EU looked at national monopolies of collective management, this friction with territorial monopolies was not the main issue, he said. Electricity monopolies are national, he noted. Hernández called for a “general revision of collective management where we would look once again at the efficiency of this national, traditional monopoly.”
“I hope the framework … will go along the lines of deriving the greatest benefits of collective management and will take up the major challenges such as those in the European market,” he said.
Flavio Arosemena Burbano, director of the Ecuador National Directorate of Copyrights and Related Rights, said there is now an expectation of immediate access, and that much of piracy stems from a lack of access. Many people would pay a reasonable rate if they had reasonable access. Collecting societies help with this access and help with licensing, he said. Collective licensing organisations also help with finding copyright owners. He suggested the use of a model in Chile with one collective management organisation, a monopolistic situation, with rates are set for the organisation and subject to an arbitral tribunal to avoid possible violations of competition law.
Economics of Copyright and Competition
Separately, Sacha Wunsch-Vincent, WIPO senior economic officer, discussed the tension between copyright and competition from an economic perspective. Copyright can provide full distribution and price control to an owner, leading to market segmentation, potentially resulting in higher prices and other non-price concessions from the consumer or licensee.
In the online context, rightholders can still pursue market segmentation and price control, most often by digital rights management or IP-address identification. But a shift in market power has occurred through the rise of digital content value chains and content tied to particular devices or online platforms. He asked where the bargaining power is between the content rights holders, internet intermediaries (such as social networks or video-sharing sites), and infrastructure providers (‘the pipe’), especially in the context of ever-greater possibilities for unauthorised downloading.
He also voiced concern about the high transaction costs to secure content rights, the lock-in to some offerings in the face of lacking interoperability, the inability to compete across borders due to the territoriality issues, all translating into high entry barriers in the downstream market, hindering competition.
Wunsch-Vincent gave a breakout of the share of revenues which different content industries generate online, with online games generating 34 percent of total revenues, followed by: music 27 percent; advertising 10 percent; film 6 percent; newspaper 4 percent; and consumer and educational book publishing 1 percent.
He highlighted the still-difficult experience of an internet user based in a very high per capita income country in accessing legitimate content services, as most popular online movie download services are only accessible in the United States. The promises of an efficient online market ‘with a long tail’ has not yet been fulfilled, he said, pointing to the risk of emerging ‘digital content enclaves’, where particular content is only available on certain devices or platforms.
Meanwhile, Helenara Braga Avancini of the Faculdade Cenecista de Osorio in Porto Alegre, Brazil, also gave an academic discussion of the relationship of competition and copyright. She highlighted the traditional notion of products with a utilitarian character, and said industrial property “always recognised the importance of an economic order” to limit excesses that might come with monopoly power. She said recently the temptation for copyright holders to abuse their rights is growing. But the limitation of copyright by competition law is exceptional and should only be applied when it is proved a copyright holder exceeded ownership rights.
The focus should not be on making copyright holders renounce their exclusive rights in favour of society, but rather that all stakeholders benefit from the author’s work, and that the author should be the first beneficiary, as well as users and rights holders.
William New may be reached at firstname.lastname@example.org.