New Models Emerge For European Copyright Licensing System

By Dugie Standeford for Intellectual Property Watch
The European system for licensing copyrighted music is in “huge confusion” following the rejection by content users and smaller collecting societies of a proposed model contract for collective management of music on cable, satellite and the Internet, Thierry Desurmont, vice president of the board of France’s Societe des Auteurs, Compositeurs et Editeurs de Musique, said this week.

Desurmont spoke along with others at a 22 October Chatham House/International Institute of Communications conference on trends in global communications in London.

Collecting societies traditionally forged bilateral agreements with each other that gave users access to multiple repertoires for single-territory use, he said. That model was a perfect tool for exploiting music in a single territory, he said, but it forced users to apply for separate licences from the collecting society in every territory in which they intended to make use of the music.

Over the years, the scheme was extended to music used in the area covered by the footprint of a satellite network and, later, to worldwide performing and reproduction rights. The resulting licences allowed users to secure global rights to a worldwide repertoire, Desurmont said.

But complaints arose from broadcasters accustomed to shopping for licences from societies that provided the weakest protection to rights owners, Desurmont said. Collecting societies then modified their system to allow satellite companies to obtain licences only from the organisation located where the uplink took place, and Internet media companies from societies located where they were economically resident, he said.

That system worked well for some 20 years, until the European Commission’s Competition Directorate-General (DG) raised antitrust issues about the uplink and economic residence clauses, after which collecting societies resumed their original licensing practices.

In 2003, broadcasters RTL and Music Choice Europe complained that the territorial limits in collecting societies’ reciprocal licences were anti-competitive, said Desurmont. The Competition DG pressed for a system permitting societies to grant licences covering multiple territories and repertoires, he said.

In October 2005, the Internal Market DG recommended that rights owners and collecting societies be allowed to licence their own repertoires directly to users, bypassing the network of reciprocal representation agreements between societies – a stance directly opposed to the Commission’s competition division, Desurmont said.

The move sparked several consequences, he said. International music publishers are handling their Anglo-US repertoire outside the traditional collecting society system via CELAS, a company created to represent exclusively EMI Music Publishing’s repertoire for online and mobile exploitation in Europe.

A second consequence has been the growing fear of small and mid-sized collecting societies and repertoire owners that they will be marginalised if they are no longer allowed to licence the music of large content owners and collecting societies, Desurmont said. In addition, there is opposition from the European Parliament as well as from users, who want to continue to benefit from one-stop-shop access to worldwide licences, he said.

In an attempt to reconcile the conflicting Commission positions, the International Confederation of societies of Authors and Composers (CISAC) and various collecting Societies proposed to allow collecting societies to choose whether to transfer rights directly to their own repertoires or to enter into cross-licensing pacts with other societies for multiple repertoires.

Before final approval, the Competition DG market-tested the CISAC system, Desurmont said. The reaction from users and small and medium collecting societies has been “very, very bad,” he said – so bad, in fact, that the proposal probably will not win Commission approval.

If stakeholders cannot find a solution, one may emerge in the context of an upcoming initiative on online content from the Information Society and Media DG, Desurmont said.

Other Rights Models Emerging

The BBC believes the national structure of collecting societies does not adapt easily to the international use of content, said Rob Kirkham, senior rights negotiation manager, rights and business affairs. In April 2005, the BBC, British Film Institute, Channel 4 and Open University launched the Creative Archive Licence Group (CALG) to allow users to access, use and distribute their moving images, audio and stills.

Use is subject to several conditions, including that the content not be used for commercial, endorsement or derogatory purposes, that it be restricted to the UK, that the content owner receive attribution, and that any work derived from the material also be licensed under the CALG scheme, Kirkham said.

Other rights licensing models are being piloted, said Kirkham. One involves syndication contracts with operators such as video website YouTube for on-demand content clips of BBC promotional material and specially produced programs.

The BBC Archive Trial, now running with a closed group of subscribers, is digitising and creating access to around 1,000 hours of archived BBC audiovisual content. And BBC iPlayer, which offers online seven-day TV “catch-up,” simulcasts of TV shows and audio downloads, uses a “public service rights model” to allow broadcasters to acquire rights to content across all of the broadcaster’s services for a small fee, Kirkham said. Not all BBC output will initially be available due to rights issues, he said, and iPlayer is available only in the UK.

ISP Liability for Infringement

The panel was asked whether digital rights management (DRM) schemes and criminalising users is the right path.

The market will decide, said Kirkham. The BBC is required to make its iPlayer service available across all platforms, but it will deploy DRM because of commercial interests, its relationship with rights owners, and the fact that it is supported by Britons’ annual licence fees. However, content providers must remain alive to the possibility DRM-free content, such as music now offered on iTunes, could move to the audiovisual arena, Kirkham said..

Anyone who sues his own customers should expect to be unpopular, said panel chairman Steve Holmes, an information technology and communications lawyer at Baker & McKenzie. One debate likely to heat up over the next year in Europe is the extent to which copyright owners can hold Internet service providers (ISPs), rather than users, responsible for infringement, he said. Desurmont predicted that mandated filtering of unauthorised Internet content also will be a hot topic.

Dugie Standeford may be reached at info@ip-watch.ch.