EC to investigate copyright cartel

Posted on 8 Feb 2006 at 10:53

The European Commission is set to take on what it believes is a music copyright cartel. It says that it will open formal proceedings against CISAC - the International Confederation of Societies of Authors and Composers (CISAC) and the national collecting societies over the way they collect royalties through new media.

The EC has particularly taken issue with monopolistic practices that force both music authors and licensees to work solely through the national collecting agencies. It considers that agreements between the collection agencies are contrary to the EC's ban of restrictive business practices.

It cites membership restrictions that force authors to transfer their rights only to their own national collecting society (whatever the subsequent exploitations of the rights), and the territorial restrictions that means that commercial users can get a licence only from the domestic collecting society and that licence is limited to a single country.

The effect of non-competition deals between the various local collecting agencies gives them a de facto monopoly in each territory in which they operate and makes it easier to lock out any competition. Also of concern is that the current set up is stunting the growth of digital delivery services via the Internet. When they come to Europe, organisations like iTunes find they have to make separate deals with each national royalty collection agency which has slowed the expansion of these businesses and added to costs.

The European Commission has already expressed the view that the current national method of collecting royalties is not only cumbersome but also anti-competitive and monopolistic. Last year the EC proposed a unified method of collecting and distributing royalties across Europe and praised the Belgian and Dutch bodies for striking a deal to cross-license music.

Meanwhile, CISAC is throwing its weight against the 'global licence' before the French National Assembly. In challenging the P2P licence envisaged by French lawmakers, CISAC says that it seeks to ensure 'that rights holders receive fair compensation for the use of their works on Internet, this system would grant Internet users the de facto right to download creative works for a small fee'.

Margot Daly, CEO of Music Choice, a co-complainant in the case, said: 'The decision on this long-running case ... is really a decision in support of open, transparent, and efficient copyright licensing across Europe. The 20+-year old system is out of sync with the modern world and this decision indicates that the market must find better and easier ways to benefit every area of the music supply chain.

'Competitive, pan-European licensing will significantly grow the market for the distribution of music on all platforms, which can only be a good thing for authors, broadcasters, and consumers.'

Author: Steve Malone