Europe clinches deal on music royalties

 

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By Steve Malone

Posted on 6 Oct 2006 at 11:06

The European Commission has given its blessing to a deal between the major record labels and the local royalty 'collecting societies'. Under the new arrangement broadcasters and Internet music download sites now only have to negotiate a single deal with one of the societies in order to gain the right to distribute songs across the EEA (European Economic Area.

Under the new Central Licensing Agreement, a record company can obtain a copyright license for the combined repertoires of all the collecting societies and covering the whole of the EEA or part thereof, from any collecting society within the EEA.

The intention is to allow the collecting societies to operate in any of the member countries, increase competition and drive down prices.

The European Union has been threatening to take action against the national collecting agencies accusing them of operating a cartel. Under the old system, music downloads services such as iTunes would have found itself having to pay a royalty to each of the 13 collecting societies in Europe even if it only sold that tune in one of them.

Under pressure, the five big major record companies and the mostly national collecting societies in Europe have now agreed the deal, which the European Commission has given legal backing.

As part of the deal, a compromise solution has been agreed. In future, collecting societies can continue to give rebates to record companies in their negotiations. In return the societies will drop their no-competition clause which maintains their local monopolies.

The new regime will not only give a boost to international download services such as iTunes, but also to transnational broadcasters who will only have to pay a single royalty to broadcast a song in all European countries.