Monti to cut red tape and kick-start online music

Date: 26/09/02

By Peter Chapman

MARIO Monti is set to boost the EU's faltering online music market by loosening the vice-like grip of the bodies which dictate who gets a licence to put music and video on the internet.

The competition chief will cut red tape faced by radio or TV stations that broadcast music over the internet at the same time as over the airwaves, in a process known as 'simulcasting'.

Monti aide Miguel Mendes Pereira said broadcasters should no longer be issued with a take-it-or-leave-it offer from their local 'collecting society' - a national body that handles licensing and makes sure that songwriters and artists get paid whenever their work is played.

Instead, he told an industry conference that broadcasters should be able to shop around to get a better deal from collecting societies in other member states.

'Collecting societies are monopolists and the concern is to understand how, in the digital online environment, competition may come about.

'The view of the Commission is that we don't see any more a need for the territorial restrictions,' he said.

The collecting societies had kept control of national markets in the past, mainly because they needed to be close enough to discotheques to physically check what music was played and when.

But Mendes Pereira said this argument was not valid in the online world, where a BBC radio programme, for example, can be heard over the internet in India or Australia.

In the ruling, expected next month, the Commission will force key changes to an earlier agreement that collecting societies and the International Federation of the Phonographic Industry (IFPI) had sent to Brussels for approval under the EU's anti-trust rules.

Under their original deal, the collecting houses had merely agreed to cooperate to ensure copyright owners in other countries were paid whenever their work was played.

But Mendes Pereira said this would have 'perpetuated for online the monopolistic situation that exists in the offline world', adding that competition watchdogs would likely extend the new rationale to two more rulings, expected next year.

These will cover the licensing regime for companies that 'stream' or download music or video from a website to a customer's computer.

Wes Himes, secretary-general of the European Digital Media Association, said its members - who include French CD retailer Fnac.com, Italy's Vitaminic and web book store Amazon - are currently often forced to accept whatever terms the collecting society in their home country demands.

That means managers spend far too long negotiating licences and not enough time developing new services for customers.

'We believe that the internal market for licensing will give a jump start to the digital music market,' he added.

An IFPI spokesperson said the industry could live with the new simulcasting regime despite being told to change their plan.

Competition Commissioner Mario Monti is set to boost the EU's faltering online music market by loosening the vice-like grip of the bodies which dictate who gets a licence to put music and video on the internet.