Beaming state subsidies

Date: 04/05/05

Societies that collect royalties and re-distribute them among performers and producers will have to follow pan-EU rules if the European Commission adopts a proposal as planned in October. But online service providers wanting to bypass 'collecting societies' altogether are likely to be disappointed.

Instead, the proposal is likely to take the form either of a code of conduct for royalty collectors or a framework directive to establish minimum rules for how revenue is distributed among rights holders.

A Commission source said that the results of an impact assessment study are expected by the end of the month, on the basis of which a decision will be taken. But, he said, legislation is not a given as a result of the drive for efficient legislation.

"With Commissioner [Charlie] McCreevy things have changed," he said. "Less is more."

Head of unit Tilman Lueder told the Fordham annual conference on intellectual property at the beginning of April that legislation would only be adopted if "efficiency gains for all stakeholders...exceed the cost of compliance".

The problem is that collecting societies, which sprang up in the 18th century, are entrenched in national rules and regulations, which has lead to accusations of a lack of transparency, particularly as some societies cream off funds to be used for cultural projects.

It also means that companies with international operations have to apply to 25 different bodies across the EU in order to use performances, which makes it difficult to keep track. One example cited by Lueder is that former James Bond star Sean Connery is still waiting for €95,963 from French collective rights management society ADAMI because the latter "does not have Mr Connery's address".

As a result, the Brussels executive announced last year that it would consider common EU rules on how collecting societies are established, obliging them to publish tariffs and adhere to principles of good governance.

The Commission may also ensure that member states set up external bodies to ensure that societies are collecting and distributing funds fairly, and on the other side, introduce rules for terms and tariffs that online service providers have to pay for copyright licences.

Xavier Blanc, secretary general of AEPO, the Association of European Performers' Organisations, said that collecting rights management societies were not averse to more transparency, but warned: "If we impose a set of obligations on collecting societies, we must also do the same for users. For example, radio stations shouldn't just pay their rights but also inform us of their playlists so that we can fairly distribute."

But software producers want the Commission to go further. They argue that, because it is now possible to remunerate rights holders directly via online technology - known as digital rights management (DRM), they should be allowed to pay the rights holders directly and to bypass outdated collecting societies.

In last year's communication on rights management, the Commission said that as a result of DRM, any legislation should allow rights holders to manage some of their rights individually. But DRM is not yet likely to wipe out collecting societies.

Article takes a look at public funding and the absence of effective competition rules in the sector of public broadcasting.