European Commission objects to music royalty arrangements

The Commission has sent a Statement of Objections to CISAC and the national collecting societies in the European Economic Area that are members of CISAC.

Collecting societies act as trustees on behalf of their members (here, authors of musical works). The CISAC-member collecting societies manage copyright and grant exploitation licences on behalf of their members for all types of music broadcasting – in bars, nightclubs or via the internet.

At issue is the CISAC model contract, which details how members will carry out this collective management of copyright. CISAC members follow the model in creating bilateral agreements, known as reciprocal representation contracts, with other CISAC members.

The Statement of Objections (SO) does not relate to the entire model contract and its bilateral implementations; it is not concerned with traditional forms of copyright exploitation. Instead, the SO covers only some relatively new types of exploitation – the internet, satellite transmission and cable retransmission of music.

Here, says the Commission, the agreements might breach competition law because they require authors to transfer their rights only to their own national collecting society. The agreements also oblige commercial users to obtain a license (which is limited to the domestic territory) only from the domestic collecting society.

Taken together, these restrictions effectively give national collecting societies a monopoly, says the Commission.

CISAC and the collecting societies now have two-and-a-half months to reply to the Commission's objections. They can also request a hearing at which they would be able to submit their arguments directly to the representatives of the national competition authorities.