A system of one-stop agreements for the licensing of television and radio music via the Internet has won an exemption from EU anti-trust rules. Announcing the decision on October 8, Competition Commissioner Mario Monti said this would introduce more competition for European television and radio companies, which simultaneously broadcast music shows on the Internet.

 In practical terms, the Agreement means that broadcasters, who already pay fees for music broadcasts on their terrestrial AM and FM services, will now have to pay an additional fee for streaming exactly the same output on the Internet.

Under the new rules, broadcasters can get a single “one-stop shop” licence from royalty collecting societies to cover Internet broadcasts across most of the European Economic Area (EEA - which groups the 15 EU states plus Norway, Iceland and Liechtenstein) except for Spain and France. This means broadcasters no longer need to secure a licence from each national collecting society. The Agreement also includes societies from Central and Eastern Europe, Asia, South America, Australia and New Zealand.

This is the first decision by the Commission concerning the collective management and licensing of copyright for the purposes of commercial exploitation of musical works on the Internet.

The present case stems from a notification of a Reciprocal Agreement by the International Federation of the Phonographic Industry (IFPI). The notification was made in the name of the copyright administration societies of music record companies. It does not concern authors’ rights, which are collected by different agencies.

The Reciprocal Agreement is intended to facilitate the creation of a new category of copyright licence with a multi-territorial scope. It will operate for an experimental period after which its nature, scope and operation will be reviewed. The Agreement in its present form will expire on December 31, 2004.

Jay Berman, IFPI Chairman and CEO said: “We developed this system to help the legitimate market for simulcasting to develop and to make it easier for broadcasters to obtain licences. It is an important step forward for the recording industry as it adapts its business to the Internet and finds new ways of licensing music for consumers to enjoy. We are pleased the Commission has endorsed the system”.

Over the last few years, radio and television broadcasters have begun to broadcast their programmes via the Internet along with the traditional terrestrial transmissions to European homes. This practice, known as “simulcasting”, requires broadcasters to obtain international licences from music rights owners. Broadcasters traditionally operate on a national or regional basis under limited territorial copyright licences. Thus, because of its global nature, the Internet poses a new challenge in the way those rights are acquired.

Sergio Natucci, President of the European commercial radio association AER, has mixed feelings about the proposed system, and feels that the music industry is not providing broadcasters with enough information about their copyright negotiations at European and world-wide level. He says AER members support the “one-stop shop” principle but are skeptical of the relevance of the new simulcasting licence. “We are not totally clear on why radio broadcasters have to pay an additional fee for streaming exactly the same AM/FM output on the Internet. It would be useful if the music industry would also engage in a process of revising the unreasonable high fees currently charged to broadcasters, especially in Northern European countries, which are very often not proportionate to the size and activities of radio companies”.

Frederik Stucki, representative of the Swiss’ commercial radio trade body ASPR, says: “It is important to underline that the Commission’s decision in no way prejudges the question of simulcast licences being legally required. In ASPR’s opinion, no contractual licence is required where the law provides for a system of compulsory licensing due to which the act of communication to the public of phonograms is subject only to the payment of equitable remuneration. Where this is not the case, a reciprocal agreement should include not only the phonogram industry’s rights, but also the performers’ rights in order to create a real “one-stop-shop” and guarantee legal certainty for the broadcaster”. In this sense, Stucki continues: “We are surprised to see that in the proposed reciprocal agreement, Switzerland is not represented by its official collecting society for all neighbouring rights, Swissperform, but merely by the interest group of the Swiss phonogram industry”.

Public broadcasters, through their trade body organisation, the EBU, have also expressed doubts as to the legal grounds of the simulcasting licences envisaged by the Reciprocal Agreement. In a submission sent to the European Commission, the EBU seems not to be convinced that simulcast licences are legally required at all. Furthermore, the EBU asks the Commission to guarantee that the licensor collecting society determines individually the tariff to be charged for a multi-territory licence, so as to ensure that the competition allowed for by the Reciprocal Agreement extends to pricing and that it is not undermined in practice by, for example, a concerted behaviour of the collecting societies party to the Agreement.

In this direction, the parties involved in the Agreement have also undertaken to increase transparency as regards to the fees charged for a copyright licence. A set of proposals will be presented to the European Commission by the end of 2003, aimed at separating the copyright royalty from the fee meant to cover the licensing administration costs of each collecting society. The two elements will be separately identified upon the granting of the licence. This way, TV and radio broadcasters will be able to recognise the most efficient societies in the EEA and seek their licences from the societies providing them at the lowest cost.

ENDS
28/01/03

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