Key Media Players Urge Commission to Reject Collecting Societies’ Settlement Plan
Major European media companies are demanding rejection of a proposal meant to avert an antitrust ruling on a model contract for collective management of copyrighted music on cable, satellite and the Internet. The contract was created by the International Confederation of Societies of Authors and Composers (CISAC), which also put forth the disputed plan. In its July 10 letter to EC President Jose Barroso and Competition Commissioner Neelie Kroes, the media company coalition said CISAC’s proposal would fragment music rights licensing and harm smaller authors’ rights societies. CISAC declined to comment on the letter, citing a pending inquiry.
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The case arose in 2003 when broadcasters RTL and Music Choice Europe said limits set by and reciprocal cross- licenses between CISAC and its European Economic Area (EEA) members violated a European Community Treaty ban on restrictive business practices, Music Choice said. In January 2006, the EC launched an antitrust proceeding over provisions concerning retransmission of music via Internet, cable networks and satellite.
Two clauses are being studied. One on membership restrictions obliges authors to transfer their rights only to their own national collecting societies. The second, on territorial restrictions, requires commercial users to get licenses only from the domestic collecting society and limited to the domestic territory, the EC said. In response to the probe, CISAC and 18 EEA collecting societies agreed to modify the model contract, the EC said.
The proposed settlement would lift membership limits and the exclusivity provision, which requires exclusive reciprocal representation for collecting societies’ respective territories, the EC said. CISAC and members also agreed that when they forge bilateral pacts, they will allow multi-territorial licensing on their respective repertoires, subject to conditions such as ensuring that collecting societies’ competition does not hurt artists’ royalties, the EC said.
In response to a June EC request for feedback on the proposal, the European Composer & Songwriter Alliance said the old way did not break the law, but still called CISAC’s changes “positive.” But last week broadcasters, including France Telecom, Deutsche Telekom, RTL Group, Liberty Global Inc., Orange, SBS Broadcasting Group, and Cable Europe, strongly criticized the settlement.
Under CISAC’s old scheme, authors’ rights could be cleared only by their national collecting societies, Cable Europe Managing Director Caroline van Weede told us. Commercial operators could license music only from the collecting societies in territories where they planned to use it, she said Friday. Licensing markets were fragmented but a broadcaster seeking a license from one national society could clear numerous other rights under bilateral agreements in place among national rights bodies, she said.
CISAC’s proposal would let collecting societies back away from bilateral agreements and directly offer licensing, van Weede said. That may prevent broadcasters from clearing rights for a wide repertoire in one go since would have to know which society holds what rights, she said. The direct licensing provision would hurt smaller collecting societies whose reluctance to jettison bilateral contracts could cost them clients, she said.
The CISAC plan is a “step forward” allowing authors and commercial operators to use collective societies of their choice, van Weede said. But it is a “step backward” in that broadcasters will have to deal with several societies to clear needed rights, she said.
The coalition wants a one-stop global licensing system. The EC can achieve that by “demanding that the collecting societies amend their proposals to provide for an economically meaningful licensing system,” it said. Failing that, the Commission should find CISAC in violation of antitrust law, it said.
The EC can make CISAC’s proposal legally binding, seek modifications or find the current scheme legal or illegal, an EC Competition spokesman said. The aim is a better system, not to fine CISAC, van Weede said.