“Elimination” in/or (chose yourself) collective rights management in Russia?

CEO of Russian union of right holders, collecting private copying levy under state accreditation, and VOIS, collective management organisation collecting royalties under state accreditation for all worldwide repertoire, explained the main tendencies in Russian collective rights management and his vision of perspectives.

His interview is very interesting for right holders and users, because the main point of interview is that there must be the one “Highlander” who will collect royalties and there can be many distributors of collected royalties. He believes the main trend in the field of collective rights management is globalisation and elimination of intermediaries, so called “takeawaysation” – when users or buyers make a deal directly with seller, i.e. “form communications at minimum costs”. But don’t hurry up to think that you understand it correctly. Wait for a moment. It is not as simple as it can appear.

Currently accredited by state collecting society in Russia constitutes of three functions: collection, allocation and paying of royalties. All these three functions are regulated by Russian state in relation to right holder. Right holders are like in serfdom. It is extensive collective management of rights. But it is required only for collection, but not for allocation and paying. In the context of collection the competition is not reasonable, from economic point of view. If many organisations would collect royalties, the dumping will be the only result.

What about allocation and paying of royalties? Here competition is possible. They could be performed by other organisations, which have direct agreements with right holders. This is how Krichevsky understands “umbrella model” in collective management of rights.

Right holders don’t have control over paying of royalties. Even if they form their own collecting society, it would not change their unfavorable position. Krichevsky believes in Germany, Canada and Japan there are systems where right holders unite together and pay royalties among themselves. Krichevsky means that GEMA, for example, collects royalties and transfers them to right holders and they share received sum like some kind of “common Fund”.

So how the ideal Krichevsky’s system should work? There should be collection (of royalties) in semi-automatic system. The key element in this system is b2b streaming service allowing automatically receive the user’s report. In other words, accredited CMO becomes a “one-stop-window” for user: all venues, bars and restaurants know exactly where they should go; they know who they have to ask for in order to conclude licence agreement.

The special online service is also a must. It allows to play music and promptly, automatically, to report to accredited CMO. Collected money along with reports go to organisations having direct agreements with right holders. This system gives rise to a question – why right holders need an accredited CMO? If users report to accredited CMO and pay money to it, why they can’t do the same to organisations, who concluded direct agreements with right holders? This is the system of bright future for collective management of rights in Russia?

According to Krichevsky, accredited collective management organisations should refuse from distribution of royalties, such function is not appropriate for them. Collective management organisations like collectors. In cases when exercising of rights in individual order is not possible, collective rights management can help. Accredited CMO does not need authority from right holders, but organisations, who distribute royalties, collected by accredited CMO, must have authority directly from right holder.