Retrospective: Collective rights management in the Digital Single Market – summary of responses to technical review

The Directive’s main objective is to ensure that collective management organisations (“CMOs”) act in the best interests of the rightholders they represent. The Directive sets out the standards that CMOs must meet to ensure that they act in the best interests of the rightholders they represent. It establishes some fundamental protections for rightholders, including those who are not members of CMOs. These include detailed requirements for the way in which rights revenues are collected and paid, how the monies are handled, and how deductions are made.

The Directive provides a framework for best practice in licensing, including obligations on licensees around data provision. It also creates scope for the voluntary aggregation of music repertoire and rights with the aim of reducing the number of licences needed to operate a multi-territorial, multi-repertoire service.

All these measures are underpinned by detailed requirements to ensure effective monitoring and compliance, overseen by a national competent authority (NCA). Those requirements include ensuring that proper arrangements are in place for handling complaints and resolving disputes.

The Directive’s provisions for improved transparency and governance complement existing domestic legislation for the regulation of CMOs. The Copyright (Regulation of Relevant Licensing Bodies) Regulations 2014 (the “2014 Regulations”) require UK CMOs to adhere to codes of practice that comply with minimum standards of governance and transparency under those Regulations.

The scope of the 2014 Regulations does not currently extend to those organisations that also collectively manage rights but which have a different legal form to CMOs. The Directive calls these organisations “independent management entities” (IMEs).

In general terms, UK CMOs tend to be constituted as companies limited by guarantee, (a form usually adopted by most incorporated charities, public benefit bodies, clubs, and membership organisations). They typically describe themselves as “not for profit” organisations and are owned and controlled by their members, the rightholders. IMEs, by contrast, are for-profit commercial entities that are not owned or controlled by rightholders. Under the Directive they will have to comply with certain provisions; broadly summarised, these oblige them to provide information to the rightholders they represent, CMOs, users and the public.

The Government consulted on its approach to implement the Directive in February 2015, and published its response in July 2015. Subsequently, the Government developed draft Regulations, and published these for a short technical review in October 2015. The review sought views on whether the draft Regulations effectively and properly implemented the approach set out in the July consultation response. This document summarises the responses received, and sets out the main steps that Government has taken to respond to them.

Some CMOs argued that the draft Regulations imposed certain obligations on them – such as a requirement to ensure that a member did make a proxy appointment resulting in a conflict of interest – which they could not guarantee could be met. One CMO argued that the drafting of Regulation 15(2) and 15(4) placed an inappropriate requirement on CMOs regarding the outcome of negotiations on tariffs, which they argued were a commercial negotiation between parties.

One response argued that qualification as a CMO for the purposes of these Regulations should not automatically mean that a body was considered a “licensing body” for the purposes of the 1988 Copyright, Designs and Patent Act. Other asked for more guidance on the definition of “CMO” and whether the Regulations would apply to all the activities of a body meeting the definition. One respondent was concerned that particular voting or decision-making arrangements could prevent fair representation of rightholders represented by a trade association or other similar body.