CISAC’s public comment on collective management rules review

The network of reciprocal representation agreements developed by CISAC and signed by its members ensures that author’s rights are protected and administered around the world and that each CMO is in a position to offer licensing solutions that cover broad repertoire. This system also ensures that royalties flow to authors wherever they are in the world.

Because of the unique nature of the collective management system, both American and foreign authors rely on the effective operations of ASCAP and BMI. In order to allow ASCAP and BMI to operate efficiently and offer licencing solutions that match today’s market needs, amendments to the rules are needed. These include, in particular:

  • Ability for rates to be set by reference to the market value.
  • Potential licensees should be required to disclose financial and business model information, and other relevant facts, when applying for a licence, to assist societies in determining the licence rate.
  • Rights owners should be allowed to grant partial assignment of rights to the societies, and to bundle rights so that the societies can act as agents for a combination of the reproduction and the performing right, thereby enabling them to respond to the needs of potential licensees.
  • Tariff setting and dispute resolution procedures should be made swift and affordable.

CISAC societies can administer and license in their territories both local and foreign repertoire thanks to a sophisticated network of reciprocal representation agreements. The reciprocal agreements concluded between music societies enable each society in each country to licence the entire world repertoire of compositions and secure national treatment for all repertoires, regardless of its origin. This makes it simpler for music users to acquire licences for the global repertoire in as streamlined a manner as possible. The contracts enable royalties to flow to creators via their societies wherever they are in the world.

CISAC is of the opinion that provisions in the copyright international treaties signed and implemented by the US prevent the adoption of a remuneration system based on a “reasonable fee” for authors. Article 11 of the Berne Convention grants authors of dramatic, dramatico-musical and musical works the exclusive right of authorising the public performance of their works by any means or process, as well as any communication to the public of the performance of their work. This exclusive right should include the ability of these authors to set a tariff that reflects the market value of the rights licensed.

Arbitration of and appeals against licence fees are, as in the US, a feature of the music societies’ environment elsewhere. However, lengthy and expensive legal proceedings in the US are particularly onerous for not-for-profit entities such as ASCAP and BMI, and result in unnecessary financial burden on the authors themselves. In other territories, workable and less costly procedures are in place.

For example, in Germany there is a set affordable procedure in the national law for tariff arbitration. A licensee may refer a matter to an arbitration court specializing in the matter (Schiedsstelle). This specialist court will decide what license is considered adequate or, alternatively, whether there are any legitimate grounds for an appeal. While the decision of the court is not binding, it serves to set the guidelines for further negotiations and agreement. Where the parties cannot reach an agreement on the basis of the specialist court’s finding, the matter can be brought to the mainstream German courts.

In Italy there are 12 specialised sections established by law at the Tribunals (and Courts of Appeal) – usually one per region – with exclusive competence in the field of industrial and intellectual property, as well as unfair competition and antitrust. Dispute resolution procedures such as arbitration and media-conciliation, provided by the Civil Code and by a recent Law Decree, can also be activated with regard to disputes on IP rights, usually on the basis of an agreement between the parties and separately.

As in US, Italian representative bodies negotiate on behalf of their members (e.g. organisations of shopkeepers, restaurants, concert organisers or whatever) and, whether included in the agreements with the representative associations, the members can address their association for a preliminary verification on the accuracy in the application of the tariff rules.

In a few cases, related to instance to the right to access to the documents pursuant Law 241/1990, the licensee, or the trade body acting on behalf of him, can file a claim before the Italian Administrative Tribunal; in this event the three tiers of civil procedures available are reduced to two in the interests of swift and cost effective solutions (but with the usual right of appeal to the Consiglio di Stato – State Council).

In the Netherlands an arbitration committee is operating for disputes between users and CMOs concerning tariffs. There is no obligation to be represented by an attorney in the arbitration procedure, which reduces the costs. The arbitration committee does not have jurisdiction where the financial interest is higher than € 100000. Furthermore, the decision is only binding if parties do not file a claim before the court within 3 months of the decision.

It remains a concern to CISAS that costs of the US rate court proceedings are so high. Licensees bear only their own costs, while the societies must bear the costs of every hearing. Complete withdrawal of whole catalogues is undesirable for a number of reasons. First, it would complicate licencing as it would force potential licensees to approach a larger number of licensors. It would also increase transaction costs for the music user, which would inevitably be passed to the consumer. Finally, it would increase uncertainty and likely result in an increased number of disputes.

The wholesale withdrawal and direct licencing of a music publisher’s entire catalogue would also be a Herculean administrative task and will increase licencing complexity. Such complications would arise from a number of factors:

  • The wholesale withdrawal of a catalogue places a publisher in the unenviable (and expensive) position of having to conduct public performance licencing activity across multiple venues, and music services throughout the US marketplace;
  • US authors (in common with their colleagues around the world) are concerned that in the case of complete withdrawal of rights by music publishers, they may not be contractually entitled to share in any lump sum revenues. In other words, these authors may not obtain a share in a payment negotiated directly by their music publisher with a music service, following the withdrawal of that publisher’s catalogue.
  • Co-writing is a common phenomenon among songwriters, even where the writers are contracted to separate publishers or to no publishers. Under US law where a copyright is co-owned, a licence can be issued by either owner. This is not necessarily the case in the rest of the world. In the UK, for example, where co-authors or co-owners have a shared interest in a copyright work, licencing consent must be secured from all the parties having an interest in the work.
  • Pricing differentials arise. One co-writer may find their part of the copyright valued as X via the society system, while the other is valued as 2X under a direct licence. This is confusing for creators, for licensees and for the market as a whole.

Authors and their publisher partners should be in a position to bundle rights, so that ASCAP and BMI can act as agents for a combination of the reproduction and the performing rights, thereby enabling them to respond to the needs of potential licensees.