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The public comment by Music Manager’s Forum on collective rights management rules review

The CMOs should have the ability alone or in association with other rights administration entities (such as the pre-existing Harry Fox agency) to bundle the performing and the mechanical right for blanket licensing to music users in a transparent manner using common unique works identifiers for the musical compositions to promote transparency and facilitate accurate data matching.

Unlike the position in the USA where (now) there are four performing right societies, the societies in Europe operate in their domestic territories as monopolies, some de Jure and some de facto. Reciprocal representation contracts between societies pass repertoires throughout the EU (indeed the world) thereby making Society A solely responsible for the administration of the right of Society B in Society A’s territory.

So irrespective of whether a party resigned from membership of one country and joined one in another country (made possible by the free movement of goods and services enshrined in the EU Treaty establishing the European Union) the territorial structure of the licensing model means that a resigning member could not escape the domestic administration practices of the society from which he had resigned.

That valuation of music rights administered by the societies should be permitted by reference to wider market factors including consideration of prices established by identical licensees for use of sound recording copyrights and the recorded performances embodied thereon.

The requirement of “reasonable” in rate setting does not appear to be supported by guidance as to what exactly constitutes reasonableness. The wider marketplace for music would seem to be the appropriate benchmark. Literary works, and films, television programmes and television formats are all traded and priced on the open market and without this degree of central regulation. The inability of societies to agree rates in a wider market context penalizes an entire constituency of creators expressly protected by the US Constitution – namely authors.

Applicants for licences are disproportionately well-treated when it comes to the provision of information and by the application process in general. In the United Kingdom an applicant is required to make an interim payment. At the very least US licensees should be required to make an interim payment pending the issuing of a final licence with an agreed tariff. How a US licensee, with no requirement or deadline for an application to a rate court if they are dissatisfied with the level of a tariff, can perform musical works without any payment whatsoever?

The societies should not be compelled to permit rights withdrawal that divides individual copyrights into sub-strands of usage. This is a practice that would, in the US market place, increase market complexity for licensees and beneficiaries of rights alike. Instead, unusually for a territory, right owners in the USA have the option of four societies that are empowered to issue licence and administer revenues. This market choice appears to offer sufficient flexibility for right owners, many of whom already have membership of at least two US societies (if not more) determined by the administrative choices of the individual writers they contract.

Fragmentation of the market caused by partial rights withdrawal (or indeed by withdrawal of a US publisher’s entire catalogue) will mean that potential licensees, while securing direct licences from major rights owners, will still need to acquire licences from the CMOs for foreign-originated works as well as those remaining within the society system. This could lead to differential pricing and more complicated and more costly transactions.

Co-writing songs is a common practice. How does a co-writer signed to a different publisher get paid when his writing partner is signed to a publisher who is issuing direct licences? He has no contractual relationship with his partner’s publisher to rely upon. Writers’ contracts routinely state that they are not entitled to be paid a share of revenue that is paid as advances, lump sums or is not able to be “directly and identifiably” attributed to their work.

A system of mandatory arbitration via panel should be introduced to remove the financial burden of expensive rate court decisions that so penalise the societies and to mitigate the burden of licensing and regulatory decisions falling upon just two (unarguably learned) members of the US judiciary. Arbitration should apply to disputes arising in relation to all societies and their collective management licence terms and tariffs.