IIPA, in its written submission in response to USTR’s request for comments, gave main principles for collective management of rights. Actually it seems like recommendation for certain countries, including Russia, how to organize governing of CMO on national level. It would be better not to change anything in this peace of submission. By reading always keep in mind, that collective management in Russia organized rather than submission recommends.
State accreditation appoints certain CMO to manage public performance. The Russian law does not prohibit establishment of non-accredited CMO, but right holders, especially those who keep foreign repertoire, are not interested to do so directly. The Russian companies take licenses from foreign right holders and register themselves as right holders (non licensees) in CMO and declare that they are representative of foreign right holders. Mostly so called representative have only written letters without clear representation of authority to collect royalties in Russia, license public performance or digital rights. So, just remind yourself what are the principles of collective management.
Laws and Regulations Governing Collective Management Organizations (CMOs)
Direct licensing of copyright works and sound recordings by individual rights holders of their exclusive rights should always remain the baseline. However, in certain circumstances where it makes economic sense and where international treaties permit, rights holders may prefer to exercise some of their rights on a collective basis, e.g., through CMOs.
Public performance and broadcasting rights are a good example, because there are often a large number of users (potential licensees) involved, for example, from cafes and restaurants, to hundreds of radio stations, and the value of individual transactions may be relatively small compared to the transactional costs. Public performance income has become an increasingly important source of revenue for music rights holders, more so than broadcast income worldwide.
This represents an important source of monies for the financing of the production and dissemination of new works. This importance has heightened the need for efficient, transparent, and accountable collective management services. It is therefore essential that rights holders can, on a voluntary basis, set up and govern their own CMOs.
Governmental roles should be limited to establishing regulatory frameworks that enable efficient, fair and non-discriminatory operations of CMOs backed by rights holders, and, where appropriate, providing expert fora for the resolution of disputes on certain aspects of collective management, including by ensuring that rights are properly valued.
If specific CMO legislation is enacted, it should focus on setting out principles for the establishment and basic operations of CMOs, including:
- Collective management should always be voluntary, transparent, allow rights holders the ability to organize efficiently, and should never limit exclusive rights or direct licensing;
- CMOs should only be established and governed by rights holders who have mandated a CMO to manage their rights;
- CMOs may not discriminate in policy or practice between rights holders on the grounds of nationality or similar criteria (and, rights holders large and small should have a voice in governance, with majority approval);
- Distributions should be based on actual use of works and made in a fair and transparent manner, and administrative fees limited to reasonable, demonstrable costs and expenses; and
- CMO tariffs should reflect the market value of the use of the rights in the given commercial context, i.e., they should be set following a “willing buyer, willing seller” standard.
The individual Country Reports detail serious concerns about these issues in a number of countries, including Ukraine, Thailand, Malaysia, Indonesia, the UAE, Russia, Taiwan, Switzerland, Vietnam, Uruguay, Peru, India, and Brazil and Argentina (albeit for different reasons).
A separate problem concerns the number of CMOs in countries where governments have failed to establish robust criteria for CMOs and/or have misapplied the so-called extended collective license (ECL) provisions leading to an uncontrolled proliferation of CMOs, for instance in Ukraine, Kazakhstan and Thailand.
In Malaysia, the government has forced different categories of music rights holders’ CMOs to operate through a single government-controlled entity. In UAE, the government has prevented rights holders from exercising their performance rights at all, by refusing to grant an operating license to a music CMO.
The motion picture industry remains concerned about proposals for mandatory collective licensing in some Latin American countries. If imposed on rights holders, these schemes would undermine exclusive rights and encumber distribution; they should not be adopted.
The recording industry is also concerned about these developments in Latin American because they could undermine legal certainty and freedom of contract and impact the proper licensing of music videos (treated as audiovisual works).