Online music licensing - A way out of the maze

• Author: Phil Hardy
• Position: Editor of theviewfromtheboundary
• Pages: 10-12

10

FE BR UA RY 2 01 1

1www.theviewf romthe

boundary.com

2 In 2010 Viviane Reding

became Eur opean

Commissione r for

Justice, F undamental

Rights and Citizenship

3 The Intern ational

Confederati on of

Societies of Authors

and Compos ers

ONLINE MUSIC

LICENSING – A WAY

OUT OF THE MAZE

in 2000. The complaint

was t riggered by the

refusal of the German

authors’ society GEMA

to grant a pan-Euro -

pean license “for all its

music broadcasti ng

activiti es, both nation-

al and inter national via

tradition al and new

forms of explo itation.”

A similar com plaint

was fi led in 20 03, by

European digital and i nteractive broa dcaster

Music Cho ice again st C ISAC.3The t wo com-

plaint s were subseque ntly consoli dated and in

July 2009 the Commissi on ru led in favor of RTL

and M usic Cho ice.

The EC reasoned that the societies were ant i-

competiti ve be cause they had created a closed

network in which each indi vidual socie ty has th e

exclusive r ight to grant lice nses to commercial

users withi n its national terr itory. The Commission

considered tha t thi s co nstrained autho rs a nd

composers as well as broadcasters : the former be-

ing required t o join the c ollecting society of the

country of their domicile and the latter bein g re-

quired to con clude licens ing agreemen ts with

the c ollecting s ocieties of each c ountry in which

they op erated.

The Comm ission’s ruling pr ompted the Eu ropean

societi es to end the prac tice of au tomatically ex-

tending one set of ri ghts to all s ectors, notab ly to

the sat ellite broad casting and digital se ctors. The

societi es also chang ed their memb ership rules

allowin g i ndividuals g reater freedo m i n t heir

choice of co llecting soci ety, while at the same

The Europea n dig ital

music licensing land-

scape i s in turmoil.

Legal rulings, European

Union initiative s in

support of con sumer

interests, the develo p-

ment of the digital

marketplace, emerging

online busi ness mod-

els, and collecting so-

cieties for m usical

works a ll have had a

part in creating what has become a complex maze.

Trying to naviga te the licensing labyrinth can be

a rea l headache. Businesse s and consumers alike

have much t o gain from a coord inated and seam-

less lice nsing environment in Europe. Vivia ne

Reding,2as E uropean Commissio ner for

Informati on Socie ty and Media, put i t simply : “In

the EU, consum er rights online sh ould not de-

pend on where a company or website is based.

National borders should no l onger compl icate

European consumer s’ lives when th ey go online

to buy a book or download a s ong.”

Historically, music publishers an d collecting soci-

eties administered their rights on a territory -by-ter-

ritory basis and as users themselves operated with-

in a single territory, t his was unproblematic. With

greater mark et integration and the emergence of

digital networks, however, a growing number of

observers are recognizing that territorial approach-

es to licensing are becoming unworkable.

The desire for a one-sto p shop for the online li-

censing of music rights acros s Europe was the

root of a compla int by broa dcaster RTL to the EC

At the conclus ion of the 2008 annual rep ort of Hungarian auth ors’ society Artisj us, director genera l

András S zinger charact erized the cu rrent Europea n digital mar ket as repres enting “a cha otic period o f li-

censing.” He was not alone in this view. While authors’ soc ieties are cu rrently grapp ling with the issue of

licensing , music publi shers, broadc asters and di gital music suppliers also have a stak e in finding a viable

solution. Each is seeki ng to speed up the creation o f a pan-European digital music ma rket, and each is

seeking to do this on thei r own terms. Conse quently, the European music licensing landsc ape is pre-

senting significant c hallenges. In this articl e, Phil Hard y, Editor of

theviewf romthebou ndary

1

explores how

this cam e about and a possible way forwar d.

Photo: iStockphoto/Cesair