EN    EN EN 
 
EN 1   EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 16.7.2008 
SEC(2008) 2288 
  
COMMISSION STAFF WORKING DOCUMENT 
 
accompanying the 
Proposal for a 
 
COUNCIL DIRECTIVE 
 
amending Council Directive 2006/116/EC as regards  the term of protection of copyright 
and related rights 
  
SUMMARY OF THE IMPACT ASSESSMENT  
ON THE LEGAL AND ECONOMIC SI TUATION OF PERFORMERS AND 
RECORD PRODUCERS IN THE EUROPEAN UNION  
{COM(2008) 464 final} 
{SEC(2008) 2287} 
 
EN 2   EN  
SUMMARY 
This Impact Assessment (IA) analyses the econ omic and social situat ion of performers and 
record producers in the European Union.  
With respect to performing artists, this IA shows that many Europe an musicians or singers 
start their career in their early 20's. That means that when the current 50 year protection 
ends, they will be in their 70's and likely to  live well into their 80' s and 90's (average life 
expectancy in the EU is 75 years for men and 81  years for women). As a result, performers 
face an income gap at the end of their lifetimes, as they lose ro yalty payments from record 
companies as well as remuneration due for th e broadcasting or public performance of their 
sound recordings. The latter income streams ar e paid to performers di rectly through their 
collecting societies and are not affected by their contractual arrangements with the record 
companies.  
For session musicians, who play background music,  and lesser known artists, that means that 
broadcasting and public performance income decreases when performers are at the most vulnerable period of their live s, i.e. when they are approach ing retirement. Once copyright 
protection expires, they will also lose out on po tential revenue when their early performances 
are sold on the Internet.  
Moreover, when their rights expire performers are exposed to potentia lly objectionable uses 
of their performance which are harmful to their name or reputa tion. Performers are also at a 
disadvantage as compared to authors whose works are protecte d until 70 years after their 
death. This could be seen as unfair since pe rformers are nowadays not only just as necessary 
as authors but also more identifiable with the commercial success of a sound recording.  
As regards producers of sound recordings, the IA shows that their principal challenge is peer-
to-peer piracy and their n eed to adapt their busi ness to the challenges  of dematerialised 
distribution. In these circumstances, they face th e challenge of keeping up the steady revenue 
stream necessary to invest in new talent. Record companies claim that they invest around 
17% of their revenues in the d evelopment of new talent, i.e. to sign new talent, promote 
untried talent and produce innovat ive recordings. Therefore, a longer term of protection 
would generate additional in come to help finance new ta lent and would allow record 
companies to better spread the risk in develop ing new talent. Due to uncertain returns (only 
one in eight sound recordings is successful) and so-called 'information asymmetries' such 
revenue is often not avai lable on capital markets. 
The impact assessment analyses the economic, so cial and cultural impacts of six options 
This IA presents a total of seven options, but one option was discarded before the analysis of 
impacts. Apart from the standard option of 'd oing nothing' and letting the music market 
develop, the IA analyses two opti ons linked to the term of pr otection for sound recordings and 
three options that would not require a change  in the current terms that apply to sound 
recordings.  
With respect to the term of protection this IA looks at the option of extending the term of 
performers to 'life or 50 years' , whichever is longer. This op tion would enhance the status of 
performers and, by linking protection to their l ifetime, recognise the individual and creative 
nature of their performances. This option woul d not only apply to the performers' exclusive 
rights but also to the variety of broadcasti ng and public performance rights that are not 
transferred to the record companies.  
 
EN 3   EN Another option involving the term of protection would be to extend the current 50 year term to 
95 years for performers and record companies. This  option ensures full equivalence with the 
longest term of protection in the world. In order to ensure that the benefit of term extension 
accrues to performing artists, especially sessi on musicians that have tr ansferred their related 
right against a one off payment, the extension of the term of protection for record companies 
should be accompanied by the payment of a certain percentage of record companies' 
increased revenues into a fund dedicated to improving the situati on of session musicians. 
Again, as in the 'life or 50 year' option, the remuneration for broadcasting and public 
performance would remain with the performer for 95 years.  
Another set of options looks at ways to address the probl ems identified above without 
modifying the term of protec tion. These options comprise va rious possibilities which could 
improve the financial situation and moral rights of performers. These measures, of course, 
could be used either as alternatives to a te rm extension or as measures to complement an 
extension of the term of protection. Several of  these measures could only be the subject of 
Community legislation. 
This IA describes how performers contractual ly transfer their exclusive rights to record 
labels, (including their reproduction, distributio n, rental and making avai lable rights, but not 
their remuneration claims for broadcasting and public performances. In  order to limit the 
effect of the systematic contractual transfe r of performers' exclusive rights to record 
companies, the IA examines the possibility of an 'unwaivable' right to remuneration to which 
performers would remain entitled even after hav ing transferred their making available right 
to a record producer. The creation of a claim for equitable remuneration for online sales or 
other forms of making performances available online is an interesting option, whose time may 
yet come. However, at this stage, the uncertain ties surrounding the issue of who should pay 
this 'equitable remuneration' are such that the likely effects of this option cannot be quantified 
with any reasonable measure of certainty. In  light of the uncertainties surrounding the 
practical administration of the claim for equ itable remuneration, further study on this option 
is imperative. While in the futu re this option might well be introduced to enhance performers' 
participation in revenue generated online, it is too early to disc uss at this stage. This option 
was therefore discarded before  the analysis of impacts. 
Another option analysed is to strengthen perfor mers' moral rights. The scope of their moral 
rights could be harmonised to include a right  to restrict derogatory uses of their 
performances.  
A further option is to ensure that 'use it or lo se it' clauses are included in agreements between 
performers and record labels. This means that, if a record company is unwilling to re-release 
a performance during the extended term, the pe rformer can move to ano ther record company 
or exploit the record himself.  
The impacts of the different options 
All options are assesse d against the following six operational objectives : (1) gradually align 
authors' and performers' protection; (2) in crementally increase the remuneration of 
performers; (3) diminish th e discrepancies in protection between the EU and US; (4) 
incrementally increase A&R resources, i.e., the development of new talent; (5) ensure 
availability of music at reasonable prices; and (6) encourage digitisati on of back catalogue.  
The IA concludes that 'doing nothing' is not a preferable option. If nothing was done, 
thousands of European performers who recorded in  the late fifties and si xties would lose all 
of their airplay royalties over the next ten years. This would have considerable social and 
 
EN 4   EN cultural impacts. Equally, the sound recording industry would be obliged to cut down on the 
creation of new sound recordings in Europe.  
The IA considers the impact of options not in volving the term of performers' and record 
producers' rights (options 3a, b, c and d). Op tion 3a (unwaivable right to equitable 
remuneration) appears premature as it is unclear  who would pay for th is remuneration and it 
is hard to estimate the financia l benefit it would bring. Option 3b (the strengthening of moral 
rights), has no financial impact on performers and record producers. Option 3c, the 'use it or 
lose it' clause, would be bene ficial to performers by allowing them to make sure their 
performances are available on the market. It w ould also be beneficial for cultural diversity. 
Option 3d, the fund to be set up by record companies, would be very beneficial to non-
featured performer. Record producers, however, would have to pay into the fund at least 20% 
of the additional revenue genera ted by the term extension. Ho wever, the IA concludes that 
marketing sound recordings would remain profit able for record companies despite having to 
pay 20% towards thus fund.  
Options involving a term extension (2a "life or 50 years" and 2b "95 years for performers and 
record producers") seem to be rather more suitable in contributing towards the six policy objectives. Both options 2a and 2b bring financi al benefits to performers and would thus 
allow more performers to dedicate more  time to their artistic activities.  
Option 2a, by linking the term to the life of a pe rformer, would contribute to aligning the legal 
protection of performers and aut hors. It would reflect the pe rsonal nature of performers' 
artistic contributions and recogni se that performers are as e ssential as authors to bringing 
music to the public. It would also allow performe rs to object to derogatory uses of their works 
during their lifetime. 
In addition, option 2b would increase the pool  of A&R resources available to record 
producers and could thus have an additional positive impact on cu ltural diversity. This IA 
also demonstrates that the benefits of a term extension are no t necessarily skewed  in favour of 
famous featured performers. While featured  performers certainly earn the bulk of the 
copyright royalties that are negotiated with the record companies, all performers, be it 
featured artists or session musi cians, are entitled to so-cal led 'secondary' income sources, 
such as single equitable remuneration when the sound recording incorporating their performances is broadcast or performed in pub lic. A term extension would ensure that these 
income sources do not cease during the performe r's lifetime. Even incr emental increases in 
income are used by performers to buy more tim e to devote to their artistic careers, and to 
spend less time on part time employment. Moreo ver, for the thousands of anonymous session 
musicians who were at the peak of their careers in the late fifties and si xties, 'single equitable 
remuneration' for the broadcasting of  their recordings is often th e only source of income left 
from their artistic career.  
In addition to ensuring the increased availab ility of A&R, option 2b is also easier to 
implement than option 2a, becaus e the latter option is linked to the life of individual 
performers. As the example of co-written works demonstrates, linking a copyright to the life of individual contributors raises complex issues when several performers contribute to a sound 
recording. These would increase the legislat ive and administrative bur den on Member States 
and create legal uncertainty, bec ause the term of protection to the term of protection would 
no longer be linked to a certain and uniform dat e, i.e., the publication of the phonogram that 
contains the performance, but to the sometim es very different lifetimes of individual co-
performers. 
What are the likely provisions in the proposal to  ensure that it is the performing artists that 
benefit?  
 
EN 5   EN In order to ensure that the benefit of term extension would accrue to performing artists, 
especially session musicians, th is IA concludes that record  companies should contribute 
towards a fund for session musicians (option 3d). In order to have the financial volume necessary to ensure real benefits for session musicians, this IA proposes that the record companies set aside at least 20%  of the revenue that accrue s during the extended term for 
session musicians. The fund's impac t on session musicians would be  positive, as the average 
performer' additional annual revenues duri ng a 45-year term would almost triple 
The IA also proposes that a term extension shoul d be accompanied by a 'use it or lose it' 
provision (option 3c). This means that, in the event that a record company is unwilling to re-
release a performance during the extended term , the performer can mo ve to another record 
company or make his performance available himself.  
Empirical studies show that the impact of a term extension would not be negative for 
consumers.  
Empirical studies show that the price of sound recordings that  are out of copyright is not 
lower than that of sound recordings in copyri ght. This is true in relation to statutory 
remuneration claims and for the sale of CDs. 
The 'single equitable remuneration' due for br oadcasting and performances  of music in public 
venues would remain the same as these payment s are calculated as a percentage of the 
broadcasters or other operators' revenue. As fa r as CD sales are concerned, very few studies 
analyse the price between prices of in-copyright  and out-of copyright recordings. A study by 
Price Waterhouse Coopers concluded that there was no systematic difference between prices 
of in-copyright and out-of copyri ght recordings. It is the most  comprehensive study to date 
and covers 129 albums recorded between 1950 and 1958. On this basis, it finds no clear 
evidence that records in which the related rights have expired are systematically sold at lower prices than records whic h are still protected.  
Other studies have been consider ed in analysing the impact of copyright or related rights on 
prices. Most of them focus on books. However, even in this category, either no overall price difference is found between the samples of book s in- or out-of-copyrig ht, or, the impact of 
copyright on the price is extremely model-de pendant and therefore the estimates obtained 
cannot be seen as very robust. Given the lack of  widely accepted models  and the length of the 
time span, it is fair to sa y that there is no clear evidence that  prices will increase due to term 
extension.  In addition, overall, the extended term shoul d have a positive impact on consumer choice and 
cultural diversity. In the long run, this is because a term extension will benefit cultural 
diversity by ensuring the availability of res ources to fund and develop new talent. In the short 
to medium term, a term extension provides r ecord companies with an incentive to digitise and 
market their back catalogue of old recordings. It  is already clear that  internet distribution 
offers unique opportunities to market an unprecedented quantity of sound recordings. 
International dimension 
The IA also looked at the trade  implications of a longer term  of protection and provisionally 
concludes that most of the additional revenue collected in an extended term would stay in Europe and benefit European performers. This is good for promoting Europe's performers 
and the cultural vibrancy of European sound recordings.