COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market
Date: 2012-07-11
Institutions: European Commission
Subjects: Internet, copyright, cultural pluralism, impact study, management audit, market access, music, patents licence, profit, single market

EUROPEAN COMMISSION 

Brussels, 11.7.2012  
SWD(2012) 204 final 

COMMISSION STAFF WORKING DOCUMENT 

IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a Directive of the European Parliament and of the Council 

on collective management of copyright and related rights and multi-territorial licensing 
of rights in musical works for online uses in the internal market 

{COM(2012) 372 final} 
{SWD(2012) 205 final} 

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COMMISSION STAFF WORKING DOCUMENT 

IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a Directive of the European Parliament and of the Council 

on collective management of copyright and related rights and multi-territorial licensing 
of rights in musical works for online uses in the internal market 

TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

2. 

2.1. 

2.2. 

3. 

Introduction, policy context, procedural issues and consultation ................................ 5 

Introduction .................................................................................................................. 5 

Policy context............................................................................................................... 7 

Procedural issues and consultation of interested parties .............................................. 8 

Background .................................................................................................................. 9 

Collective rights management...................................................................................... 9 

Collective rights management of rights in musical works for online use .................. 12 

Problem definition...................................................................................................... 14 

3.1. 

Insufficient checks and balances on the functioning of collecting societies.............. 15 

3.1.1.  Problem 1: Rightholders – in particular non-domestic ones – are not always able to 

exercise their rights, notably because of poor governance and transparency standards 
applied by collecting societies ................................................................................... 15 

3.1.2.  Problem 2: Poor financial management: royalties collected by societies on behalf of 

rightholders accumulate, pending distribution, with little oversight.......................... 19 

3.1.3.  Consequences............................................................................................................. 20 

3.2. 

Difficulties in the supply of multi-territory licences and the aggregation of the 
repertoire of the musical works.................................................................................. 21 

3.2.1.  Problem 1: Authors' collecting societies are not sufficiently prepared for online 

multi-territory licensing which is demanding and costly........................................... 25 

3.2.2.  Problem 2: Online multi-territory licensing by authors' collecting societies is subject 

to legal uncertainty..................................................................................................... 26 

3.2.3.  Consequences............................................................................................................. 27 

3.3. 

Baseline scenario........................................................................................................ 27 

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3.4. 

Does the EU have the right to act?............................................................................. 29 

3.4.1.  Legal basis.................................................................................................................. 29 

3.4.2.  Subsidiarity and proportionality................................................................................. 30 

4. 

5. 

5.1. 

5.2. 

5.3. 

5.4. 

Objectives................................................................................................................... 32 

Policy options on transparency and control in collecting societies............................ 32 

Option A1 – Status quo .............................................................................................. 32 

Option A2 – Better enforcement ................................................................................ 32 

Option A3 – Codification of existing principles ........................................................ 32 

Option A4 – Beyond codification: a governance & transparency framework for 
collecting societies ..................................................................................................... 32 

5.5. 

Comparison of policy options .................................................................................... 32 

5.5.1. 

Impacts on the Internal Market .................................................................................. 32 

5.5.2. 

Impacts on the degree of competition ........................................................................ 32 

5.5.3. 

Impacts on stakeholders: in general ........................................................................... 32 

5.5.4. 

Impacts on stakeholders: SMEs, micro-enterprises ................................................... 32 

5.5.5.  Effectiveness and proportionality .............................................................................. 32 

5.5.6.  Efficiency ................................................................................................................... 32 

6. 

6.1. 

6.2. 

6.3. 

6.4. 

6.5. 

6.6. 

Policy options on multi-territory licensing for online use of musical works............. 32 

Option B1 - Status quo............................................................................................... 32 

Option B2 – The European Licensing Passport ......................................................... 32 

Option B3 – Parallel direct licensing ......................................................................... 32 

Option B4 – Extended collective licensing combined with a country of origin 
principle...................................................................................................................... 32 

Option B5 – Centralised Portal .................................................................................. 32 

Comparison of policy options on multi-territory licensing........................................ 32 

6.6.1. 

Impacts on the Internal Market .................................................................................. 32 

6.6.2. 

Impacts on the degree of competition ........................................................................ 32 

6.6.3. 

Impacts on stakeholders: in general ........................................................................... 32 

6.6.4. 

Impacts on stakeholders: SMEs, micro-enterprises ................................................... 32 

6.6.5.  Effectiveness and proportionality .............................................................................. 32 

6.6.6.  Efficiency ................................................................................................................... 32 

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7. 

7.1. 

7.2. 

7.3. 

8. 

9. 

10. 

11. 

12. 

13. 

14. 

15. 

16. 

17. 

18. 

19. 

20. 

21. 

22. 

23. 

24. 

25. 

26. 

27. 

28. 

29. 

Comparison of the combinations of G&T and "licensing" options ........................... 32 

Combination of options.............................................................................................. 32 

Other impacts ............................................................................................................. 32 

Policy choice .............................................................................................................. 32 

Choice of instrument .................................................................................................. 32 

Monitoring and evaluation ......................................................................................... 32 

Annex A: Report from the hearing on collecting societies, 23 April 2010................ 32 

Annex B: Short summary of main stakeholders views .............................................. 32 

Annex C: Governance and transparency in the acquis............................................... 32 

Annex D: Major EU online services .......................................................................... 32 

Annex E: Digital music revenue ................................................................................ 32 

Annex F: Economic dimension of Collective Rights Management in Europe .......... 32 

Annex G: Cross border royalty flows ........................................................................ 32 

Annex H: Transparency: accounting, reporting and performance indicators ............ 32 

Annex I: Data processing and databases.................................................................... 32 

Annex J: Music publishing......................................................................................... 32 

Annex K: Licensing practices for online use of music .............................................. 32 

Annex L: Implementation of the Commission Recommendation of 2005 and 
Overview of national regulatory frameworks ............................................................ 32 

Annex M: Overview of licensing in the US............................................................... 32 

Annex N: Summary and analysis of impacts of options on transparency and control 
in collecting societies ................................................................................................. 32 

Annex O: Summary and Analysis of impacts of options multi-territory licences for 
online use of musical works....................................................................................... 32 

Annex P: Compliance cost of Option A4 – Beyond codification: a governance and 
transparency framework in collecting societies ......................................................... 32 

Annex Q: Compliance cost of Option B2 – The European Licensing Passport ........ 32 

Annex R: Comparison of the combinations of G&T and "licensing" options ........... 32 

Annex S: Monitoring indicators................................................................................. 32 

Annex T – Glossary ................................................................................................... 32 

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1. 

INTRODUCTION, POLICY CONTEXT, PROCEDURAL ISSUES AND CONSULTATION  

1.1. 

Introduction 

The  protection  provided  by  copyright  and  related  rights  aims  at  ensuring  that  authors, 
performers,  record  and  film  producers,  etc.,  i.e.  those  who  have  created  or  invested  in  the 
creation  of  works  or  other  protected  subject  matter  (literature,  music,  films,  etc.)  can 
determine  how  these  works  and  other  protected  subject  matter  can  be  used  and  be 
remunerated by it. These rights therefore aim at providing an incentive to create, to invest into 
creative activities and to disseminate works and other protected subject matter to the public. 
Copyright protection in the EU needs to be seen within the context of the Single Market and 
the underlying principles of free movement of goods and services. Copyright protection in the 
Digital  Single  Market  needs  to  work  so  that  more  content  and  more  services  become 
accessible to European citizens, including across borders.  

Copyright  is  also  a  factor  for  growth  with  significant  economic  and  social  importance.1  In 
2008  the  creative  industries2  accounted  for  3%  of  EU-27  employment  (i.e.  6.7  million 
people).  The  employment  rate  increased  by  an  average  of  3.5%  a  year  in  the  period  2000-
2007 compared to 1% a year for the total EU economy.3 On a global scale, the contribution of 
these  industries  to  the  GDP  and  national  employment  varies  significantly  in  different 
countries  but  reaches  5.4%  and  5.9%  on  average.4  In  Europe,  the  value  of  the  EU  recorded 
music  market  is  around  €  6  billion  (representing  around  a  fifth  of  the  total  music  market 
which  is  worth  approx.  €  30  billion),5  book  publishers  in  the  EU  and  the  EEA  have  annual 
sales  revenues  of  some  €  23  billion,6  and  the  audiovisual  industry  was  worth  some  €  96 
billion  in  2008.7  Copyright  is  also  an  important  factor  in  so-called  non-core  copyright 
industries,  which  include  architecture,  toys,  games,  production  of  computer  equipment,  TV 
sets or DVD players. It is estimated that non-core industries contribute to 2.34% of GDP and 
2.53% of employment in developed countries.8 

The  distribution  of  goods  and  services  protected  by  copyright  or  related  rights  (e.g.  books, 
audiovisual  productions,  recorded  music)  requires  the  licensing  of  rights  by  different 
rightholders  (e.g.  authors,  performers,  producers).  Individual  licensing  of  these  rights  is  not 
always  practical  or  effective  hence  collecting  societies  ("CS")  were  created  to  manage 
copyright and related rights on a collective basis for some rightholders and in some sectors. 

1 

2 

3 
4 

5 
6 
7 
8 

2012, 

WIPO 

industries, 

Copyright + Creativity = Jobs and Economic Growth, WIPO studies on the economic  contribution of 
copyright 
http://www.ip-watch.org/weblog/wp-
content/uploads/2012/02/WIPO-Copyright-Economic-Contribution-Analysis-2012-FINAL-230-2.pdf 
Creative  industries  include  information  services  such  as  publishing  activities  (books,  periodicals  and 
software),  motion  pictures,  video  and  television  programme  production,  sound  recording  and  music 
publishing  activities,  programming  and  broadcasting  activities,  computer  programming,  architectural 
and  engineering  services,  advertising,  design  activities,  photographic  activities,  translation  and 
interpretation activities, creative, arts and entertainment activities.  
European Competitiveness Report 2010, Commission Staff Working Document, SEC(2010) 1276 final. 
As regards the contribution to GDP, three quarters of the 30 countries participating in the WIPO show a 
contribution between 4% and 6.5%. With respect to employment, the contribution is between 4% and 
7% in three quarters of the countries. (see WIPO study 2012) 
IFPI, Recording industry in numbers 2011. 
Federation of European Publishers' statistics for 2010. 
PWC Global Entertainment and Media Outlook 2009-2013, June 2009. 
Copyright + Creativity = Jobs and Economic Growth (WIPO 2012). 

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CS  allow  commercial  users  to  clear  rights  for  a  large  number  of  works,  in  circumstances 
where  individual  negotiations  with  individual  creators  would  be  impractical  and  entail 
prohibitive transaction costs. From the viewpoint of many commercial users, whether active 
in  traditional  (e.g.  broadcasting,  cable  retransmission)  or  new  forms  of  exploitation  (e.g. 
download,  streaming  services),  the  role  of  collecting  societies  is  therefore  essential. 
Moreover,  CS  play  a  key  role  in  the  protection  and  promotion  of  the  diversity  of  cultural 
expressions by enabling the smallest and less popular repertoires to access the market. 

Rights management exercised by CS practically always has a Single Market dimension. This 
is because even when CS grant licences in their own territory only, they generally license the 
rights of both domestic and foreign rightholders. Therefore, in order to ensure that rights from 
all  over  the  EU  are  licensed  in  all  Member  States  ("MS"),  it  is  crucial  that  CS  function 
efficiently  and  transparently,  taking  due  account  of  the  interest  they  represent.  There  is 
evidence that this is not always the case – recent regulatory failures in some MS indicate that 
there is a need for action in this area.9 Moreover, the ability of CS to efficiently deliver their 
services  is  increasingly  being  questioned,  leading  to  a  loss  of  trust  and  confidence  in  their 
services.  The  issue  is  often  raised  by  national  parliaments,10  the  European  Parliament11  and 
national  competition  authorities.12  It  is  the  subject  of  complaints  from  rightholders  and 
users.13 

In  addition,  specific  problems  have  been  identified  regarding  the  collective  management  of 
the  rights  of  authors'  in  musical  works  (i.e.  composers  of  music  and  authors  of  lyrics)  for 
online uses. Online service providers often need to obtain multi-territory (“MT”) licences in 
the aggregated EU repertoire. Securing such licences proves to be a very difficult and costly 
exercise.14 This complexity is specific to authors' rights in musical works.15 This has led, in a 
number of instances, to a fragmentation of the European market for online music services and 
other online services needing to license rights in music (e.g. audiovisual services). Addressing 
this situation is one of the pre-conditions to stimulating the legal offer of online music across 
the EU, giving consumers greater choice and allowing creators of musical works, and those 
that invest in their creation, the possibility to reap the full benefits of the Single Market. This 
was underlined in the "Single Market Act"16 which states that, in the internet age, collective 

9 
10 

11 

12 

13 
14 
15 
16 

See details in Section 3.1. 
E.g.  in  France,  Assemblée  Nationale,  Commission  des  affaires  culturelles  et  de  l’éducation,  24 
November  2010,  http://www.assemblee-nationale.fr/13/cr-cedu/10-11/c1011016.asp;  in  Spain,  Motion 
173/000229 of Congreso (house of representatives) enquiring on planned government measures on the 
control collecting societies, 19 July 2011 http://www.congreso.es/docu/tramit/173.229.pdf. 
E.g. Report on collective cross-border management of copyright and related rights for legitimate online 
music services (05.03.2007) (Final A6-0053/2007).  
E.g. in Spain, Comisión Nacional de la Competencia (CNC), Report on the collective management of 
intellectual property rights, December 2009; in Slovenia, Decision 200 of 8 April 2011 of the Slovenian 
Competition Protection Office against the Slovenian Society of Composers, Authors and Publishers for 
Copyright  Protection  (SAZAS);  in  Greece,  Elliniki  Epitropi  Antagonismou,  14  July  2003,  AEPI, 
Decision  245/III/2003;  in  Poland,  Decision  n°  RWA-6/2009  of  10  June  2009  of  the  President  of  the 
Office  for  Competition  and  Consumer  Protection,  Polish  Musical  Performing  Artists’  Association 
(SAWP); and Decision n° RWA 19/2008 of 24 June 2008 of the President of the Office of Competition 
and Consumer Protection (Authors' Association ZAIKS). 
See Annex B. 
See details in Section 3.2. 
See details in Chapter 2. 
Commission  Communication  "Single  Market  Act:  Twelve  levers  to  boost  growth  and  strengthen 
confidence "Working together to create new growth", COM(2011) 206 final, adopted on 13 April 2011, 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52011DC0206:EN:NOT. 

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management  must  be  able  to  evolve  towards  European  models  which  facilitate  licences 
covering several territories.  

At the same time it needs to be emphasised that complex copyright licensing processes are 
not  the  only  reason  for  the  fragmentation  of  the  online  market.  Other  reasons  include 
technological  barriers  (limited  access  to  high-speed  networks),  lack  of  legal  certainty  for 
service  providers  (differences  in  legislation  in  areas  such  as  consumer  protection  or  content 
rating),  payment  methods  (access  to  credit  cards),  consumer  trust  in  online  transactions, 
illegal  downloading  of  files  (piracy)  and  cultural  and  linguistic  differences.  Finally,  service 
providers  sometimes  take  decisions  to  segment  shops  territorially  and/or  launch  only  in  the 
more  mature  markets  (e.g.  with  higher  consumer  online  spend)  due  to  purely  commercial 
reasons  such  as,  in  the  case  of  advertisement-funded  services,  the  differences  between 
national advertising markets.17 Nonetheless, the relative importance of the complex licensing 
processes in fragmenting the market is high.  

The  described  inefficiencies  of  collective  rights  management  including  the  complexities 
related to collective licensing of authors' rights for online music services do not only hamper 
the  exercise  of  copyright  and  related  rights  (which  are  rights  of  property,  intrinsically 
individual in nature, largely harmonised at EU level and which, as such, must be protected) by 
their holders depriving them of due benefits and taking away incentives for creation but also 
limit the free movement of goods and services and prevent consumers from enjoying access to 
a wide diversity of content. 

1.2. 

Policy context 

The creation of a Single Market for intellectual property rights has been high on the political 
agenda in the last few years. This Impact Assessment ("IA") is presented within the context of 
the  Europe  2020  Strategy,18  which  aims  to  boost  smart,  sustainable  and  inclusive  growth  in 
Europe, the Commission's Communication "A Digital Agenda for Europe" which includes a 
number of actions to address the barriers to the development of Europe's online markets,19 the 
"Single  Market  Act"  which  identifies  Intellectual  Property  as  one  of  the  key  areas  in  which 
action  is  required  and  the  Commission  Communication  "A  Single  Market  for  Intellectual 
Property  Rights"  (the  "IPR  Communication").20  In  addition,  this  Impact  Assessment  is 
presented  in  the  context  of  the  ambition  to  achieve  the  Digital  Single  Market21  by  creating 
conditions  for  thriving  e-commerce  and  online  services  as  set  out  in  the  Commission's 
Communication "A coherent framework for building trust in the Digital Single Market for e-
commerce  and  online  services"  which  also  identifies  the  implementation  of  the  IPR 

17 

18 
19 

20 

21 

Advertisements are targeted at local and national audiences. Service providers cannot raise revenue in 
e.g. Greece on the basis of advertisements destined e.g. for the Swedish market. 
EUROPE 2020 - A strategy for smart, sustainable and inclusive growth - COM(2010) 2020. 
Adopted  on  19  May  2010,  http://ec.europa.eu/information_society/digital-agenda/documents/digital-
agenda-communication-en.pdf  
A  Single  Market  for  Intellectual  Property  Rights  -  Boosting  creativity  and  innovation  to  provide 
economic  growth,  high  quality  jobs  and  first  class  products  and  services  in  Europe:  COM(2011)  287 
final of 24.05.2011. 
The Digital Single Market is far from achieving its full potential; the cost of the failure to complete it is 
expected to be at least 4.1% GDP between 2010 and 2020 i.e. EUR 500 billion or EUR 1000 per citizen 
(Copenhagen Economics, The Economic Impact of a European Digital Single Market, March 2010). 

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Communication  as  one  of  the  main  actions  to  develop  the  legal  and  cross-border  offer  of 
online products and services.22 

In  the  IPR  Communication  the  Commission,  inter  alia,  announced  its  intention  to  create  a 
legal  framework  for  the  collective  management  of  copyright,  including  common  rules  on 
governance  and  transparency  ("G&T")  of  the  entities  carrying  out  such  collective 
management as well as specific measures to foster the development of new online services in 
the music sector.23  

Against  this  background,  this  IA  analyses  the  nature  and  magnitude  of  two  specific  but 
interlinked problems: inefficiencies associated with collective management of copyright and 
related  rights  in  general  and  the  specific  complexities  of  the  collective  licensing  of  authors' 
rights in musical works for online uses. It has the objective of setting out an approach to meet 
two  related  policy  objectives:  improving  the  governance  and  transparency  of  collecting 
societies at large and facilitating multi-territory licensing of musical works for online services.  

Whilst the IPR Communication envisages the "[c]reation of a comprehensive framework for 
copyright  in  the  digital  Single  Market"24,  the  other  proposed  initiatives  within  this  IPR 
framework,  including  any  measures  to  fight  piracy  as  well  as  other  measures  required  to 
remove  other  barriers  to  the  Digital  Single  Market  as  mentioned  in  the  Introduction,  do  not 
form part of this exercise. 

This IA analyses the functioning of CS as such. It does not discuss the nature of rights (e.g. 
exclusive  rights  or  remuneration  rights)  or  whether  certain  rights  should  be  collectively 
managed (e.g. compulsory collective management) as this would go beyond the functioning 
of CS and enter rather into the definition of rights as such (i.e. the subject matter of existing 
Directives).  It  does  not  analyse,  for  instance,  the  issue  of  compensation  for  acts  of  private 
copying. Discussions on this topic run in parallel as announced in the IPR Communication.25  

1.3. 

Procedural issues and consultation of interested parties 

In  preparation  of  this  IA  DG  MARKT  organised  wide-ranging  consultations  the  results  of 
which  have  been  integrated  in  the  IA.  All  interested  parties  -  including  authors,  publishers, 
performers, producers, CS, commercial users, consumers and public bodies - were involved. 
The formal consultation process began in October 2009, when DG INFSO and DG MARKT 
undertook an online public consultation on "Content Online"26 in order to promote a reflection 
and  broad  debate  about  possible  European  responses  to  the  challenges  of  the  digital 
"dematerialisation" of content, including easier and quicker rights clearance structures while 
ensuring that rightholders are remunerated fairly and adequately when their works are used on 
digital platforms. This online consultation was open for comments from 22 October 2009 to 5 
January  2010.  In  response  to  the  consultation,  several  stakeholders  considered  that  the 
aggregation of different music repertoires would simplify rights clearance and licensing. Also, 

22 

23 
24 
25 

26 

12 

on 

942, 

January 

adopted 

http://ec.europa.eu/internal_market/e-

COM(2011) 
2012, 
commerce/docs/communication2012/COM2011_942_en.pdf . 
Section 3.3.1 of the IPR Communication. 
Section 3.3 of the IPR Communication. 
Section 3.3.4 of the IPR Communication. See also Statement by Commissioner Barnier of 23 November 
2011,http://ec.europa.eu/commission_2010-2014/barnier/headlines/speeches/2011/11/20111123_en.htm 
Creative Content in a European Digital Single Market: Challenges for the Future. A Reflection 
Document of DG INFSO and DG MARKT (22 October 2009). 
http://ec.europa.eu/avpolicy/docs/other_actions/col_2009/reflection_paper.pdf 

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a  number  of  authors'  associations,  publishers  and  commercial  users  pointed  out  that  further 
reflection on measures focusing on the governance and transparency of CS would be useful. 
Consumers'  associations  deemed  that  regulatory  intervention,  for  instance  by  means  of  a 
framework directive, was required. 

On 23 April 2010, the Commission organised a public hearing on the governance of collective 
rights management in the EU,27 attended by almost 300 stakeholders. The aim of the hearing 
was to explore how the relationships between copyright owners, CS and commercial users of 
copyright  had  evolved  over  time.  In  December  2010  the  European  Commission  launched  a 
closed consultation, targeted at the European CS, in order to collect further data for this IA. 
Numerous bilateral meetings with different stakeholders were organised between March 2010 
and December 2011.28 These consultations confirmed the need to improve the G&T of CS and 
to set a framework that facilitates the online licensing of musical works. 

DG MARKT has closely cooperated with other DGs: between May 2010 and February 2012 
DG MARKT organised seven inter-service steering group meetings, with the participation of 
the following DGs: COMP, EAC, ENTR, INFSO, LS, SANCO, SG and TRADE. 

The Impact Assessment Board examined the IA and in its opinion of 16 March 2012 asked for 
the submission of a revised version of the report. Further to the Board's opinion, the following 
main changes have been made to this IA: the context of the addressed problems and the scope 
of  the  initiative  were  clarified  (including  the  link  between  the  two  problem  areas),  the 
assessment  of  the  need  for  EU  action  was  improved  (incl.  by  an  improved  Annex  L  on  the 
evaluation  of  the  2005  Recommendation  and  self-regulatory  approaches),  the  baseline 
scenario  and  the  presentation  of  options  were  clarified  and  the  analysis  of  their  impacts 
strengthened,  stakeholders'  views  have  been  presented  more  extensively  throughout  the  IA 
and a glossary was added. On 22 May 2012 the Board issued a positive opinion. On the basis 
of  the  opinion,  the  IA  report  has  been  further  improved.  In  particular,  the  IA  now  better 
explains the relative importance of the discussed issues in addressing the fragmentation of the 
market; it further clarifies the option on the European Licensing Passport and its impacts, adds 
more details on stakeholder views and MS experience.  

2. 

BACKGROUND  

2.1. 

Collective rights management 

The  holder  of  a  copyright  or  a  related  right  (the  rightholder)  is  generally  in  a  position  to 
choose how to exploit his or her right (see Box 1). In particular, the rightholder may opt for 
collective management or for individual management. The choice varies depending on the 
category of rightholder and the nature of the use.29  

27 

28 
29 

http://ec.europa.eu/internal_market/copyright/management/management_en.htm#hearing 

See 
Annex A. 
See Annex B for a summary of the main stakeholders' views. 
Authors of musical works (composers, lyricists) have traditionally relied on the management of their 
rights by collecting societies. The picture is different for authors in other sectors (e.g. authors of literary 
works  or  of  audiovisual  works)  where  direct  licensing  (by  the  publisher,  by  the  film  producer)  is 
predominant.  This  is  partly  because  of  high  cost  of  monitoring  uses  of  musical  works  (e.g.  public 
performance in restaurants, discos, etc.). The situation also varies amongst holders of related rights. 
For instance, performers and phonogram producers tend to rely on collective management as far as their 
remuneration  rights  (notably  for  broadcasting  and  other  forms  of  communication  to  the  public)  are 

and 

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Box 1 - Economic rights of copyright and related rights 

Copyright is vested in authors whereas related rights are vested in performers, phonogram (i.e. record) and 
film  producers  as  well  as  broadcasting  organisations.  Copyright  and  related  rights  include  so-called 
"economic rights" which enable rightholders to control (license) the use of their works and other protected 
subject  matter  (i.e.  performances,  phonograms,  audiovisual  productions  and  broadcasts)  and  to  be 
remunerated for their use. These rights normally take the form of exclusive rights (e.g. the right to authorise 
the  distribution  of  copies  of  a  book).  They  can  be  managed  directly  by  the  original  rightholder  (e.g.  the 
author of a book) or by those to whom the rights have been transferred (e.g. a book publisher). They can also 
be managed collectively by a CS if the society is entrusted to do so by the rightholder. For certain forms of 
exploitation (normally secondary forms of exploitation), rights can be subject to a "compulsory licence"30 or 
simply take the form of a "remuneration right".31  
Economic rights32 include rights to reproduce and distribute works and other protected subject matter (e.g. in 
the form of books, DVDs, etc.), and rights to publicly perform/communicate to the public works and other 
protected subject matter (e.g. the public performance of a musical work in a concert or of a record in a bar, 
the broadcast of a film, etc.). With the advent of digital networks and forms of distribution, rightholders have 
also been accorded the "making available" right to cover internet uses such as downloads, streams, etc.  

Collective  management  is  generally  carried  out  by  collecting  societies,  which  are 
organisations traditionally set up by rightholders at national level to collectively manage their 
rights  (see  Box  2).33  Collecting  societies  play  a  valuable  role  in  facilitating  licensing  of 
copyright and related rights and lowering transaction costs. Notably, they allow commercial 
users  to  clear  rights  for  a  large  number  of  works,34  in  circumstances  where  individual 
negotiations  with  individual  creators  would  be  impractical  and  entail  prohibitive  transaction 
costs.35  They  allow  rightholders  to  be  remunerated  for  uses  which  they  would  not  be  in  a 
position to control or enforce themselves, including in non-domestic markets. 

Collective management has traditionally been regulated to a greater or lesser extent under the 
national law of each MS. There are significant differences in how MS address the activities of 
CS.36 In some MS, the recent failures in the activities of some CS37 have triggered renewed 
attention,  in  particular  as  regards  their  transparency,  governance  and  the  handling  of 

concerned, but less so for their exclusive rights where direct licensing by the producer, including of the 
performers' rights transferred to the producer, is predominant. Audiovisual producers resort to collective 
management even less (mostly for the licensing of cable retransmission rights). Broadcasters hardly use 
it (as far as the management of their own rights is concerned). 
Under a compulsory licence, the owner of the rights cannot oppose the granting of a licence. 
A remuneration right entitles the owner only to collect remuneration from certain uses. 
The  content  of  these  rights  is  defined  Directive  2001/29/EC  of  the  European  Parliament  and  of  the 
Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the 
information  society,  OJ  L  167,  22.6.2001,  p.10  and  in  Directive  2006/115/EC  of  the  European 
Parliament  and  of  the  Council  of  12  December  2006  on  rental  right  and  lending  right  and  on  certain 
rights related to copyright in the field of intellectual property, OJ L 376, 27.12.2006, p. 28. 
Each  CS  traditionally  operates  in  its  own  national  territory  and  licenses  national  users.  Its  members 
(those who directly entrust their rights to the CS) are predominantly national rightholders. Generally, a 
CS can only license the rights for which it has been given the authority (or mandate) to do so.  
E.g. the music streaming service Spotify has a catalogue of 16 million songs; a single song can have 4-
10 rightholders. 
One example would be the management of rights related to the public performance of musical works 
and phonograms. Another would be the management of the compensation for acts of reprography (e.g. 
photocopies)  and  private  copies.  Other rights  which  are often  collectively  managed  include  the rental 
right, the public lending right, the artists' resale right as well as the cable retransmission right.  
Some MS only set out very general principles and leave significant freedom to CS and their members to 
set out their detailed conditions of operation. Other MS prescribe more detailed rules e.g. regarding the 
legal form of CS, their accounting policies, the supervision they are subject to, etc. See Annex L. 
See Chapter 3. 

30 
31 
32 

33 

34 

35 

36 

37 

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remuneration  collected  on  behalf  of  rightholders.38  The  existing  EU  legal  framework  is 
showing its limitations in addressing these issues: various Directives39 contain references to 
management by CS but do not address the conditions of functioning of CS as such, principles 
stemming from Commission competition decisions are not uniformly applied,40 the take up of 
the  Commission  Recommendation  on  collective  cross-border  management  of  copyright  and 
related rights for legitimate online music services (the "2005 Recommendation")41 has been 
unsatisfactory42 and the impact of the 2006 Directive on services in the internal market (the 
"Services Directive")43 on CS, though positive, has so far been limited. 

Box 2 – Collecting societies 

CS aggregate one or more of the rights of one or more categories of rightholders notably for licensing 
purposes,  i.e.  to  grant  licences  to  commercial  users  on  behalf  of  rightholders.  They  also  provide  services 
such  as  auditing  and  monitoring  the  use  of  rights  and  collecting  and  distributing  royalties.  They  provide 
services to rightholders, to users and to other CS. CS are historically established on a national basis: in most 
EU MS there are several CS representing different rightholders and, sometimes, different rights. The sum of 
the  rights  of  all  rightholders  it  represents  directly  constitutes  the  society's  own  repertoire,  which  is  often 
limited  to  domestic  works.  However,  CS  in  different  countries  traditionally  grant  each  other  the  right  to 
license their respective repertoires through a network of "reciprocal representation agreements". This way 
a CS can license its own repertoire and the repertoire of other CS.44  

They  are  formed  under  different  legal  forms:  some  are  limited  liability  companies  (e.g.  PRS  in  the  UK), 
limited liability collective companies (SABAM in BE) or société civile à capital variable (e.g. SACEM in 
FR) but others may be not-for-profit associations (e.g. SGAE in ES, BUMA in the NL) or foundations (e.g. 
STEMRA in the NL) or even ad hoc legal forms explicitly created under national law (e.g. SIAE in IT is an 
ente pubblico economico a base associativa). In some MS CS are under the supervision of ministries or other 
authorities.45 There are also important differences between CS as to the amount of funds they manage and the 
number of employees they employ.46  

In  general  (but  not  always),  there  is  only  one  CS  representing  all  or  some  of  the  rights  of  a  category  of 
rightholders  in  a  given  territory.  As  a  result,  CS  have  often  been  considered  by  competition  authorities, 
whether  the  Commission  or  national  competition  authorities,  as  holding  a  dominant  position  within  their 
respective product and geographical markets.47 

38 
39 
40 
41 

42 
43 

44 

45 
46 
47 

Some MS adopted new legislation addressing G&T of CS. For details see Annex L. 
See Glossary. 
See Annex C and Section 3.1. 
Commission  Recommendation  2005/737/EC  on  collective  cross-border  management  of  copyright  and 
related rights for legitimate online music services (OJ L 276/54, 21.10.2005). 
See Annex L. 
Directive 2006/123/EC of 12 December 2006 on services in the internal market, OJ L 376, 27.12.2006, 
p.  36.  The  implementation  of  the  Services  Directive,  and  in  particular  of  articles  9  to  15,  has  led  to 
improvements  to  the  legal  framework  applied  to  CS  in  a  number  of  MS.  Some  MS  that  required 
authorisation  for  the  establishment  of  collective  rights  managers  have  amended  the  criteria  for 
authorisation  and  related  procedures  in  order  to  comply  with  the  Services  Directive.  Discriminatory 
requirements have been eliminated, criteria have been clarified and procedures have been simplified. As 
for  MS'  requirements  with  respect  to  the  cross-border  provision  of  collective  rights  management 
services  (to  comply  with  Article  16  of  the  Services  Directive,  MS  may  no  longer  impose  a  prior 
authorisation, let alone an establishment requirement, on collective rights managers legally established 
in other MS and wanting to provide services into their territory) there is still room for improvement. 
In  particular,  as  regards  off-line  uses,  this  licence  is  usually  limited  to  uses  in  its  own  territory 
("territorial  licensing")  although  there  are  important  exceptions  to  this  principle,  e.g.  as  regards  the 
licensing of so-called mechanical rights (see Box 3) by authors' CS to record producers. 
See Annex L. 
See Annex F. 
E.g.  Case  395/87,  Ministère  public  v  Jean-Louis  Tournier;  Joined  cases  110/88,  241/88  and  242/88, 
François Lucazeau and others v SACEM and others. 

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In terms of the contestability of markets, in the offline environment there is no real prospect of competition 
for services in a particular territory due to the need to monitor and enforce rights in physical premises (e.g. 
discos,  bars).  This  creates  high  entry  barriers  (sufficient  number  of  represented  rightholders  is  required  to 
spread  costs).  On  the  contrary,  in  the  online  world  the  contestability  of  the  market  is  realistic.  CS  can 
compete as they can license they own repertoire in their territory of another CS and carry out monitoring by 
electronic means. Consequently, rightholders can exercise their right to choose the better performing CS. 

Economic  dimension  of  collective  management48:  collecting  societies  collected  around  € 
6.1 billion in the EU in 2009.49 The vast majority of this income fell to the 101 European CS 
managing  authors'  rights  (for  over  one  million  authors)  and  most  of  this  income  is  derived 
from musical creations (83% in the case of authors societies).  

2.2. 

Collective rights management of rights in musical works for online use  

The  online  environment  has  brought  changes  to  copyright  licensing.  One  change  is  that 
online services are not limited by national borders and can reach over to consumers in other 
MS.  Licences  for  online  services  can  also  be  granted  and  monitored  at  a  distance.  In  many 
sectors, MT licensing of online rights is carried out directly by rightholders, or those to which 
the  rights  have  been  transferred,  without  the  intervention  of  CS  (direct  MT  licensing).50  In 
other sectors, the MT licensing of online rights is done collectively.51  

Box 3 – The rights required for online use of musical works: mechanical and performing rights 

The online exploitation of recorded music, films and other audiovisual works, video games, catch-up TV and 
radio,  etc.  requires  normally  the  licensing  of  the  authors'  rights  in  musical  works.  This  involves  a 
combination of two exclusive rights:  

(1)  the  right  to  authorise  the  reproduction  of  the  musical  work  (as  such  work  must  be  stored  prior  to  its 
communication in a computer memory and, in the case of services such as "download services", a “copy” is 
kept by the end user) – the so called mechanical rights and  

(2) the right to authorise making available to the public of the musical work (as such work is made available 
on the website and accessed by end users) – part of the so called performing rights. 

In  the  case  of  physical  distribution  of  music  (e.g.  CDs)  rights  are  centralised  in  the  record 
producers.52  The  situation  is  different  as  regards  online  exploitation  of  recorded  music  (e.g. 
downloads)  where  authors  do  not  license  the  rights  to  the  record  producer  any  longer  but 

48 
49 

50 

51 

52 

See Annex F.  
Ibid.  table  F.8.1;  the  overall  value  of  European  copyright  industries  is  estimated  at  €400  billion  (cf. 
European Competitiveness Report 2010 and Eurostat). 
For instance, record producers licence their rights directly for most online services. The same applies in 
the case of film producers, book publishers, journal and magazine publishers or games publishers. 
For  instance,  societies  active  in  visual  art  and  photography  have  pooled  or  combined  their  repertoire 
and each local society has the authority to license the repertoire on a multi-territorial basis to any user. 
Record  producers'  societies  have  also  organised  the  licensing  of  simulcasting  (unaltered  and 
simultaneous online retransmission of a TV or radio broadcast) and webcasting (certain types of non-
interactive online streaming) services, as well as the rights for certain forms of on-demand streaming of 
phonograms  (namely  catch-up  TV  and  radio)  in  a  similar  manner.  Multi-territory  licensing  has  also 
developed successfully in the reprography sector and in respect of access to educational material in so-
called “virtual learning environments” which extend to foreign-based students. 
The producer obtains the required mechanical reproduction right directly from the performers and via a 
EU  based  CS  from  the  authors  and  publishers.  This  is  done  through  a  "central  licensing  agreement" 
(CLA) between a record producer and a EU CS. Under this type of agreements the producer obtains an 
EEA-wide multi-territory licence from a EU society of its choice. Note that, of course, there is no need 
to clear the performing right for physical distribution.  

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directly  to  the  online  service  provider  (e.g.  iTunes).  This  is  largely  done  by  the  CS 
representing the authors of  musical  works.  Thus,  authors CSs have become key players in 
the licensing of online services.  

The development of MT licensing of online music rights by authors' societies is still on-going 
and  seems  to  be  evolving  in  a  different  manner  than  the  MT  licensing  of  online  rights  for 
other rightholders or in other sectors. This is partly because other sectors and rightholders rely 
far less on collective management for the licensing of online rights and partly because of the 
manner in which the management of rights in musical works has evolved in Europe. 

The  emergence  of  online  music  services  created  a  challenge  to  CS  which  had  traditionally 
granted  only  territorial  licences  for  their  own/domestic  repertoire  and  for  the  repertoire 
managed on the basis of reciprocal representation agreements.53 Adapting to the new market 
requirements  has  proven  to  be  difficult  for  CS  in  terms  of  the  required  data  identification, 
management  capability  and  the  aggregation  of  repertoire.  The  necessary  improvements  are 
often  hindered  by  rightholders'  insufficient  influence  over  the  decisions  (costs,  stakes  and 
investments) taken by the CS (problems with G&T) and the lack of technological means.54  

This was one of the reasons for the specific development which occurred since the mid-2000's 
whereby a number of music publishers withdrew from CS the management of those parts of 
the rights for online use of musical works that they control and began to license them directly 
through designated agents or selected CS. As a result, a number of new licensing platforms 
(collecting societies and publisher agents) have been created to provide MT licences.55 Some 
CS  also  started  to  grant  MT  licences  in  their  own  repertoire  to  online  users.  While  this  has 
improved the possibilities for users to obtain MT licences, it has also led to a fragmentation of 
the repertoire (parts now in the hands of the CS and parts in the hands of the music publishers 
or their agents).  

Box 4 – Anglo-American repertoire and Continental repertoire / Split copyrights 

There  are  important  differences  in  how  rights  in  musical  works  (whether  offline  or  online)  are  managed 
between the UK and Ireland (as well as in the US - the so-called Anglo-American repertoire) and the rest of 
the EU (the so-called Continental repertoire): 

In the UK, Ireland (and the US), generally authors of musical works assign their mechanical rights to music 
publishers56  and  their  performing  rights  to  performing  rights  CS.  This  means  that  publishers  have  the 

53 

54 
55 

56 

These  mono-territory,  multi-repertoire  licences  are  sufficient  for  "offline"  uses  (by  broadcasters, 
cinemas, discotheques, bars, etc.). It should be also noted that the Commission Decision of 16 July 2008 
(COMP/C2/38.698)  in  the  CISAC  case  ordered  the  collecting  societies  being  parties  to  the  case  to 
withdraw  the  provisions  conferring  territorial  exclusivity  from  their  reciprocal  representation 
agreements. 
See Chapter 3. 
Such  as  CELAS  for  the  licensing  of  rights  in  the  EMI  publishing  catalogue,  or  PAECOL  for  the 
licensing of rights in the SONY ATV catalogue; see Annex K, table K.2. and Annex L. 
A  music  publisher  markets  musical  works  and  provides  authors  with  a  number  of  other  services. 
Publishers usually  track various royalty payments,  monitor uses and licence certain uses on behalf of 
authors.  They  often  pay  the  author  an  advance  on  royalties  and  promote  the  work,  e.g.  by  creating 
"demo" recordings or finding performers and record producers which might be interested in the work. 
In return, publishers obtain a share of royalties from certain rights e.g. from the right of communication 
to  the  public,  and/or  a  transfer  of  certain  rights  e.g.  mechanical  rights  (see  Annex  J,  table  J.3,  for  an 
illustration of the revenue streams of publishers). 

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mechanical rights in the Anglo-American repertoire.57 Performing rights are managed by CS who enter into 
reciprocal representation agreements with CS in other MS. 

In the rest of the EU, generally authors assign both mechanical and performing rights to CS while providing 
publishers  with  the  right  to  a  part  of  the  royalties  due  to  them.58  CS  enter  into  reciprocal  representation 
agreements, on the basis of which their repertoire is represented in other national markets by other CS.  

Additional  complexity  is  added  by  the  issue  of  split-copyrights:  many  musical  works  are  co-written, 
meaning that in many cases there will be more than one author, each of whom has rights; these authors may 
have  transferred  their  rights  to  different  publishers  and/or  mandated  the  administration  of  their  rights  to 
different CS. Thus, clearing the rights to use one work may require several licences.  

As  a  result,  for  the  online  exploitation  of  musical  works,  service  providers  need  to  obtain 
licences from a number of different licensors: 

(1) 

Some CS which grant licences for their own repertoire on a multi-territory basis; 

(2)  Music  publishers  or  their  licensing  agents  which  grant  licences  for  the  publisher's 
Anglo-American repertoire on a multi-territory basis;  

(3) 
CS  which  grant  multi-repertoire  licences  for  their  own  territory  (these  are  needed  to 
acquire all the remaining rights that have not been licensed via the MT licences described in 
(1) and (2)). 

Besides the licensing of rights in musical works, service providers also need to get licences 
from  producers  (record  producers,  audiovisual  producers)  who  typically  license  their  rights 
directly59  (normally  along  with  the  rights  of  performers  that  have  been  transferred  to  the 
producer) without relying on CS and often on a multi-territory basis.  

3. 

PROBLEM DEFINITION  

The  IA  identifies  two  layers  of  problems  related  to  the  collective  management  of  rights: 
problems  as  regards  the  functioning  of  collecting  societies  (first  layer)  in  general  (whatever 
the  category  of  rightholders  they  represent  or  the  category  of  rights  they  manage)  and 
problems  specific  to  the  supply  of  multi-territory  licences  for  the  online  exploitation  of 
musical works (second layer). 

The  two  problems  are  interlinked.  It  is  explained  in  this  Chapter  that  in  many  cases 
rightholders do not have efficient means to control the management of their CS, including the 
decisions taken as regards licensing or the distribution of royalties. As indicated in Box 2, in 
the online environment, in theory, the possibility of rightholders to choose the best CS could 
lead to competition between CS. This choice however can only be effective if a) rightholders 
have a real choice (i.e. there is no barrier created by law or the societies' practices), b) they 
have access to sufficient information on the key performance indicators of the CS and c) they 

57 

58 

59 

In the case of the Anglo repertoire these rights are licensed through an exclusive agent MCPS owned by 
the  Music  Publishers'  Association.  MCPS  could  enter  into  reciprocal  representation  agreements  with 
other CS in order to entrust the management of publishers' mechanical rights but normally this does not 
happen and publishers appoint local sub-publishers which become members of local CS and authorise 
the management of mechanical rights to them directly. 
Since publishers are often members of CS the share of the royalty is often directly allocated to them by 
CS.  Some  publishers  appoint  local  sub-publishers  to  collect  the  share  of  the  royalty  for  them  locally 
directly from the distributing collecting society. 
Though see above in Chapter 2 for examples of collective management of rights of record producers.  

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can  exercise  control  over  the  management's  strategic  decisions,  in  particular  whether  they 
engage  in  multi-territory  licensing  and  whether  this  is  done  in  a  cost-effective  manner. 
Therefore, the problems related to MT licensing (subject to the  restrictions  explained in the 
Introduction) derive, to a large extent, from the inability of rightholders to access information 
and exercise real control over the CS. G&T layer is required for addressing these problems of 
MT  licensing.  But  MT  licensing  is  also  affected  by  problems  of  a  different  nature  such  as 
invoicing  and  data  processing.  These  require  measures  going  beyond  G&T.  Whilst  the 
problems related to the G&T of CS have a broader scope, the second layer of problems cannot 
be  solved  without  addressing  the  first  one.  The  identified  problems  are  summarised  in  the 
following problem tree. 

Table 1: Problem tree 

3.1. 

Insufficient checks and balances on the functioning of collecting societies 

3.1.1.  Problem 1: Rightholders – in particular non-domestic ones – are not always able to 
exercise  their  rights,  notably  because  of  poor  governance  and  transparency 
standards applied by collecting societies  

Collecting societies are often composed of several thousand members, able to exercise voting 
rights60  in  general  meetings  to  which  managers  and  boards  governing  the  operations  of  the 
societies are accountable. Membership of CS, to date, remains largely national. Foreign direct 
membership accounts for approximately 10% of the membership of CS.61  

60 

61 

Except as regards CS whose members are other CS or associations representing rightholders, rather than 
individual rightholders. For instance, this is the case with regard to some reprography rights societies. 
For instance, in societies such as PRS for Music, SACEM, SIAE, STIM or SABAM, members which 
are not nationals of or domiciled in the same MS as their collecting society amount to 7%, 11%, 10%, 
10% and 10% of membership respectively. 

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15 

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At  the  same  time,  a  significant  share  of  collecting  societies'  turnover  derives  from  non-
domestic works. A sample of 10 major authors' CS in the EU shows62 that out of € 2.5 billion 
collected,  €  210  million  were  paid  to  other  societies:  roughly  8%  of  all  collections.  If  the 
picture is taken at the level of one country, 6.1% of the royalties received by the eight active 
Spanish  CS  in  2007  (€  518.9  million)  was  collected  abroad  and  12.3%  total  revenue 
distributed amongst rightholders (€ 413.7 million) was assigned to members of CS from other 
countries.63 These flows between CS do not take into account the entirety of the cross-border 
dimension,  as  some  important  foreign  rightholders  collect  income  directly  from  domestic 
societies  (e.g.  music  publishers  via  sub-publishers,  major  record  companies  via  their  local 
affiliates).64 The cross-border dimension is particularly important in the music sector; a recent 
study shows that the share of local repertoires in music downloads is 15% in DE, 17% in PL, 
23% in NL, 28% in FR, 30% in ES and 45% in SE.65 

The G&T of each CS is paramount not only to its members but also to foreign rightholders 
whose rights are, directly or indirectly, managed by that CS. Accordingly, and similarly to the 
situation  for  any  legal  entity  with  large  membership,  the  rules  on  G&T  could  (and  should) 
play a role in safeguarding the interests of all rightholders whose rights a CS manages as well 
as  in  alleviating  the  asymmetry  of  information  of  commercial  partners  who  are  facing  the 
important market (quasi-monopoly) power that most CS enjoy within their domestic markets. 

However,  this  is  not  happening  in  all  cases.  Currently,  there  are  no  EU  G&T  rules  which 
apply  to  CS  as  such;  although  some  of  them,  if  incorporated  as  limited  liability  companies, 
will be subject to EU harmonised company law rules on certain transparency requirements,66 
on capital formation67 and on disclosure of financial statements.68 As a result, the G&T rules 
applied from CS result from (different) national rules,69 self-regulation either by the society 
itself (e.g. statutes)70 or through associations,71 decisions of competition authorities (including 

62 
63 

64 

65 

66 

67 

68 

69 
70 

of 

rights, 

property 

December 

intellectual 

management 

See Annex G. Data of 2010 and for 3 societies of 2008. 
The  difference  between  the  royalties  collected  and  the  revenue  distributed  was  assigned  to 
administration  costs  (€  73.3  million)  and  to  expenditures  on  assistance,  promotion  and  training  for 
societies members (€ 35.2 million). See Comisión Nacional de la Competencia (CNC), Report on the 
2009, 
collective 
http://www.cncompetencia.es/Default.aspx?TabId=228, §§56, 59 and 60. 
E.g.  in  the  case  of  GEMA,  approx.  €  101  million  non-domestic  income  was  paid  to  sub-publishers 
compared to € 105 million paid to non-domestic societies (2009). The figures are € 100 million vs. € 99 
million in 2010. See in Annex G. 
See  E.  Legrand,  Monitoring  the  cross-border  circulation  of  European  music  repertoire  within  the 
European Union, Report commissioned by EMO & Eurosonic Noordeslag, in partnership with Nielsen, 
January 2012. 
Directive  2009/101/EC  of  the  European  Parliament  and  of  the  Council  of  16  September  2009  on 
coordination of safeguards which, for the protection of the interests of members and third parties, are 
required by Member States of companies within the meaning of the second paragraph of Article 48 of 
the Treaty, with a view to making such safeguards equivalent, OJ L 258, 1.10.2009, p. 11. 
Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for 
the  protection  of  the  interests  of  members  and  others,  are  required  by  Member  States  of  companies 
within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of 
public  limited  liability  companies  and  the  maintenance  and  alteration  of  their  capital,  with  a  view  to 
making such safeguards equivalent, OJ L 26, 31.1.1977, p. 1. 
Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54 (3) (g) of the Treaty on the 
annual  accounts  of  certain  types  of  companies,  OJ  L  222,  14.8.1978,  p.  11;  and  Seventh  Council 
Directive  83/349/EEC  of  13  June  1983  based  on  the  Article  54  (3)  (g)  of  the  Treaty  on  consolidated 
accounts, OJ L 193, 18.7.1983, p. 1. 
See in Annex L.  
Statutes of many CS have transparency rules. 

EN 

16 

   EN 

 
                                                 
the European Commission), case-law (including from the Court of Justice of the EU) or soft-
law  (e.g.  2005  Recommendation)72.  A  number  of  MS  have  intervened  in  recent  years  via 
legislation to address problems relating to the functioning of collective management.73 There 
is however evidence that national rules and/or self-regulatory efforts are not effective in 
securing  that  important  principles  of  governance  and  transparency  are  uniformly  or 
properly applied across the EU.74 

Box 5 – Cases of insufficient governance and transparency standards 

Firstly, certain rightholders are unable to properly exercise their rights: 

the principle of rightholder choice75 is not always available from some collecting societies,76 or 

• 
is difficult to exercise;77 
• 
rightholders;78 
• 
some music and book publishers claim that they cannot become members of some CS which 
administer their rights,79 or that their role in the decision-making of some societies is curtailed.80 In the case 

there  are  still  occurrences  of  discrimination  between  voting  members  of  societies  and  other 

71 

72 

73 

74 
75 

76 

77 

78 

the 

code 

rules 

IFRRO 

musical 

initiative 

concerns 

societies: 

reprography 

of  Authors 

of  Societies 

and  Composers 

the  European  Grouping 

There  are  several  initiatives  regarding  the  CS  managing  music  rights.  See  for  instance:  Common 
Declaration of 7 July 2006 on Governance in collective Management Societies and on Management of 
Online Rights in Music Works, issued by the International Confederation of Music Publishers (ICMP) 
(GESAC), 
and 
(http://www.gesac.org/eng/positions/download/ICMPGESACDeclaration_final_EN_070706.pdf); 
CISAC 
professional 
societies 
for 
(http://www.cisac.org/CisacPortal/cisacDownloadFile.do?docId=18258); IMPALA code of conduct for record 
company 
societies 
collecting 
(http://www.impalamusic.org/FINAL%20IMPALA%20Code%20of%20Conduct%20for%20Collecting%20Societi
es.pdf); IFPI Code of Conduct for music industry Music Licensing Companies; PRS for Music Code of 
(http://www.prsformusic.com/users/businessesandliveevents/codeofpractice/Pages/default.aspx). 
practice 
conduct 
of 
Another 
(http://www.ifrro.org/content/ifrro-code-conduct-reproduction-rights-organisations).  At 
the  national 
level, in the UK, work on a code of conduct for collecting societies is carried out under the auspices of 
the British Copyright Council. Internationally, a voluntary code of conduct for CS is also in operation in 
Australia (http://www.copyright.com.au/assets/documents/CodeFinal2008.pdf). 
See  Annex  C  for  a  description  of  general  principles  of  G&T  applicable  to  CS  which  stem  from 
Commission decisions in the anti-trust field, judgments of the ECJ and the 2005 Recommendation.  
In France, Law n°2006-961 of 1 August 2006; in Belgium, Law of 10 December 2009, amending, to the 
extent  the  status  and  the  control  of  collecting  societies  is  concerned,  Law  of  30  June  1994  (MB 
23/12/09);  in Poland,  Law of  8  July  2010,  Amending  the  law on  copyright  and related  rights  OJ  152 
(2010) item 1016. In Hungary, Act 173 of 2011 amending certain laws relating to intellectual property 
(adopted  on  5th  December  2011).  In  Italy,  Article  39  of  Law-decree  24.1.2012,  n.  1  on  "Urgent 
provisions  for  competition,  the  development  of  infrastructures  and  competitiveness"  (OJ  n.19  of  24 
January 2012). There are also forthcoming initiatives: in the Netherlands, proposed amendments to the 
Dutch Act of 6 March 2003 on the supervision of collective management organisations administering 
copyrights and related rights; in Germany, the Ministry of Justice has held hearings on the transparency 
of CS in the context of the preparation of the so-called "third basket" of copyright reforms.  
See Annex L on the evaluation of the Recommendation & MS experience. 
Members should be free to decide which category of rights to entrust to a CS, for which territories and 
to which CS. Cf. Commission Recommendation 2005/737 and Commission antitrust decisions,  cit. in 
Annex C.  
See  Commission  Decision  of  22  May  2007  in  Case  No  COMP/M4404  –  Universal/BMG  Music 
Publishing, §§172 and seq.  
E.g.  in  Spain,  see  the  national  competition  authority's  Report  (December  2009),  §§148  and  seq,  also 
noting the excessive length of mandates and notice periods for withdrawing rights, §§141 and seq. 
E.g.  see  decision  200  of  8  April  2011  of  the  Slovenian  Competition  Protection  Office  against  the 
Slovenian  Society  of  Composers, Authors  and  Publishers for  Copyright Protection (SAZAS). Also,  it 
seems  that,  at  least  until  recently,  there  were  still  cases  where  some  societies  did  not  accept  foreign 
rightholders as members. 

EN 

17 

   EN 

 
                                                                                                                                                         
of music publishers, this happens despite the fact that self-regulation81 foresaw that membership in CS should 
be open to all music publishers, that publishers would be appropriately represented in the general meetings of 
the societies and that they would eligible to seat in the boards of the societies, where one third of the seats 
would be reserved for them;82 
• 
Commission's CISAC decision stated that antitrust rules prevent CS from doing so.83 

some  reciprocal  agreements  between  CS  seem  to  contain exclusivity  clauses, despite  the  fact  that  the 

Secondly, rightholders do not have access to basic financial information on CS:  

• 
out of 27 major national CS, six do not make annual reports available online; eight do not have 
any  financial  statements  available  online  and  five  only  have  incomplete  or  simplified  financial  statements 
online. In practice, this means that rightholders cannot obtain a verifiable indication of the income that 13 out 
of 27 CS have distributed in a year;84 

• 
furthermore, essential benchmarks for the performance of societies (other than administration 
costs)  are  often  not  available  from  annual  reporting  documents:  for  several  major  societies  information  on 
how  royalties  are  collected,  the  amount  of  royalties  distributed  in  the  year,  the  time  taken  to  distribute 
royalties or the proportion of royalties which remain undistributed after a number of years, is not available; 

• 
matters  are  often  more  complex  when  looking  for  and  finding  information  on  cross-border 
royalty  flows.  Very  few  collecting  societies  provide  an  indication  of  how  much  is  collected  abroad,  from 
which societies, and how much is remitted abroad.85 

Thirdly, some practices have the effect of discriminating foreign rightholders (non-members): 

some  societies  apply  additional  deductions  (the  so-called  social  and  cultural  "CISAC 

• 
deductions") only with respect to distributions to foreign CS and not to their own members;86 
• 
rules which are not favourable to non-domestic rightholders.87 

other  societies  place  additional  burdens  on  non-domestic  rightholders  or  apply  distribution 

A  majority  of  stakeholders  (creators,  music  publishers,  commercial  users,  consumers)  share 
the belief that "no action" is not a solution and calls for improved G&T standards for CS. CS, 
however, generally argue that self-regulation would be enough to implement high standards of 
G&T.  

The effective governance of CS should guarantee that rightholders are in a position to ensure 
that  the  society  is  effectively  acting  in  their  interests  and,  as  some  consulted  rightholders' 
representatives have  stressed,  to  control and improve  their  CS.  However,  if  rightholders  are 
not able to exercise their rights and/or are not fully informed of the activities and state of a 
CS,  they  cannot  exercise  meaningful  control  over  the  activities  of  that  CS.  This  control  is 
even  harder  to  exercise  for  foreign  rightholders,  in  particular  where  there  is  little  clarity  on 
cross-border flows and deductions.88 It could be argued that rightholders have little incentives 
to incur the costs of monitoring and controlling management of CS anyway, given the wide 

79 

80 

81 
82 
83 
84 
85 
86 
87 

88 

It is reported that in some authors CS (e.g. in EL, PL), music publishers are not allowed to be members 
of the societies. 
It  is  reported  that  in  some  authors  CS  (e.g.  in  LT,  RO,  SI),  there  are  no  representation  of  music 
publishers in the boards. 
See ICMP/GESAC Common Declaration of 7 July 2006, cit. supra.  
A number of authors CS are reported as failing to comply with the one third rule (e.g. in BG, IT, LV). 
E.g. in Spain, see the national competition authority's Report (December 2009), §135. 
See in Annex H. 
See Annex G. 
E.g. see the 4th Annual Report of the Commission Permanente de Contrôle des SPRD(2007), p. 193. 
I.e. some societies' distribution processes put foreign rightholders at a disadvantage to claim their rights. 
For  instance  there  have  been  cases  where  the  distribution  was  based  on  the  salaries  received  by  the 
rightholders in the country of the collecting society in the previous year.  
E.g. see 4th Annual Report of the Commission Permanente de Contrôle des SPRD (2007), p. 189. 

EN 

18 

   EN 

 
                                                                                                                                                         
dispersed membership of those CS, in particular the largest ones.89 From this perspective, the 
situation  would  be  similar  to  the  agency  problem  in  listed  companies  with  dispersed 
ownership,90 where there may be shareholders with particular strength who have the capacity 
and interest to monitor the activities of societies.91 Also, CS having entrusted other societies 
the  representation  of  their  repertoire  are  likely  to  have  incentives  to  monitor  such 
societies, in particular when their repertoire has an important value cross-border. 

3.1.2.  Problem 2: Poor financial management: royalties collected by societies on behalf of 

rightholders accumulate, pending distribution, with little oversight 

Poor  governance  standards  and  little  transparency  necessarily  have  knock-on  effects  on  the 
operation of CS. This is notably shown by the poor financial management of some CS.  

CS collect money on behalf of rightholders before they distribute it, generating a positive cash 
flow. Thus, royalties collective management implies the collection and handling of large sums 
of  money  on  behalf  of  rightholders.  However,  in  some  cases,  these  sums  accumulate, 
pending distribution, with little oversight and their handling can be poor.  

Box 6 – Poor handling of collected royalties 

It often takes a significant amount of time to distribute collected income to rightholders, so funds accumulate 
within the societies. For those societies that provide such information,92 from 27% to 45% of collections are 
distributed  in  the  year  of  collection.  Overall,  between  5  and  10%  of  collections  are  not  distributed  to 
rightholders for as many as three years after they were collected – a delay which is significant.93 This leads 
to a gap between what societies collect in a given year and how much they can distribute from those amounts 
in the same year. This means that substantial amounts of money are kept by societies pending distribution. 
Thus, e.g. in 2010 major societies had accumulated € 3.6 billions worth of liabilities to rightholders and were 
managing € 3.7 billions' worth of available funds.94 

Also, funds pending distribution are not always appropriately managed: 

89 

90 

91 

92 
93 

94 

19 of the 21 largest collecting societies in the EU, managing income in excess of €50 million/year each 
in 2010, had between 18559 members (for AKM, in AT) and 431362 members (for VG Wort in DE), 
with many of them having over 50000 members. 
It  should  be  noted  that  EU  legislation  has  largely  relied  on  transparency  obligations,  rather  than 
structural  measures,  in  order  to  address  the  agency  problem  in  listed  companies.  See  for  instance, 
Commission Staff Working Document, Impact Assessment on the Proportionality between Capital and 
Control in Listed Companies, 12.12.2007, SEC(2007)1705. 
As stated by the Spanish competition authority, "the growing degree of concentration of rights reduces 
[…]  also  affords  holders  a  greater  capacity  to  manage  their  rights.  There  are  societies  in  which  the 
degree of atomisation of the number of rightholders represented is low, such as, for example, musical 
works, where there are few rightholders, namely the major music publishers, that pool together large 
numbers  of  rights."  Cf.  Comisión  Nacional  de  la  Competencia  (CNC),  Report  on  the  collective 
management of intellectual property rights, December 2009, §76. 
E.g. GEMA and SABAM. 
For  instance,  citing  data  from  another  Spanish  public  agency,  the  Spanish  competition  authority 
explains that of the average annual income of the Spanish eight collecting societies for 2005-2007, 65.8 
million euros (13.6%) was not assigned in the initial distribution. This percentage declines over time, as 
some rightholders are eventually found. Thus, the sums that wind up undistributed would approximately 
be  4%  of  the  total  sums  collected.  According  to  the  Spanish  competition  authority,  "in  any  event, 
royalties paid by users and not distributed to any rightholder accumulate over time in very considerable 
sums".  See  Comisión  Nacional  de  la  Competencia  (CNC),  Report  on  the  collective  management  of 
intellectual property rights, December 2009, §61. 
For authors' CS, on the basis of information available in published annual reports and annual accounts. 

EN 

19 

   EN 

 
                                                 
• 
often  amounts  accumulated  by  societies  are  invested  pending  distribution,  generating 
significant  revenues  in  interest,  however,  occasionally  they  may  cause  significant  losses  (which  will 
ultimately be borne by rightholders);95 

• 
the use of non-distributed income (and interest) is often not clear and varies from one society to 
another: for instance some societies use this income to fund their functioning96 (a practice which could be 
seen as reducing the incentive to improve the efficient distribution of income to rightholders), thus giving an 
impression of low operating expenses,97 while in others the money is re-distributed to rightholders. In some 
cases, it would seem that part of the income collected is never distributed.98 

Members  of  CS  are  not  necessarily  aware  of  these  activities  or  alerted  to  their  risks.  The 
handling  of  money  collected  but  still  owed  to  rightholders  thus  raises  important  issues 
regarding how and on what such funds should be used, who decides on their use and how they 
should be accounted for. The rules currently applicable to CS do not deal satisfactorily with 
these issues99 and, as shown by Problem 1, managers of CS have no incentives to improve the 
situation.100 This situation has led some creators' representatives to call for non-discriminatory 
distribution  rules.  Some  rightholders'  representatives  and  commercial  users  have  asked  for 
common and transparent accounting standards for CS in order to ensure the adequate flow and 
distribution of revenues. Finally, some commercial users have stressed that the rules on non-
distributable income should be more tightly regulated. 

3.1.3.  Consequences 

Collecting  societies  are  service  providers  -  they  provide  services  to  their  members  (and 
indirectly  to  non-member  rightholders),  to  users  and  to  other  CS.101  The  insufficient  checks 
and balances in the functioning of CS are, however, likely to result in underperforming CS. 
This impacts on rightholders in the first place. As showed above, these insufficient checks and 
balances may result in lower/late distribution of income. Thus it is particularly important that 
rightholders  are  now  in  a  position  to  entrust  the  CS  of  their  choice  for  the  management  of 
their rights and to influence the key decisions in the running of the CS. 

95 

96 

97 
98 
99 

100 

101 

SIAE,  Rapporto  annuale  sulla  gestione,  Esercizio  2008,  p.74.  -  the  Italian  collecting  society  SIAE 
reported to have lost € 35.2 millions in 2008 following an investment into a debt instrument issued by 
Lehman Brothers. 
See for instance the claims as regards SIAE, in Billboard, 28 November 2009, p.13: "'Most collecting 
societies  redistribute  royalties  rapidly,'  says  delegate  Toni  Verona,  GM  of  Modena-based  indie 
publisher/laber Alabianca. 'But SIAE often keeps the money for as long as 16 months. The interest the 
money gathers by sitting in the bank is used to finance the society's considerable running costs.'" 
E.g. see 7th Annual Report of the Commission Permanente de Contrôle des SPRD (2010), p. 29. 
E.g. for Spain, see the national competition authority's Report (December 2009), §61. 
See Annex L; few MS have rules in place, see e.g. art. 65 ter, § 3, and 65quater, § 3, of the Belgian law 
of 30 June 1994 on copyright and related rights (separation of accounts, rules on financial placements, 
information  on  income  not  distributed);  article  R.  321-6-1  of  the  French  Intellectual  Property  Code 
(right of information of members on financial placements); proposed amendments to the Dutch Act of 6 
March  2003  on  the  supervision  of  collective  management  organisations  administering  copyrights  and 
related rights (no risk bearing placements). 
For instance, a recent report from the French supervisor of collecting societies shows that in the period 
2000  to  2010  management  performance  in  the  distribution  of  royalties  has  not  improved,  on  the 
contrary. Non-allocated income ("restes à affecter au 31.12") increases over time in a similar fashion as 
revenues  from  the  primary  exploitation  of  rights  ("perceptions  primaires").  See  Synthèse  du  rapport 
annuel  2011,  Commission  permanente  de  contrôle  des  sociétés  de  perception  et  de  répartition  des 
droits, Avril 2012, p. 8. 
Usually to foreign CS but also to domestic ones: e.g. a CS may provide royalty collection services to 
other domestic CS. 

EN 

20 

   EN 

 
                                                 
Additionally, the insufficient checks and balances in the functioning of CS may result in lost 
(licensing) opportunities,102 whether online or offline, for rightholders, users, and ultimately 
consumers.  The  effective  governance  of  CS  should  also  result  in  a  large  repertoire  of  EU 
rights being made available, by EU rightholders and through CS, for use to commercial users 
in  all  MS.  Users,  however,  point  out  that  insufficient  transparency  and  accountability  to 
rightholders  leads  to  licensing  processes  which  are  slow,  unpredictable  and  too  costly103. 
Difficulties  in  licensing  result  in  fewer  or  more  expensive  products  and  services  reaching 
consumers. The existence of performing and efficient CS is of particular relevance as regards 
the licencing of rights for the use of musical works in the online environment, as shown in the 
next section. In the online environment – contrary to the offline world where markets are less 
contestable  –  CS  may  more  easily  be  competing  against  each  other  in  order  to  attract 
repertoire  (i.e.  provided  that  rightholders  can  effectively  choose  their  CS,  can  make  an 
informed choice and can effectively exercise control over the CS) and in the licencing market. 
This situation also leads to lost opportunities in so-called non-core copyright industries.104  

3.2. 

Difficulties  in  the  supply  of  multi-territory  licences  and  the  aggregation  of  the 
repertoire of the musical works 

The online environment offers a wide range of opportunities to develop new and innovative 
services.  In  the  music  sector,  on-line  music  services  to  consumers  range  from  à  la  carte 
download  to  streaming  services  or  cloud-based  matching  services;  and  from  pay-per-
download  to  subscription  or  advertising-funded  services.  These  services  often  have  a  multi-
territory  reach  or  are  launched  in  several  territories  at  the  same  time.  Another  important 
feature  of  these  services  is  that  the  current  prevailing  business  model  lies  in  being  able  to 
provide access to the widest possible repertoire of recorded music.  

On-line distribution of music is becoming widespread. IFPI, the international federation of the 
recorded music industry estimates105 that digital music revenues to record companies grew by 
8%  globally  in  2011  to  an  estimated  US$5.2  billion;  that  3.6  billion  downloads  were 
purchased globally in 2011 (an increase of 17%); and that digital channels now account for an 
estimated  32%  of  record  company  revenues  globally.106  Some  markets  see  now  more  than 
half of their revenues derive from digital channels: e.g. US (52%), South Korea (53%). But 
developments  in  the  EU  are  slower:  access  to  a  wide  range  and  types  of  music  services  on 

102 

103 

104 
105 
106 

This is not the only factor affecting lost licensing opportunities. But insufficient checks and balances in 
the functioning of CS imply that managers of CS have little incentives to improve the performance of 
the CS as long as the revenues of CS remain relatively stable.  
The  Spanish  competition  authority  points  at  the  general  problems  affecting  the  negotiations 
mechanisms between users and collecting societies. Inter alia, it underlines that the Spanish intellectual 
property law "fails to include transparency obligations regarding the repertoires or the ranges of rights 
actually  managed  by  collecting  societies,  the  administration  costs,  the  sums  not  distributed  to 
rightholders and the contracts they reach with individual users. This provokes problems of information 
that affect the equilibrium of the negotiation process. It also increases the cost of negotiating and, in 
short, the cost of obtaining licences, boosting aggregate costs for users and/or lengthening the business 
maturation periods, and introduces uncertainty, which can be especially harmful to the development of 
new  markets  and  slow  the  pace  of  innovation."  See  Comisión  Nacional  de  la  Competencia  (CNC), 
Report on the collective management of intellectual property rights, December 2009, §§179 and seq., in 
particular §183-184. 
See in the Introduction. 
IFPI, Digital Music Report 2012. 
Compared to 5% for newspapers, 4% for books and 1% for films. Only the gaming industry (42%) does 
it better. Cf. PWC Global Entertainment & Media Outlook, IFPI. 

EN 

21 

   EN 

 
                                                 
offer is unevenly spread across the EU.107 There are more than 300 different online services in 
Europe, offering a digitised catalogue of more than 13 million tracks.108 However, only one 
mainstream music service is available in 27 MS. In some MS, the vast majority of mainstream 
services are available while other MS (e.g. in Eastern Europe) are served by only a few major 
providers.  

107 
108 

See also Annex D. 
See  the  list  in  the  IFPI  report:  the  Online  Music  Market  in  Europe—  New  Business  Models  and 
Consumer Choice http://www.ifpi.org/content/library/The_Online_Music_Market_in_Europe.pdf 

EN 

22 

   EN 

 
                                                 
i

s
e
n
u
T
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 

MT 
LU 
CY 
SI 
HU 
EE 
LV 
LT 
BG 
EL 
RO 
DK 
SK 
CZ 
FI 
PT 
BE 
PL 
SE 
IE 
NL 
IT 
FR 
DE 
AT 
ES 
UK 

l

a
t
i
g
d

i

7
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 

1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 

i

c
s
u
M
e
1 
1 
1 
1 

1 
1 
1 
1 
1 

1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 

r
e
z
e
e
D

1 
1 
1 

1 

1 
1 
1 

1 
1 
1 
1 
1 
1 
1 
1 
1 

e
n
o
f
a
d
o
V

e
b
u
T
u
o
Y

M
F

t
s
a
L

i

c
s
u
M

y
n
o
S

d
e
t
i

m

i
l

n
U

y
f
i
t
o
p
S

e
g
n
a
r
O

a
b
m
a
J

e
c
a
p
S
y
M

e
n
u
Z

3
P
M
n
o
z
a
m
A

P
m
W

i

r
e
t
s
p
a
N

l

a
t
o
T

i

c
s
u
M
a
k
o
N

i

1 

1 
1 

1 

1 

1 
1 
1 

1 

1 
1 

1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 
1 

1 

1 

1 

1 

1 
1 

1 
1 
1 

1 
1 

1 

1 

1 

1 

1 

1 
1 
1 

1 

1 

1 

1 

1 
1 
1 

1 
1 

1 
1 

1 
1 
1 
1 

1 
1 
1 

1 
1 
1 
1 
1 
1 
1 
1 
1 
1 

1 
1 

1 
1 
1 
1 
1 
1 

1 
1 
1 

1 
1 
1 

1 

1 

1 
1 
1 

1 

1 
1 
1 
1 

1 

1 

3 
3 
3 
3 
3 
4 
4 
4 
4 
4 
4 
6 
6 
6 
7 
7 
8 
8 
10 
10 
10 
10 
12 
13 
13 
14 
15 

Total 

27 

26 

25 

16 

15 

11 

11 

10 

10 

10 

7 

8 

6 

4 

4 

2 

2 

Table 2. Availability of online services in EU MS (January 2012, source: pro-music.org).  

A  number  of  factors  contribute  to  the  territorial  fragmentation  of  online  music  offerings. 
Complex  copyright  licensing  processes  are  not  the  only  reason  for  the  fragmentation  of  the 
online market,but they play a part in it. Other reasons include technological barriers (limited 
access  to  high-speed  networks),  lack  of  legal  certainty  for  service  providers  (differences  in 
legislation in areas such as consumer protection or content rating), payment methods (access 
to  credit  cards),  consumer  trust  in  online  transactions,  illegal  downloading  of  files  (piracy) 
and cultural and linguistic differences. Finally, service providers sometimes take decisions to 
segment shops territorially and/or launch only in the more mature markets (e.g. with higher 
consumer  online  spend)  due  to  purely  commercial  reasons  such  as,  in  the  case  of 
advertisement-funded  services,  the  differences  between  national  advertising  markets.109 
Whilst it appears difficult to quantify the relative importance of each of the different factors 
for  such  fragmentation,  there  is  evidence  (see  for  instance  section  3.2.3)  suggesting  that 
complex  copyright  licensing  processes  are  an  important  factor  contributing  to  such 
fragmentation, not least because without securing a licence it is illegal to provide a service.110 

109 

110 

Advertisements are targeted at local and national audiences. Service providers cannot raise revenue in 
e.g. Greece on the basis of advertisements destined e.g. for the Swedish market.  
One  could  argue  that  the  limited  cross-border  demand  for  certain  repertoires  could  be  a  factor 
contributing to the fragmentation of markets. However, this factor seems to be of a lesser importance. 
Major operators try to secure the possibility of providing as wide as repertoire as possible to their online 

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As explained before, users usually need to secure MT licences in the aggregate repertoire, in 
order  to  launch  online  music  services.  Obtaining  licenses  from  individual  rightholders  (e.g. 
record  producers)  does  not  seem  to  pose  particular  problems,  and  neither  does  licensing 
practices  by  publishers  as  these  rightholders  usually  hold  rights  for  all  concerned  territories 
and thus they are easily able to provide MT licenses. This is however not the case for authors' 
rights where, as explained above, the rights managed by the CS show a more complex picture. 
Currently,  the  licensing  of  author's  rights  for  the  online  use  of  musical  works,  notably 
obtaining  coverage  for  the  entire  repertoire  (“aggregation”),  is  proving  difficult, 
cumbersome  and  costly  for  commercial  users,  as  it  was  also  highlighted  in  stakeholder 
consultations. Even though the offer of online services involving the use of musical works has 
become wider in the recent years (as is shown by Table 2 above) the costs of the process of 
clearing  authors'  rights  for  the  online  use  of  musical  works  remain  relatively  high  for  the 
majority of users (in particular small ones and new entrants). Only few major providers can 
afford multiple, parallel and legally challenging negotiations. There seems to be no immediate 
perspective for a spontaneous, market-driven resolution of this problem. 

It is also important to highlight the relation between this problem and the problems on G&T 
in CS, in particular the difficulties rightholders have to face in exercising their rights in a CS. 
Table 3 illustrates that the lack of efficient online MT licensing results in an important loss of 
income for rightholders. One may well assume that if they had better ability to improve the 
conditions of online MT licensing in their CS, they would do so.  

Table 3. Potential and Actual CS digital royalty revenue (in EUR millions) 

consumers  and  have  therefore  an  interest  in  obtaining  licences  allowing  them  to  present  a  large 
repertoire to the consumers, wherever they are located. 
The Commission services have not collected any information suggesting that any price discrimination 
applied by CS could be contributing to the fragmentation of the market. 

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Source:  MPRA:  Counting  the  costs  of  Collective  Rights  Management  of  Music  Copyright  in  Europe,  Ghafele, 
Roya and Gibert, Benjamin, 2011, http://mpra.ub.uni-muenchen.de/34646 , p.17 

3.2.1.  Problem  1:  Authors'  collecting  societies  are  not  sufficiently  prepared  for  online 

multi-territory licensing which is demanding and costly 

The  demands  of  online  licensing  are  high.  Licences  are  normally  “transactional”  (meaning 
that  the  user  reports  and  the  CS  invoices  on  a  per-use/per-work  -  or  share  of  work  -  basis). 
The licensing of musical works on a MT basis for online services requires the extensive use of 
data processing capabilities as the scale of reported uses of music is considerable. Without 
adequate  automated  processes,  the  processing  of  those  uses  would  not  be  economically 
viable.111 

one CS processed 20 million lines of data for a single online service;112 

another  CS  reported  3  million  downloads  from  a  single  major  service  provider  in  2010,  and  that  it 

Box 7 – Examples of the scale of reported online uses 
• 
• 
processed the equivalent of three billion acts (downloads or streams);113 
• 
in  2008,  a  CS  was  required  to  process  20  million  transactions  (i.e.  a  single  download  or  stream)  per 
month for an active repertoire of 8.5 million tracks; in 2010, this had increased to 62 million transactions a 
month covering 13 million tracks;114 
• 
than 50 times.115  

for  a  major  download  service,  94%  of  downloads  concerned  tracks  which  had  been  downloaded  less 

The  qualitative  nature  of  the  data  required  has  also  changed,  as  licensors  who  previously 
operated  on  a  purely  national  basis  must  now  hold  data  on  rights  ownership  in  all  the 
territories  covered  by  their  licences.116  In  the  offline  environment,  the  risks  of  conflicts  as 
regards  the  ownership  of  the  rights  in  a  given  territory  were  minimal.  Inaccurate  data  was 
only  relevant  to  the  distribution  of  income  to  rightholders  and  other  CS;  it  was  largely 
invisible to users. In the online world, if two CS claim to own the same work, a user will be 
invoiced twice. The industry generally acknowledges that the data on works ownership is not 
sufficiently  accurate  –  some  users  arguing  that  they  receive  double  invoices,  data  on  excel 
spreadsheets,  and  some  CS  arguing  that  their  rights  are  not  always  clearly  excluded  from 
licences  from  other  CS.  A  number  of  industry  initiatives  have  been  put  forward  (ICE, 
GRD)117 to address the issue and improve the identification of the works, rightholders or even 
to create a comprehensive database. 

At  present,  many  CS  do  not  have  the  ability  to  accurately  identify  works  and  work-
shares licensed and to organise fully electronic data exchange with online music service 
providers  pertaining  to  usages  of  works  and  subsequent  invoices.  Entering  the  market 
without the ability to meet these requirements can cause damage. Firstly, as explained above, 

111 

112 
113 
114 
115 
116 
117 

According to one estimate, an automated match would cost on average €0.02, while a match requiring a 
manual intervention would cost €14. It is estimated that for 100% share of a work, a collecting society 
collects in the region of €0.08 per work downloaded, see e.g. "Two steps closer to a global copyright 
database",  in  Summary  of  CISAC’s  World  Copyright  Summit  #3,  Brussels,  June  7  &  8,  2011, 
http://www.cisac.org/CisacPortal/initConsultDoc.do?idDoc=22436, p. 37. 
Spotify, STIM Annual Report 2010, p. 17 
SACEM Annual report 2010, p. 12 and 27. 
FX Nutall, "Understanding Metadata", MidemNet (2010). See also Annex I. 
SACEM Annual report 2010. 
To which the issue of "split copyright", as described in Box 4, adds further complexity. 
See in Annex I. 

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it  may  result  in  inaccurate,  or  "double"  invoicing118  for  users.  Secondly,  licensors'  lack  of 
accurate  ownership  data  encourages  service  providers  to  meet  the  repertoire  gap  with  a 
national  licence  which  is  tailored  as  an  insurance  against  any  claims  in  works  not  already 
licensed  (see  Problem  2).  Furthermore,  as  a  consequence  of  deficient  electronic  data 
exchange, some users are receiving invoices from some licensors with significant delays, and 
some rightholders are experiencing even longer delays in receiving their payments. 

3.2.2.  Problem 2: Online multi-territory licensing by authors' collecting societies is subject 

to legal uncertainty 

National legal frameworks applicable to CS119 are designed for licensing activities which take 
place on a national basis. In this regard, some large CS argued that national regulation hinders 
their  multi-territorial  licensing  activities.  At  the  same  time,  CS  are  service  providers  which 
benefit  from  the  free  movement  of  services  and  the  EU  acquis  relating  to  this  principle, 
notably  the  Services  Directive.  While  the  application  of  the  existing  acquis  should  address 
some  of  the  uncertainties  faced  by  CS  wanting  to  provide  MT  licences,120  considerable 
uncertainty remains as regards the application of the acquis and the possibility for CS to 
provide  licences  covering  several  EU  countries  and/or  to  licensees  established  in  other  MS. 
Doubts  also  arise  as  to  whether  existing  rules  applicable  to  CS  apply  to  new  licensing 
entities.121  This  means  that  the  entities  or  societies  which  carry  out  MT  licensing  do  not 
necessarily  know  if  or  to  what  extent  a  particular  legal  framework  is  applicable  to  the  MT 
licences they grant. This uncertainty acts as a deterrent to entering the MT licensing market in 
the  EU.  It  also  deters  the  local  CS  from  entrusting  their  rights  to  an  existing  multi-territory 
licensor as they would be venturing into unknown territory.  

Another symptom of the existing legal uncertainty is that in certain cases, commercial users 
who want to provide online services in several MS seem to be obtaining MT licences from CS 
representing  major  repertoires;  but  they  also  obtain  multi-repertoire  licences  limited  to  the 
national  territories  of  each  of  the  countries  they  want  to  cover.  Such  mono-territory  multi-
repertoire  licences  are  offered  by  local  CS  under  existing  reciprocal  agreements  with  other 
societies.  They  are  essentially  used  to  cover  repertoire  which  is  not  already  licensed  on  a 
multi-territory basis by a CS. 

As a result, online services are often licensed through a combination of MT licences and 
national licences. This not only brings up the number of licences required but may also limit 
the  territorial  reach  of  the  service  to  the  lowest  common  denominator,  i.e.  those  territories 
which  are  covered  by  both  MT  licences  and  national  licences.  In  the  stakeholder 
consultations,  online  music  service  providers  highlighted  the  additional  costs  deriving  from 
legal uncertainty. 

118 

119 
120 
121 

Data  submitted  in  confidence  to  the  European  Commission  suggests  that  this  concerns  between  10% 
and 30% of royalties invoiced to users. According to some estimates, the costs of an automated match 
from an invoice per work amount to € 0.02, and to € 15 if the automated match fails. 
See Annex L. 
See Section 2.1 on the Services Directive. 
For instance, the status of CELAS and whether it should be subject to supervision by the German Patent 
Office has recently been in dispute, see MyVideo Broadband SRL v CELAS GmbH, LG München, Az. 7 
O 4139/08 (25 June 2009). 

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3.2.3.  Consequences 

For providers of on-line music services, when launching new services (especially where the 
innovative nature of the service requires new licence structures and rates), the large number 
of licensors -  and variations  as to  the  repertoire  and rights they can  licence -  can be a 
major handicap. The numerous parallel negotiations are also time-consuming in a very fast 
moving market and are costly.122 Consulted online music service providers have reported that 
other factors such as repertoire fragmentation, the handling and reconciliation of invoices, and 
the  administration  of  a  considerable  number  of  licences,  do  affect  costs.  Such  services  are 
accordingly likely to opt to launch only in one or a few MS,123 thus depriving themselves of 
the  larger  consumer  base  that  the  Digital  Single  Market  has  to  offer.124  Alternatively,  some 
services might choose to launch on the basis of major repertoire only, which can be secured 
with  a  smaller  number  of  licences.  This  would  be  detrimental  to  niche  and  local  repertoire. 
Furthermore, legitimate service providers face the unfair competition from providers of illegal 
content  online  which  provide  their  illegal  services  everywhere.  Consumers  ultimately  have 
less choice and there is a loss of cultural diversity. 

For  rightholders  (authors  and  publishers),  the  increased  income  that  could  be  generated  by 
expanding consumers' access to their works via new services throughout the Single Market, is 
lost. This is leading to less trust on the ability of CS to manage their rights. 

3.3. 

Baseline scenario  

In  the  absence  of  action  at  EU  level,  it  is  likely  that  the  checks  and  balances  on  the 
functioning  of  collecting  societies  would  remain  insufficient  (see  section  3.1).  As  seen 
recently in the case of Belgium, France or Poland, MS could introduce various rules on G&T. 
However,  it  is  unclear  whether  all  MS  would  have  an  incentive  to  do  so  in  the  absence  of 
harmonisation  at  EU  level,  as  the  current  practice  shows  that  few  MS  have  recently  taken 
such measures. Moreover the standards and the supervisory approach would vary from MS to 
MS, and so would the level of protection of rightholders.  

It could be envisaged that CS could try and agree on common codes of conduct which would 
be applicable to all CS or to certain categories of CS and which would go beyond the existing 
codes to cover issues such as: participation in the decision-making process, financial reporting 
standards, rules on handling of funds, etc. However, additional self-regulation by CS would 
not  necessarily  lead  to  the  improvement  in  G&T  standards  for  all  CS.  This  improvement 
would depend on the willingness of CS to abide by these standards. So far, the self-regulatory 
experience concerns essentially the societies managing music rights, partially because of the 
pressure made by important rightholders. Beyond this pressure, managers of CS have limited 
incentives to increase the efficiency of the societies' operations and, as shown in section 3.1, 
peer  pressure  (by  other  CS)  is  also  limited.  In  any  case,  experience  shows  that  the  current 
codes  are  not  fully  respected  anyway.  As  a  result,  self-regulation  would  only  address 

122 
123 
124 

See MPRA: Counting the costs of Collective Rights Management of Music Copyright in Europe, 2011 
See Table 2 above. 
One  of  the  most  commented  cases  is  the  significant  delay  taken  by  Spotify  to  launch  its  services  in 
Germany which, according to the music industry, is the biggest music market in the EU. Spotify only 
launched its service in Germany in March 2012 although it was serving other major EU MS since 2010 
and  the  German-speaking  Austria  since  2011.  The  press  has  reported  the  difficulties  encountered  by 
Spotify to agree on licensing terms with GEMA, the German authors' collecting society, and the length 
of the negotiations.  

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governance inefficiencies to a limited extent and consequently rightholders' control over CS 
would not be significantly improved. Moreover, due to the lack of appropriate incentives, it is 
unlikely that solutions implemented by MS or CS themselves will take sufficient account of 
the specific problems raised by the cross-border dimension of collective rights management. 
A  number  of  organisations  representing  CS  however  deem  that  rules  on  G&T  have  already 
been sufficiently addressed in other EU instruments. 

the  online  music  sector  and 

The value of the 2005 Recommendation is somewhat limited because its scope is limited (it 
only  covers 
limited  number  of 
recommendations)  and  its  principles  have  only  been  partially  respected  by  CS.  This  is  not 
surprising  since  the  persuasion  value  of  the  Recommendation  is  limited125  and  there  are  no 
incentives for CS to respect it. 

it  only  contains  a 

If  insufficient  access  to  information  and  little  oversight  over  collected  royalties  continue, 
rightholders' mistrust and lack of confidence would most likely persist. This may cause major 
rightholders to seek to withdraw their rights from the CS when a credible alternative exists.126 
Users would also continue to suffer from the lack of transparency and the related problems in 
the licensing process. Moreover, some societies would continue to operate under significantly 
lower G&T standards than others. This would not create the trust needed in the cooperation 
between societies when a society represents the repertoire of another one. 

Lack of improvements in the G&T rules would also have knock-on effects on the licensing of 
musical works to online services. The problems identified in the licensing of musical works 
need to be addressed by those parties who licence their works online, including all CS which 
control  repertoire  which  is  required  for  online  services.  Without  appropriate  G&T  rules, 
improvements  in  licensing  would  only  be  achieved  by  a  small  number  of  CS,  while  others 
stay  behind.  For  these  societies,  their  members  would  have  neither  access  to  enough 
information to assess how this market should be addressed, nor means to clearly influence the 
decision of their CS as to how to meet demand. 

Improved G&T rules would not be enough, however, to improve the situation with respect to 
the problems identified as they do not all derive from the insufficient check and balances in 
CS  but  have  a  different  nature.  E.g.  the  problem  of  double/incorrect  invoicing  derives  from 
the incorrect or lack of identification of the repertoires.127 Without intervention, it is unlikely 
that the market would address this problem. Some societies will continue to grant territorial 
licences  which  "absorb"  all  the  repertoire  which  has  not  been  properly  identified  by  others 
and would have limited incentives to licence themselves  on  a MT basis or to allow another 
entity to aggregate their rights. Consulted user organisations have stressed that it is important 
that  CS  are  fully  transparent  as  regards  repertoires  they  represent  and  the  rights  they  are 
mandated to manage for those repertoires. 

The IM would remain fragmented: rights licensing for online services would remain complex 
and  the  roll  out  of  online  services  across  MS  would  remain  patchy.  New  emerging  online 
services (and commercial users in general) would continue to struggle with multiple licensing 

125 
126 

127 

The European Parliament issued Resolutions in 2007 and 2008 criticising the Recommendation.  
This  is  happening  as  regards  the  management  of  online  rights  in  the  music  sector.  New  agents  who 
manage  the  online  rights  of  music  shareholders  without  having  recourse  to  CS  are  increasingly 
appearing.  
See in Section 3.2. 

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practices,128  operating  on  a  different  geographic  scale  (national  or  multi-territory)  and  at  a 
different  level  of  aggregation  (repertoire  specific  or  multi-repertoire).  In  this  context,  a 
number of music publishers pointed out that the traditional mass usage model of CS fails vis-
à-vis new business models. MS may try and address the issue but they are unlikely to be able 
to  do  so  due  to  the  inherently  cross-border  nature  of  multi-territory  licensing.  Users  would 
continue to run the risk of receiving overlapping invoices from their various licensors.  

Societies  would,  in  some  cases,  continue  to  lack  the  technical  ability  to  process  multi-
territory,  multi-repertoire  licences.  Their  repertoire  would  be  cut  off  from  the  market  for 
multi-territory  services,  or  would  be  licensed  without  adequate  technical  support.129  In  both 
cases,  this  would  lead  to  lost  revenues  for  rightholders  (lost  opportunity,  or  inaccurate  and 
delayed  payments).130  Other  societies  would  invest  heavily  in  "upgrading"  their  systems131 
even though the value of their repertoire makes such an investment unsustainable,132 without 
sufficient rightholder control resulting in significant costs for them. 

A good number of small and medium sized CS would continue to experience difficulties in 
licensing  their  rights  on  a  MT  basis.  To  some  extent,  they  would  continue  to  grant  multi-
repertoire  licences  limited  to  their  domestic  territories  on  the  basis  of  remaining  reciprocal 
agreements with other societies. Larger CS would continue their efforts to licence their rights 
directly on a multi-territory basis. All CS would continue to be active in the administration of 
rights other than online rights (e.g. licensing broadcasts, public performances, etc.). 

3.4. 

Does the EU have the right to act?  

3.4.1.  Legal basis 

The EU's right to take action to facilitate the functioning of collective rights management in 
the internal market (IM) follows from Article 50(2)(g) of the Treaty on the Functioning of the 
European  Union  (TFEU)  which  constitutes  the  specific  IM  legal  basis  for  freedom  of 

128 

129 

130 

131 

132 

According  to  a  report  prepared  for  the  European  Parliament,  Apple  (leader  in  the  market  for  online 
music sales) refused to pay licensing fees for 2007 and 2008 to SABAM, the Belgian authors' society 
and  required  financial  guarantees  from  SABAM  to  cover  the  risk  of  being  accused  of  copyright 
infringement  by  rightholders  The  argument  advanced  by  Apple  was  the  legal  uncertainty  about  the 
repertoire that SABAM was entitled to grant digital license for. See the Study "Collecting Societies and 
Cultural Diversity in the Music Sector", prepared in 2009 by the Hellenic Foundation for European and 
Foreign Policy for the European Parliament (Ref. IP/B/CULT/IC/2008_136, p. 49). 
The  capacity  of  matching  the  recording  information  (which  is  often  the  one  reported  in  the  usage 
reports  by  the  online  service  providers)  to  the  information  on  the  authors  is  essential  to  claim  the 
revenues  from  the  rights  at  stake.  This  is  particularly  important  considering  the  question  of  split 
copyrights. Should CS be incapable of processing the information in an accurate manner, they would 
most likely lose important sources of revenue. This would be to the detriment of rightholders. 
It has been reported to the Commission services that some major music service providers that some CS 
are not issuing any invoice to them on the basis of the licences granted for online uses due to lack of 
capacity to process the usage reports. This directly impacts on the ability of those CS to subsequently 
distribute royalties to the rightholders. In other instances, service providers would be subject to frequent 
cases of double invoicing.  
The  2010  consultation  attempted  to  analyse  the  state  of  all  the  existing  databases  and  the  financial 
requirements  for  their updating  and  modernisation.  The  information  received  was  minimal.  However, 
according to a session at the 2011 World Copyright Summit, SACEM (FR) indicated that it had already 
invested €71 million in IT systems over eight years to ensure that it could deliver pan-EU licensing. 
In  2009,  the  total  collections  for  EU  societies  for  online  uses  amounted  to  approximately  80€m.  The 
vast  majority  of  societies  in  the  EU  collected  less  than  €10m  in  2009  from  online  uses  of  musical 
works, see Annex F, Table F.2.5. 

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establishment,  and  Articles  53  and  62  of  the  TFEU  which  constitute  the  specific  IM  legal 
basis for services.133 Firstly, the coordination of key governance and transparency standards in 
CS  could  make  safeguards  equivalent  throughout  the  Union  and  protect  the  interests  of 
members of CS, rightholders and users. These safeguards could facilitate and encourage the 
provision  of  collective  management  services  across  borders,  in  particular  as  CS  usually 
manage the rights of foreign rightholders and cross-border royalty flows.  

Secondly,  the  proposed  action  is  instrumental  to  achieving  a  better  functioning  IM  and 
facilitating the free movement of services. CS are service providers who often provide their 
services  to  rightholders  and  other  societies  on  a  cross-border  basis.  Rights  are  also 
increasingly licensed to users on a cross-border basis. In a broader perspective, addressing the 
fragmentation  of  rules  applicable  to  collective  management  of  rights  across  Europe  will 
facilitate the free movement of all those services which rely upon copyright and related right-
protected  content.  In  particular,  taking  action  to  facilitate  the  granting  of  MT  licences  to 
online service providers is expected to substantially ease the distribution of and the access to 
music content online. 

Further,  CS  administer  rights  which  are  protected  as  property  rights  under  the  Charter  of 
Fundamental  Rights  of  the  European  Union134  and  which  are  largely  harmonised  under 
secondary EU legislation.135 

Finally,  Article  167(4)  of  the  TFEU  provides  that  the  EU  shall  take  cultural  aspects  into 
account  in  its  action  under  other  provisions  of  the  Treaties,  in  particular  in  order  to  respect 
and  to  promote  the  diversity  of  its  cultures.  All  proposed  options  take  into  account  the 
implications of EU action for cultural diversity.  

3.4.2. 

Subsidiarity and proportionality  

The subsidiarity principle (Article 5(3) of the Treaty on the European Union (TEU)) requires 
the assessment of the necessity and the added value of the EU action.  

As  regards  the  necessity  of  the  EU  action  in  this  area,  Chapter  3  explains  that  the  existing 
legal framework (at national and EU level) is insufficient to address the identified problems. 
National  laws  regulate  CS  in  divergent  ways  and  clearly  have  not  been  able  to  solve  the 
identified problems. Due to the different national regimes CS are subject to, it is unlikely that 
in  the  future  MS  would  uniformly  ensure  the  transparency  necessary  for  rightholders  to 
exercise  their  rights.  As  regards  EU  law,  competition  decisions  and  the  case  law  is  binding 
only in a given case and have a limited scope. The 2005 Recommendation does not only have 
a  limited  scope  (cross-border  licensing  of  rights  for  online  music  services)  but  it  is  also 
neither binding nor uniformly applied.136 

133 

134 

135 
136 

Article 62, in the freedom of establishment chapter, refers to Article 53 making it applicable to the free 
movement  of  services.  A  wide  range  of  EU  instruments  in  the  area  of  copyright  have  been  adopted 
pursuant to these legal bases. See Annex T. 
Other relevant fundamental rights, as laid down in the Charter of Fundamental Rights of the European 
Union,  are  the  right  to  respect  of  private  and  family  life,  protection  of  personal  data,  the  right  to  an 
effective remedy and to a fair trial. Any possible restriction of the freedom to conduct business that the 
initiative might entail is necessary to protect the interests of the members of CS, rightholders and users 
in  the  internal  market.  Moreover,  any  possible  restriction  contribute  to  the  protection  of  intellectual 
property, which is also a fundamental right recognised in the Charter. 
See Annex T. 
See section 3.3 (baseline scenario) and Annex L. 

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The objectives of the proposed action could not be achieved sufficiently by MS and could be 
better achieved at Union level due to the trans-national nature of both problems. With respect 
to G&T, as it was explained in Chapter 2, all CS represent and license the repertoire of other 
CS through reciprocal representation agreements, in their own territory. Therefore the scale of 
licensing of the works of foreign rightholders depends on the efficiencies of these other CS. 
As  the  problems  related  to  the  discrimination  of  foreign  rightholders  show,  the  general 
"principal-agent" problem in CS is intensified with respect to foreign rightholders. As they are 
not the members of the relevant CS, they have little insight in and even less influence on the 
decision-making  process  of  the  CS.  As  a  consequence  of  the  reciprocal  representation 
agreements,  a  significant  share  of  collections  derives  from  non-domestic  repertoire.  These 
cross-border royalty flows are relatively  varied,  reflecting  demand  for  cultural  diversity  and 
some  regional  cultural  affinities.  On  average,  close  to  17%  of  the  collections  of  authors' 
societies are either distributed to or received from other EU societies.137 The protection of the 
interests  of  EU  rightholders  requires  that  all  royalty  flows,  and  in  particular  cross-border 
flows,  are  transparent  and  accounted  for.  EU  intervention  is  the  only  way  to  ensure  the 
exercise of rights and in particular, the collection and distribution of royalties in a consistent 
manner across the EU. 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Total Collected

Paid to EU

Received from EU

AUME

GEMA

KODA

LATGAA

OSA

PRS

SABAM

SIAE

SPA

STIM

Average

Table 4: Share of EU trade in royalty turnover of EU societies (source: Annex G). 

Multi-territory  licensing  for  online  uses  of  musical  works  is,  by  definition,  a  cross-border 
situation. As explained in section 3.2, commercial users often need to secure a number of MT 
licenses from CS established in different MS and CS established in different MS also need to 
conclude  agreements  between  themselves  to  aggregate  repertoire.  Rules  intended  to  ensure 
the smooth functioning of multi-territory licensing are accordingly better achieved at EU level 

137 

See Table 4 and Annex G. 

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if  they  are  to  meet  their  objective.  In  particular,  sections  3.2  and  3.3  showed  the  need  for 
action  in  order  to  enhance  the  technical  capability  of  collecting  societies  as  regards  the 
licensing  of  online  rights.  Action  at  EU  level  would  secure  a  minimum  capacity  is  ensured 
across the EU, thus facilitating the dealings with commercial users across borders. It may also 
facilitate  the  emergence  of  consolidated  back-office  solutions  (e.g.  multi-territorial  multi-
repertoire databases) for CS, thus avoiding duplication of investments and therefore achieving 
savings. MS could not, by themselves, draw up rules which consistently address these cross-
border  situations,  nor  could  they  sufficiently  encourage  the  development  of  multi-territory 
databases. E.g. none of the proposed options could be achieved by MS alone, unless MS were 
to simultaneously adopt identical rules. 

Under  the principle  of proportionality (Article 5(4) TEU), the content and the form of EU 
action  shall  not  exceed  what  is  necessary  to  achieve  the  objectives  of  the  Treaties.  The 
proportionality  of  the  different  policy  options  has  been  assessed  and  the  result  of  this 
assessment is described in the relevant part of this IA.  

4. 

OBJECTIVES  

Table 5: Objective tree 

This initiative deals with two distinct but interrelated problem areas, and reflected in the 
objectives (see above). The first area deals with the problems affecting collective management 
of  rights  in  general  by  any  collecting  society.  The  general  objective  is  therefore  to  drive 

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improvements in the supply of collective rights management services by all CS. The related 
specific  objective  is  to  guarantee  sufficient  transparency  and  improve  control  over  the 
activities  of  CS  in  relation  to  all  revenue  streams,  online  and  offline,  national  and  cross-
border.  The  corresponding  operational  objectives  are  as  follows:  guarantee  that  recognised 
G&T standards are applied by CS so as to ensure that rightholders have access to information 
and  are  able  to  exercise  their  membership  rights  in  their  societies;  and  guarantee  the 
transparent and fair handling of income by CS. 

The  second  area  deals  with  the  specific  issue  of  the  online  market  for  music  services.  The 
general  objective  is  to  contribute  to  the  reduction  of  the  fragmentation  of  the  EU  Single 
Market  for  online  music  services.  The  related  specific  objective  is  to  improve  and  broaden 
MT  licensing  of  authors'  rights  for  online  use  of  musical  works  as  well  as  to  facilitate  the 
aggregation of repertoire, with a view to include as broad an offering of music repertoire as 
possible. Such licensing should be done in full respect of EU law, including competition law. 
It should be considered in this regard that the management of copyright and related rights is 
not the only factor that affects the development of the digital Single Market (see sections 1.1 
and  3.2).  However,  other  factors  are  outside  the  scope  of  this  initiative.  As  regards  the 
corresponding  operational  objectives,  they  guarantee  legal  certainty  for  licensors,  music 
service  providers  and  ultimately  rightholders;  and  enhance  the  capability  of  licensors  by 
ensuring  they  use  licensing  infrastructure  (and  provide  licensing  services)  adapted  to  the 
online environment. In this connection, the operational objectives that aim, in the first area, at 
improving  the  functioning  of  CS  (i.e.  enhanced  G&T  standards,  improved  financial 
management)  will  also  contribute  to  the  enhancing  of  the  capacity  of  licensors  of  authors' 
rights for online uses – as an important number of those better functioning collecting societies 
(the authors CS) are key players in the licensing of music rights. 

A more coherent and efficient general framework for the collective management of rights in 
the EU as well as a specific framework for the licensing of authors' rights for online use of 
musical works should help to improve consumers' access to a wider variety of cultural goods 
and services, and in particular (but not only) in the music sector. Commercial users will gain 
from  better  functioning  and  more  transparent  CS  and,  in  the  online  environment,  from  a 
framework  facilitating  the  acquisition  of  licences  for  the  provision  of  music  services 
throughout  the  EU.  Rightholders  would  maximise  their  earnings  by  widely  promoting  their 
works while receiving remuneration. At the same time, cultural diversity would be fostered by 
the availability of a large and diverse repertoire.  

5. 

POLICY OPTIONS ON TRANSPARENCY AND CONTROL IN COLLECTING SOCIETIES  

This chapter examines and compares different policy options to solve the problems presented 
in  section  3.1.  The  policy  options  are  discussed  and  measured  on  the  basis  of  their 
effectiveness (i.e. the extent to which the measures fulfil the objectives), their impact on the 
Internal Market, on rightholders, commercial users, the collecting societies as well as cultural 
diversity and their compliance costs.  

5.1. 

Option A1 – Status quo  

Description: In the absence of policy intervention, this option would rely on the market and 
peer  pressure,  including  industry  self-regulation,  to  address  the  problems  defined  in  section 
3.1.  Such  initiatives  have  already  taken  place  or  been  advocated  by  industry.  This  is  the 
option  preferred  by  some  organisations  representing  CS.  Existing  rules  however  are  not 

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comprehensive and there are problems with their implementation. Also, individual MS could 
introduce  rules  on  G&T,  as  seen  recently  in  some  MS  in  some  cases  in  reaction  to  certain 
failures of governance in CS.138 

The summary and analysis of the impacts of Option A1 are in Annex N. Comparison of the 
impacts of Option A1 to the baseline scenario: 

Criteria ► 
Policy option▼ 

Effectiveness 

Impact on 
the IM 

Impact on 
rightholders 

Impact on 
CS 

Impact on 
users 

Cultural 
diversity 

Compliance 
costs 

Option A1  

0 
"0" – no change 

0 

0 

0 

0 

0 

0 

"+" – positive impact 

"-" – negative impact 

5.2. 

Option A2 – Better enforcement 

Description: This option would rely in the first place on the enforcement of existing rules of 
EU law (e.g. Treaty provisions on freedom to provide services, concerted practices and on the 
abuse  of  a  dominant  position)139  and  on  ensuring  consistency  at  national  level  in  the 
application  of  the  principles  (e.g.  non-discrimination  principle,  rightholders  choice)140 
emerging  from  the  case  law  of  the  Court  and  the  Commission's  decisions.  However, 
secondary EU legislation does not contain G&T standards for CS (the 2005 Recommendation 
is  of  voluntary  application).  Thus  this  option  could  mainly  concern  the  existing  national 
legislative framework. 

In  practice,  the  Commission  would  raise  awareness  amongst  authorities  supervising  CS 
(including ministries of culture, ad hoc national bodies and national competition authorities) 
as  to  the  existing  case  law  and  Commission  decisions.141.  The  Commission  and  relevant 
national  authorities  would  cooperate  with  each  other  by:  (i)  holding  awareness  meetings  on 
the  application  of  existing  principles,  (ii)  informing  each  other  of  new  cases  and  envisaged 
enforcement  decisions,  (iii)  coordinating  investigations,  where  necessary,  (iv)  helping  each 
other with investigations and (v) exchanging evidence and other information. 

The summary and analysis of the impacts of Option A2 are in Annex N. Comparison of the 
impacts of Option A2 to the baseline scenario: 

Criteria ► 
Policy option▼ 
Option A2  

Effectiveness 

+ 

Impact on 
the IM 
+ [*] 

Impact on 
rightholders 
+ [*] 

Impact 
on CS 
+ 

"0" – no change 

"+" – positive impact 

"-" – negative impact 

5.3. 

Option A3 – Codification of existing principles  

Impact on 
users 
+ [*] 

Cultural 
diversity 
0 
[*] [if enforced in all MS] 

Compliance 
costs 
- 

Description:  This  option  would  consist  in  the  codification  of  the  principles142  that  have 
emerged from the case law of the Court and from the Commission's decisions together with 
the implementation of the 2005 Recommendation into binding legislation. In this option the 
applicable principles are binding, clearly established and visible for all. This would create a 

138 
139 
140 
141 

142 

See Section 3.1 and Annex L. 
Articles 56, 101 and 102 TFEU.  
See Annex C. 
Moreover, the Commission would need to encourage better regulatory oversight of CS at national level, 
e.g.  through  the  existing  European  Competition  Network  (a  forum  for  discussion  and  cooperation  of 
European competition authorities in cases where Articles 101 and 102 TFEU are applied) in so far as 
national competition authorities are concerned. 
See Annex C. 

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stable basis for their enforcement. MS would also be required to provide appropriate sanctions 
(administrative and/or civil) for breaches of G&T obligations. Therefore, the conditions of the 
effective enforcement would be established by legislation. The result of this option would be 
the following set of measures: 

S
C
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ISSUES 

Membership and 
representation 

Rightholder choice / 
flexibility of 
mandates 

Distribution of 
revenues / handling 
rightholders' income 

Transparency / 
access to information 

Dispute resolution 

Criteria for licensing 

to 

regard 

rightholders  with 

MEASURES 
-  Non-discriminatory 
treatment  of 
membership rules, and representation in the governing bodies. 
-  Fair  and  balanced  representation  of  rightholders  in  the  internal 
decision-making process. 
- The right of rightholders to decide to entrust the rights of their choice to 
the CS of their choice and for the territory of their choice. 
- The right of rightholders to withdraw their rights from CS at reasonable 
notice. 
- Non-discriminatory treatment of rightholders (also those represented on 
the  basis  of  reciprocal  agreements)  with  regard  to  the  collection, 
distribution of income, administrative fees, etc. 
- The right of rightholders to be informed of administration fees and all 
other deductions made from the royalties. 
-  The  right  of  rightholders  to  be  regularly  informed  by  CS  of  licences 
granted and royalties collected and distributed. 
-  The  right  of  rightholders  and  users  to  access  information  on  CS' 
repertoire,  existing  reciprocal  representation  agreements,  the  territorial 
scope  of  their  mandates  for  that  repertoire  and  the  applicable  tariffs  (if 
set in advance). 
- Dispute resolution mechanism. The type of mechanism would be left to 
discretion of MS on the basis of principles set out by the Commission.  
- Fair treatment of users including as regards granting of licences. 

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The summary and analysis of the impacts of Option A3 are in Annex N. Comparison of the 
impacts of Option A3 to the baseline scenario: 

Criteria ► 
Policy option▼ 

Effectiveness 

Impact on 
the IM 

Impact on 
rightholders 

Impact 
on CS 

Impact on 
users 

Cultural 
diversity 

Compliance 
costs 

Option A3  

++/+ 

++ 

"0" – no change 

"+" – positive impact 

++ 
"-" – negative impact 

++ 

++ 

+ 

-- 

5.4. 

Option A4 – Beyond codification: a governance & transparency framework for 
collecting societies  

Description:  This  option  would  build  on  Option  A3  but  provide  more  elaborate  framework 
rules on G&T to address the problems described in Section 3.1.143 The codification of existing 
principles would be complemented by a set of targeted but principle-based rules which would 
'fill in the gaps' of Option A3, with regard to financial management and rightholders' control 
over the operations of the CS, adapted to the nature of collective rights management. Under 
this  option  all  rules  would  be  set  out  in  one  instrument  providing  for  their  visibility, 
understanding and enforceability. MS would also be required to provide appropriate sanctions 
(administrative  and/or  civil)  for  breaches  of  G&T  obligations.  This  option  would  meet  the 
expectations  of  a  number  of  creators,  music  publishers,  record  producers,  commercial  users 
and consumers, who have been asking for the establishment of common and minimum G&T 
standards. The result of this option would be the following set of measures: 

ISSUES 

MEASURES 

143 

Also, as identified by some representatives of authors, CS, publishers, users and consumers. 

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S
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Membership and 
representation 

Rightholder choice / 
flexibility of mandates 

Distribution of 
revenues / handling 
rightholders' income 

Transparency / access 
to information 

Dispute resolution 
Criteria for licensing 

AS IN OPTION A3  
PLUS  Additional  rules  on  the  participation  of  rightholders  in  the 
decision-making  process  and  collective  rights  managers'  accountability 
such as the powers of the general meeting, representation of rightholders 
in the decision-making bodies, control of the management and their key 
obligations,  obligation  on  managers  to  declare  interests  in  the  society 
they manage, etc.  
AS IN OPTION A3 

AS IN OPTION A3  
PLUS  CS,  as  entities  which  bear  responsibility  for  the  assets  of  other 
persons,  would  be  subject  to  rules  which  would  guarantee  the 
appropriate  degree  of  security  of  rightholders'  income  such  as  rules  on 
the  separation  of  rightholders'  and  societies'  assets,  the  obligation  to 
account  for  revenues  and  costs  separately  for  various  revenue  streams, 
rules  on  prudential  investment  and  involvement  of  rightholders  in 
decisions on distribution of revenue (including the allocation of funds for 
deductions).  Rights  of  non-member  rightholders  would  be  strengthened 
by rules concerning the application of costs and deductions to royalties 
owed to non-member rightholders. 
AS IN OPTION A3  
PLUS  CS  would  have  to  draw  up  and  publish  an  annual  report  that 
should  include  a  financial  statement  and  certain  specific  information 
such  as  information  on  royalties  collected  (per  revenue  stream), 
operating costs (per revenue stream), the amount of royalties distributed, 
the  sums  dedicated  to  social  or  cultural  activities,  the  amount  of  non-
distributed  royalties,  the  amount  of  royalties  paid  to  other  CS,  the 
amount  of  royalties  received  from  other  CS  and  information  on  the 
financial  investments  of  the  CS,  as  well  as  other  important  operational 
and financial data for a given year. The annual report would be subject to 
audit by an independent auditor.  
PLUS  Obligation  to  publish  key  documents  such  as  articles  of 
association, membership terms, standard contracts etc. 
PLUS Enhanced (at least annual) information for individual rightholders 
on royalties and deductions made. 
AS IN OPTION A3 
AS IN OPTION A3 

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These measures correspond to a great extent to the most recent reforms introduced by some 
MS.144 Recent amendments to the legislation applicable to CS, e.g. in Belgium or Poland aim 
at ensuring better participation and control by the members of the society, better handling of 
income and more transparency on the collection and distribution of royalties.145  

Option A4 has two possible sub-options: 

Sub-option A4a: Combination of legislation with industry self-regulation 

The  rationale  behind  this  sub-option  would  be  to  guarantee  the  codification  of  key  G&T  standards  (the 
existing  principles,  rules  pertaining  to  the  annual  report,  the  handling  of  funds)  while  leaving  the  more 
detailed standard setting - specifically with regard to matters such as the internal governance structure of the 
CS,  the  decision-making  process,  procedural  rules  for  holding  the  general  meeting  (GM)  and  meetings  of 
other governing bodies of CS, members rights (such as the right of inquiry), accountability of managers, rules 
on  handling  of  complaints,  etc.  -  to  self-regulation.  These  additional  rules  would  be  elaborated  in  a 

144 
145 

See details in Chapter 3 and Annex L. 
It  should  be  noted  that  national  legal  regimes  differ  as  regards  their  level  of  details.  It  is  apparent 
however  that  recent  legislative  changes,  for  instance  in  Belgium  or  France,  provide  for  very  detailed 
requirements, e.g. with respect to transparency or financial management.  

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stakeholder driven process based on a number of core issues and requirements set by the Commission. The 
process would result in a European code of conduct which would be binding on the societies adhering to it. 
The  code  would  also  have  to  provide  for  its  enforceability,  review  and  monitoring.  It  should  provide,  in 
particular, that: (i) CS which voluntarily join the code are bound by its terms; (ii) periodical monitoring and 
reporting  on  the  code  is  carried  out  by  an  independent  third  party  and  made  public,  and  (iii)  a  periodical 
review process is carried out, by an independent third party and in consultation with the Commission and all 
interested parties, to amend the code. Should the operation of the code not bring sufficient results, or should 
certain societies not adhere to the code, the Commission could envisage legislation. 

Sub-option  A4b:  Laying  down  a  detailed  legislative  framework  for  governance  and  transparency  in 
collecting societies 

Sub-option A4b would establish more extensive legislation in the G&T area than the principle-based Option 
A4. In terms of governance, this option would entail a detailed set of provisions on the convocation of the 
general  meeting  (GM),  the  rights  members  can  exercise  before  or  at  the  GM  (e.g.  putting  items  on  the 
agenda),  the  internal  governance  structure  of  the  CS,  the  relation  between  the  management  and  the 
supervisory  board,  procedural  rules  on  complaints  and  the  right  of  inquiry,  publication  of  voting  results, 
managers' liability, etc. As regards financial management and transparency requirements are concerned, this 
sub-option would prescribe special requirements on the structure and content of annual accounts, extensive 
publication  and  transparency  requirements,  a  detailed  set  of  rules  on  the  management  of  royalties,  the 
investment policy of the CS, etc. This sub-option would aim to create a level playing field for CS all over 
Europe by ensuring that all CS comply with the same set of legal requirements. 

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The summary and analysis of the impacts of Option A4 are in Annex N. Comparison of the 
impacts of Option A4 to the baseline scenario: 

Criteria ► 
Policy option▼ 

Option A4  

Sub-option A4a 

Sub-option A4b 

Effectiveness 

Impact on 
the IM 

Impact on 
rightholders 

Impact 
on CS 

Impact on 
users 

Cultural 
diversity 

Compliance 
costs 

+++ 

++ 

++ 

+++ 

++ 

+++ 

+++ 

++ 

+++ 

+++ 

++ 

++ 

++ 

++ 

++ 

++ 

++ 

++ 

-- 

-- 

--- 

"0" – no change 

"+" – positive impact 

"-" – negative impact 

5.5. 

Comparison of policy options  

Comparison of the options: 

Objectives: ► 

Policy options▼ 

Effective-
ness 

Impact on 
the IM 

Impact on 
rightholders 

Impact on 
CS 

Impact on 
users 

Cultural 
diversity 

Compliance 
costs 

Option A1 –  
Status quo 
Option A2 –  
Better enforcement 
Option A3 –  
Codification  
Option A4 - Framework of 
G&T rules 
Sub-option A4a –legislation 
& self-regulation 
Sub-option A4b – compre- 
hensive G&T framework 
"0" – no change 

0 

+ 

++/+ 

+++ 

++ 

++ 

0 

+ 
[*] 

++ 

+++ 

++ 

+++ 

0 

+ 
[*] 

++ 

+++ 

++ 

+++ 

0 

+ 

++ 

+++ 

++ 

+++ 

0 

+ 
[*] 

++ 

++ 

++ 

++ 

0 

0 

+ 

++ 

++ 

++ 

0 

- 

-- 

-- 

-- 

--- 

"+" – positive impact 

"-" – negative impact 

[*] [if enforced in all MS] 

5.5.1. 

Impacts on the Internal Market 

Option  A1  would  not  change  the  current  fragmented  regulation  in  the  EU.  Whilst  right 
management  in  some  MS  could  be  improved  through  national  legislation  the  lack  of 
coherence would not allow solving the cross-border issues (control of royalty flows, exercise 
of membership rights, etc.) identified in Section 3.1. Option A2 could have a more positive 
impact as it would facilitate the enforcement of existing principles but significant differences 
in the operation conditions of CS would persist (unless enforcement is equally efficient in all 
MS)  and  issues  outside  the  scope  of  existing  principles  would  remain  unresolved.  The 
codification  option  would  ensure  that  certain  rights  of  rightholders  are  harmonised  and  that 
they  are  enforceable  but  it  would  not  solve  the  issues  related  to  the  lack  of  transparency  of 
financial management of CS, thus cannot deliver on the cross-border issues. Option A4 would 
create a framework of clear and comparable G&T rules that would increase the possibilities of 
control  in  CS.  Common  framework  rules  could  lead  to  convergence  of  practices  all  over 
Europe, thus it would have the most positive impact on the Internal Market. 

5.5.2. 

Impacts on the degree of competition 

As both under Option A1 and Option A2, rightholders would, to different degrees, continue to 
lack  sufficient  information  and  control  over  CS,  they  would  not  be  able  to  make  informed 
choices about CS and the competition among CS for rightholders would suffer. The situation 
would not be substantially different under Option A3 as despite better access to information 
and  increased  control  over  CS,  rightholders  would  continue  to  lack  comparable  information 
on financial management of CS allowing them to compare CS on the basis of their efficiency. 
It  is  under  Option  A4  (and  its  sub-options)  that  rightholders  would  have  sufficient 
benchmarking information on the basis of which they could exercise informed choice of CS. 
The harmonised transparency requirements would make it much easier both for rightholders 

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and users to compare the level of services offered by CS and would put competitive pressure 
on CS. 

5.5.3. 

Impacts on stakeholders: in general 

As regards rightholders, if there were no policy change (Option A1), they would, to different 
degrees,  continue  to  lack  sufficient  information  and  control  over  the  CS  and  their  financial 
management unless individual MS would decide to develop their relevant national legislation. 
Option A2 could have a more positive impact (but not to the extent required), provided that 
the  limited  number  of  existing  provisions  would  be  equally  enforced  in  all  MS.  Binding 
legislation  under  Option  A3  would  significantly  improve  the  position  of  rightholders  in  the 
CS  (see  e.g.  non-discrimination)  but  it  would  not  address  the  issues  related  to  the  lack  of 
transparency  and  financial  management.  Option  A4  would  best  address  the  problems  that 
have been identified in the problem definition. Sub-option A4b would probably ensure even 
more  benefits  to  rightholders  but  it  would  put  too  much  administrative  burden  on  CS.  Sub-
option A4a would be less efficient (based on previous experience with self-regulation).146  

As  regards  commercial  users,  the  status  quo  (Option  A1)  and  better  enforcement  (Option 
A2) are unlikely to have any impact on their situation. The codification of existing principles 
would improve their situation as they would obtain access to the most important information 
and would have the right to bring disputes before the dispute resolution body. In addition, the 
codification would have indirect impact on users, i.e. if the improvement of the rightholders' 
situation  has  a  positive  impact  on  the  practices  (esp.  licensing,  transparency)  of  the  CS. 
Option  A4  would  ensure  the  necessary  transparency  on  all  information  that  is  essential  for 
commercial users but does not damage the interest of rightholders.  

Options  A1  and  A2  would  maintain  the  diversity  of  standards  applicable  to  collecting 
societies, in some countries management standards may improve more than in others. Option 
A3  is  likely  to  have  some  positive  impact  on  the  functioning  of  CS  through  enforcing  the 
rights  of  members  and  setting  some  transparency  requirements.  The  implementation  of  the 
rules and the dispute resolution would also entail costs. Option A4 would require the biggest 
improvement  in  the  operations  of  the  CS  and  would  entail  the  highest  compliance  costs,  in 
particular if Sub-option A4b is chosen and CS will become subject to detailed organisational 
requirements. 

Cultural diversity (i.e. niche/local repertoires) is best preserved if the exploitation of rights is 
maximised  and  the  costs  related  to  collective  rights  management  are  kept  low.  Whilst  too 
detailed regulation (Sub-option A4b) is likely to increase the costs of CS more than increased 
exploitation of rights could compensate, targeted provisions could have a positive impact (in 
longer term) on both aspects and consequently on cultural diversity. 

The  improved  services  provided  by  CS  to  rightholders  and  users  should  have  an  indirect 
positive  impact  on  consumers  as  the  licensing  process  should  be  improved  resulting  in  a 
wider and diverse offer of cultural goods to consumers. 

146 

See explanation in Sections 3.1, 3.3 and Annex L. 

EN 

39 

   EN 

 
                                                 
5.5.4. 

Impacts on stakeholders: SMEs147, micro-enterprises 

Existing national legislation and industry self-regulation do not differentiate between CS on 
the basis of their size, turnover or balance sheet total as enhanced transparency, governance 
and  financial  management  rules  are  justified  by  the  specific  activity  of  these  societies  i.e. 
representing rightholders and handling of funds for rightholders. Notwithstanding the size of 
the CS, its members should have the necessary control over the activities of the society and 
access to key documents. The exemption of the CS from these rules would restrict or make it 
impossible for rightholders e.g. to exercise their right of choice or to control the handling of 
their  income  with  respect  to  these  CS.  Also  from  users'  point  of  view,  it  is  key  that  all  CS 
meet certain minimum standards in this respect. In addition, as presented in Annex P, the bulk 
of the compliance cost stemming from the preparation of the annual accounts, annual report 
and audit of the accounts (as per Option A4) has been estimated at the relatively low level of 
€5,300  per  small  CS148  per  year  (which  corresponds  to  0.4%  of  turnover  of  an  EU  average 
small CS). Accordingly, no general exemption for micro-enterprises149 is proposed.  
As pre-existing rules in Community and national law do not take into account the size of CS 
(Option A1), Options A2 and A3 would not bring about any change in this respect. In the case 
of no policy change, new national legislation or codes of conducts may take into account the 
size  of  CS  when  designing  the  rules.  In  new  legislation  under  Option  A4  (and  sub-option 
A4a), in order to minimise the regulatory burden on very small CS, it is considered to provide 
MS with a possibility of exempting such very small CS from specific obligations such as the 
obligation of organising a supervisory function within the society as well as from obligations 
of  drawing  up  special  reports  on  financial  flows  and  on  the  use  of  social,  cultural  and 
educational funds. This would be an optional exemption and the decision would be taken by 
MS having regard to the particularities of national systems. As regards the annual report, the 
provisions would take into account the existing and future simplified requirements for SMEs. 
On the other hand, the detailed nature of the regulation under the sub-option A4b would put 
unnecessary administrative burden on smaller CS and would deprive them of any flexibility. 
More efficient CS would have a positive impact on SMEs as commercial users which usually 
have an important role in launching innovative services and business models. 

5.5.5.  Effectiveness and proportionality 

Enforcement under Option A2 would improve the regulatory oversight of CS but governance 
inefficiencies  would  be  addressed  only  to  a  limited  extent  and  consequently  rightholders' 
control over CS would not be significantly improved. Option A3 would be more effective as it 
would  ensure  the  introduction  of  a  minimum  G&T  framework.  It  would  also  have  the 
advantage of 'charted territory' for CS. Option A3 would not, however, improve the G&T of 
the financial operations of CS. Both elements are regulated in Option A4 and its sub-options. 
Option  A4  and  its  sub-options  would  provide  rightholders  with  access  to  relevant,  detailed 
and accurate information on the operations of CS, including benchmarks on the performance 
of CS, and would ensure effective rightholders participation in the decision-making process.  

147 

148 
149 

Due to the nature of the identified problems and the proposed solutions, the micro and SME thresholds 
applied by the proposal for the Directive of the European Parliament and of the Council on the annual 
financial  statements,  consolidated  financial  statements  and  related  reports  of  certain  types  of 
undertakings  (Commission  proposal  CM(2011)684)  replacing  the  thresholds  included  in  the  Fourth 
Council  Directive  on  annual  accounts  (78/660/EEC)  are  more  adequate  than  the  ones  in  the 
Commission Recommendation concerning the definition of micro small and medium-sized enterprises 
(2003/361/EC). 
According to the thresholds included in the Fourth Council Directive on annual accounts (78/660/EEC). 
As per Commission's Report "Minimizing regulatory burden for SMEs. Adapting EU regulation to the 
needs of micro-enterprises" COM(2011)803. 

EN 

40 

   EN 

 
                                                 
As  regards  sub-option  A4a  the  benefits  of  industry  self-regulation  lie  in  its  flexibility, 
sensitivity  to  market  circumstances,  internalising  responsibility  for  compliance  and  usually 
lower  costs.  On  the  other  hand,  the  main  drawbacks  of  self-regulation  are  its  frequent 
weakness  (not  binding)  and  often  difficult  enforcement.  The  code  of  conduct  would  be  at 
most  an  agreement  between  CS  and  hence  it  would  not  grant  any  rights  to  rightholders  or 
commercial users. Only other CS that are parties to the code (and not rightholders or users) 
could  enforce  the  transposition.  The  main  challenge  of  this  approach  would  consist  in 
attracting  a  critical  mass  of  CS  to  participate  in  the  dialogue  and  finding  common  ground 
despite  the  varied  interests  of  different  categories  of  CS  conducting  activities  on  various 
scales.  

Sub-option A4b would go beyond targeted G&T rules. It would provide for an extensive set 
of  provisions  applicable  to  CS  all  over  Europe.  The  effectiveness  of  this  solution  could  be 
close to that of Option A4, in particular as the respect of the legal provisions could be more 
easily monitored and its enforcement easier. But too stringent legislation could not take into 
account  the  specificities  of  different  CS  in  different  sectors  and  would  deprive  them  of  any 
flexibility in their operation and could eventually block efficient right management.  

As regards the proportionality of the EU intervention, promoting better enforcement (Option 
A2) does not raise questions. Options A3 would limit EU action to the codification of existing 
principles.  This  option  would  only  impose  some  fragmented  principles  on  the  rights  of 
rightholders and transparency of royalty flows that need to be implemented. Option A4 would 
address  all  objectives  but  would  include  some  more  precise,  targeted  rules  where  the 
comparability  of  applicable  provisions  across  borders  is  essential.  Whilst  Sub-option  A4a 
would imply less EU intervention, the effectiveness of industry self-regulation raises doubts 
based on past experience. At the other end of the scale, Sub-option A4b would be suitable to 
achieve all objectives but leave practically no freedom for MS to implement the provisions. 
Therefore, this sub-option would not comply with the proportionality requirement. Option A4 
would contain the minimum set of provisions that is necessary to achieve the objectives. 

5.5.6.  Efficiency  

Option A2 would not involve compliance costs for CS as it would not entail any legislative 
intervention. The burden would be on the Commission and on the relevant national authorities 
responsible for regulatory oversight and enforcement.  At  the  same  time  the  effectiveness  of 
this option would also be limited: it has the potential to improve the situation of rightholders 
depending on the uniformity of enforcement in the MS. Therefore the efficiency of this option 
is low. The most significant compliance cost of Option A3 could be the setting up of dispute 
resolution mechanisms for rightholders and users (the costs of such mechanisms would vary 
according to the precise nature of the dispute resolution mechanism chosen – see in Annex P). 
This would facilitate enforcement but would not create an overall efficient system since the 
codification of the existing principles is not able to address all the problems that  have  been 
identified  (the  ones  related  to  financial  management,  in  particular).  The  costs  of  Option  A4 
would be relatively higher, as this option combines Option A3 and additional elements. Most 
of the costs of Option A4 would be related to the application of new rules for the handling of 
funds (no data is available for the estimation of these costs), financial reporting and audit (the 
overall cost is estimated at approximately €4.1 million on average for all EU CS per year and, 
depending  on  the  size  of  CS,  on  average  €5,300  per  small,  €14,100  per  medium-sized  and 

EN 

41 

   EN 

 
€46,700  per  large  CS  per  year150)  and  the  setting  up  of  dispute  resolution  mechanisms  for 
rightholders and users (as in Option A3). However, the cost of Option A4 must be seen on the 
one  hand  in  relation  to  some  indicators  of  the  CS  activities  (around  1%  of  total  operating 
expenses  and  no  more  than  0.4%  of  turnover  for  financial  reporting  and  audit)  and  on  the 
other hand in relation to the efficiency gains, especially in the area of enhanced transparency 
of financial operations, to be achieved by this option. Compliance costs of Option A4 and its 
sub-option A4a would be comparable although, as far as the sub-option is concerned, it would 
depend  on  the  extent  of  rules  agreed  in  the  stakeholder  dialogue.  Whilst  sub-option  A4b 
would be effective, the detailed set of G&T rules would result in higher compliance costs for 
CS stemming from specific procedural provisions on the convocation and organisation of the 
GM,  detailed  rules  on  the  internal  governance  structure  of  the  CS,  the  relation  between  the 
management and the supervisory board, procedural rules on the right of inquiry, publication 
of  voting  results,  special  requirements  on  the  structure  and  content  of  annual  accounts,  etc. 
Thus they would reduce the overall efficiency. Therefore, Option A4 is the most efficient. 

6. 

POLICY  OPTIONS  ON  MULTI-TERRITORY  LICENSING  FOR  ONLINE  USE  OF  MUSICAL 
WORKS  

This chapter examines and compares different policy options to solve the problems presented 
in section 3.2.  These  options are discussed and measured on the basis of their effectiveness 
(i.e.  the  extent  to  which  the  measures  fulfil  the  objectives),  their  impact  on  the  Internal 
Market,  rightholders,  commercial  users,  the  collecting  societies  (including  the  impact  on 
reciprocal representation agreements) as well as cultural diversity and their compliance costs.  

6.1. 

Option B1 - Status quo  

Description:  Without  policy  intervention,  this  option  would  rely  on  the  market  to  solve  the 
problems  identified  in  section  3.2.  As  explained  in  the  background,  in  the  music  sector  a 
number of market developments took place in the last few years (publishers withdrawing their 
rights, some authors' CS offering MT licences, new licensing platform being set up). On the 
basis  of  this  experience,  multiple  licensing  practices  would  continue  to  exist  with  different 
levels of geographical scale (national or multi-territory) and at a different level of aggregation 
(repertoire specific or multi-repertoire).  

The summary and analysis of the impacts of Option B1 are in Annex O. Comparison of the 
impacts of Option B1 to the baseline scenario: 

Criteria ► 
Policy option▼ 

Option B1  

Effective-
ness 

Impact on 
the IM 

Impact on 
users 

Impact on 
consumers

Impact on 
CS 

Impact on 
rightholders 

Cultural 
diversity 

Compliance 
costs 

"0" – no change 

0 
"+" – positive impact 

0 

0 

0 

0 
"-" – negative impact 

0 

0 

0 

6.2. 

Option B2 – The European Licensing Passport  

Description:  This  option  would  encourage  the  aggregation  of  repertoire  for  online  uses  of 
musical  works  at  EU  level  and  the  licensing  of  rights  through  effective  and  responsive  MT 

150 

See calculations in Annex P. 

EN 

42 

   EN 

 
 
                                                 
licensing infrastructures.151 It would do so by requiring that CS wanting to license the online 
rights of musical works on a MT basis comply with a set of conditions defined by legislation, 
which would aim at ensuring that CS engaging in MT licensing have sufficient data handling 
and invoicing capabilities152, comply with certain transparency standards towards rightholders 
and users and allow for the use of a dispute resolution mechanism. As regards transparency 
standards,  various  consulted  authors'  associations  considered  that  accessible  ownership  and 
licence  information  would  facilitate  multi-territory  and  multi-repertoire  licensing  and 
overcome the current market fragmentation. 

The  legal  requirements  listed  in  the  table  below  would  equally  apply  to  CS  granting  MT 
licences  only  for  their  own  repertoire  or  for  an  aggregated  repertoire  (a  "passport  entity"). 
This is required due to the interdependency of MT licensing activities - different CS are often 
involved in the licensing of shares of rights in one single work and therefore it is important 
that all CS granting MT licences, whether in their own repertoire or in aggregated repertoire, 
comply  with  these  legal  requirements.  CS  that  comply  with  the  requirements  could  grant 
licences  for  the  online  use  of  the  musical  works  on  a  MT  basis.  There  would  be  no 
requirements  to  provide  for  specific  ex  ante  authorisation  for  MT  licensing  but  MS  would 
have to ensure that compliance with the legal requirements can be effectively reviewed by the 
competent authorities with respect to CS established in their territory.153 

Licensing 
scope 

Enhance 
the 
capabilities 
of licensors 

–  MT licensing of musical works, on the basis of mandates from rightholders and/or from CS. 
–  Exemption for MT licences for the online rights in musical works for services ancillary to TV and 
radio programmes (e.g. catch-up TV, simultaneous retransmission) provided by broadcasters.  
Data 
handling 
capability 

–  Precise  identification  of  licensed  repertoire  by  means  of  a  continually  updated  and 

authoritative ownership database;  

–  Capability  for  fully  electronic  data  exchange  on  works  and  usage  of  works  with 
users,  on  the  basis  of  accurate  information  provided  by  users  in  the  appropriate 
format; 

–  Ability  to  process  electronically  registration  of  works,  registration  of  mandates 

and/or changes to mandates. 

Invoicing 

–  Ability to process data of rightholders switching from one passport entity to another. 
–  Timely invoicing: no more than e.g. three months from the accurate reporting of the 

relevant usage (download, stream, etc.). The user may agree otherwise. 

–  Accurate invoicing: claims on a share per work basis. 
–  Avoidance  of  overlapping  invoices:  the  "passport  entity"  should  have  effective 
procedures in place to resolve conflicting ownership claims with other licensors and 
to clear back-claims procedures (when changes in ownership are not reflected in the 
system at the time of invoicing). 

–  Payments  to  rightholders  no  later  than  e.g.  six  months  from  actual  use  of  the 

work/three months from receipt of payment from users. 

–  Accurate  reporting  on  (minimum):  licences  issued,  applicable  distribution  rules, 
revenue  per  works/shares  and  per  territory,  deductions  for  administrative  costs  and 
other deductions.

Rightholder 
services 

Legal 
certainty 

–  Availability of a dispute resolution mechanism linked to MT licences. 

CS  complying  with  the  legal  requirements  could  also  aggregate  rights  and  repertoire  on  the 
basis of mandates from rightholders and from other CS for the purposes of MT licensing for 

151 

152 
153 

Distinctly  from  Option  B4  (extended  collective  licensing  &  country-of-origin  principle),  this  option 
would not create a legal presumption that CS have the right to grant MT licenses for their repertoire but 
would rely on voluntary licensing and voluntary aggregation of repertoire on a contractual basis. 
See current problems in section 3.2. 
E.g. through complaint mechanisms. 

EN 

43 

   EN 

 
                                                 
online uses. This could put them in a position to achieve economies of scale and a breadth of 
repertoire that is attractive to users.  

Those CS which do not want to undertake the efforts and investments needed to comply with 
the legal requirements would be entitled to entrust their repertoire to the "passport entity" (i.e. 
a CS that already aggregates repertoires) of their choice154 (right to "tag on" their repertoire). 
A "passport entity" would be obliged to take on the repertoire on reasonable terms155 and to 
license it on a non-discriminatory basis. This aggregation of repertoire is supported by some 
organisations representing creators. The decision of a CS to become a "passport entity" or to 
entrust their repertoire to another CS for the purposes of MT licensing is a strategic decision 
that has to be taken by the members of a CS; hence the need to ensure, as a precondition to 
efficient  MT  licensing,  the  good  G&T  of  the  CS.  The  objective  is  to  ensure  that  all 
rightholders  have  the  possibility  of  joining  a  "passport  entity"  and  that  the  entire  EU 
repertoire can be licenced on a MT basis.156  

In relation to new, innovative services CS would have the flexibility to grant licences without 
having to take into account previous licensing terms for similar services as precedents. 

The summary and analysis of the impacts of Option B2 are in Annex O. Comparison of the 
impacts of Option B2 to the baseline scenario: 

Criteria ► 
Policy option▼ 
Option B2  

Effecti-
veness 

Impact 
on the IM 

Impact on 
users 

Impact on 
consumers 

Impact 
on CS 

Impact on 
rightholders 

Cultural 
diversity 

Compliance 
costs 

++ 

++ 

++ 

+ 

+ 

++ 

+ 

- 

"0" – no change 

"+" – positive impact 

"-" – negative impact 

6.3. 

Option B3 – Parallel direct licensing  

Description:  This  option  would  require  CS  to  manage  the  rights  of  rightholders  on  a  non-
exclusive  basis  ("non-exclusive  mandates"  from  rightholders  to  CS)  and  it  would  give 
rightholders  the  ability  to  conclude  direct  licences  with  users,  without  having  to  withdraw 
their rights from their  CS. Currently, this is not possible because CS in Europe157 generally 
require exclusive mandates from their members.  

Such  "parallel  direct  licences",  negotiated  directly  between  users  and  rightholders,  could  in 
certain cases158 be more responsive, flexible and adapted to the needs of users. CS could still 
grant licences covering rights which are not directly licensed. In this case, the CS would have 

154 

155 

156 

157 

158 

Some CS already entrust their rights to other CS for the purpose of MT licensing of online services: e.g. 
the  Irish  society's  (IMRO)  rights  are  licensed  by  the  UK  society  (PRS)  and  the  Portuguese  society's 
(PTA)  rights  are  licensed  by  the  Spanish  society  (SGAE).  Similar  trends  can  be  seen  in  the  Nordic 
countries.  
E.g. should there be a need to upgrade the information on the repertoire of a CS that wants to tag on its 
repertoire,  the  passport  entity  and  the  CS  should  agree  on  reasonable  terms  on  how  to  perform  this 
upgrade (e.g. how  information  on  the  repertoire of  the  CS  wishing  to  tag on  would be  provided)  and 
how to apportion its costs. 
Therefore,  if  a  CS  does  not  engage  in  either  method  of  MT  licensing,  after  a  transitional  period,  its 
rightholders  could  also  grant  MT  licences  themselves  (directly  or  indirectly)  in  their  online  music 
rights. 
In  the U.S.  performing rights  societies ASCAP  and  BMI  are required  (anti-trust  rules)  to  only  accept 
non-exclusive mandates  from  their  members.  The  third  and  smaller  of  the  performing  rights  societies 
(SESAM) is allowed to require exclusive mandates. 
E.g. for new forms of services where licensing terms and conditions have not yet been tested. 

EN 

44 

   EN 

 
 
                                                 
to  adjust  the  licence  tariff  to  take  into  account  ("carve  out")  the  rights  which  have  already 
been licensed in parallel by rightholders.159  

Licensing 
scope 

Enhance 
the 
capabilities 
of licensors 

–  Rightholders  can  grant  parallel  direct  licences  which  are  MT  mono-repertoire  (limited  to  the 

rights they control). 

–  No specific obligations imposed on societies for MT licences 
–  A  more  competitive  market  place  (between  societies  and  rightholders)  would  be  expected  to 
improve  the  licensing  by  CS  overtime.  However,  the  position  of  rightholders  could  deteriorate, 
depending  on  the  value  of  their  rights.  Societies  are  likely  to  stay  granting  multi-repertoire 
licences (minus the rights licence directly in parallel) for their territory. 

Data 
handling 
capability 

Invoicing 

Rightholder 
services 

– 

In the case of direct licences, rightholders identify directly licensed works and users 
report  on  their  use.  They  may  use  third  party  services  and  databases  to  do  so, 
choosing the best technology the best service provider on the market.  

–  No measures improving the capability of societies. 
–  Direct invoicing from rightholders to users for parallel direct licences. Procedures to 

be negotiated between rightholders and users. 

–  CS  must  "carve-out"  from  its  licence  the  rights  under  direct  parallel  licences  by 

rightholders. 

–  Rightholders  may  grant  direct  parallel  licences  without  having  to  withdraw  their 

rights from their society; 

–  Societies are under an obligation not to take any action impeding the grant of such 

licences. 

Legal 
certainty 

–  CS are obliged to adjust their licences to exclude rights which have been directly licensed. 
–  Parallel direct licences are not subject to any regulatory constraints. 
– 

Increased uncertainty over the repertoire represented by CS. 

A  possible  sub-option  would  consist  in  allowing  rightholders  the  choice  of  non-exclusive 
mandates as a mechanism to facilitate the aggregation of repertoire. E.g. a rightholder could 
be entitled to renegotiate his rights management contract and entrust his rights to a CS on a 
non-exclusive basis, should that society not offer MT licences, either itself or by means of a 
consortium  with  other  societies  or  rights  managers.  The  rightholder  could  then  grant,  in 
parallel, a non-exclusive mandate to another licensing agent or a licence to a user.  

The summary and analysis of the impacts of Option B3 are in Annex O. Comparison of the 
impacts of Option B3 to the baseline scenario: 

Criteria ► 
Policy option▼ 

Effecti-
veness 

Impact on 
the IM 

Impact on 
users 

Impact on 
consumers

Impact on 
CS 

Impact on 
rightholders 

Cultural 
diversity 

Compliance 
costs 

Option B3  
"0" – no change 

+ 
"+" – positive impact 

+ 

+(+) 

+ 

- 
"-" – negative impact 

+/- [*] 
[*] [depending on value of the rights] 

- 

- 

6.4. 

Option  B4  –  Extended  collective  licensing  combined  with  a  country  of  origin 
principle 

Description:  This  option  would  establish  the  presumption  that  each  author  CS  has  the 
authority to grant "blanket" licences for online uses covering the entire repertoire ("extension 
effect  of  the  licence")  provided  that  the  society  is  "representative"160.  Such  presumption 
would  aim  to  aggregate  rights  within  each  local  CS,  each  being  presumed  to  represent  the 

159 

160 

See  e.g.  Australian  Competition  and  Consumer  Commission,  Application  for  revocation  and 
substitution of authorisations A30082, A30083, A30084, A30085, A30086 and A30087 lodged by the 
Phonographic Performance Company of Australia Ltd in respect of collective licensing arrangements, 
27  September  2007,  section  6.33  and  7.5  (3)  to  (4);  USA  v  BMI,  US  Court  of  Appeals  (2nd  Cir.),  12 
December  2001  (concerning  a  "carve  out"  in  BMI's  blanket  licences,  adjusting  the  fee  of  the  blanket 
licence to take into account repertoire licensed directly).  
i.e.  it  is  mandated,  directly  by  rightholders  and  indirectly  via  agreements  with  other  societies,  to 
represent a significant share of rights in works used in the market. 

EN 

45 

   EN 

 
 
                                                 
entire repertoire. This option does not solve but simply shifts data processing problems (such 
as  repertoire  identification)  to  the  "back  office"  of  collective  management.  The  CS  would 
have  to  attribute  those  works  to  the  rightholder  to  distribute  the  income  collected,  but  this 
option  will  not  necessarily  require  CS  to  improve  key  elements  for  the  licensing  of  online 
users  (such  as  accurate  identification  and  data  processing).  Individual  rightholders  and 
publishers could still exercise their exclusive rights individually or through another licensing 
entity but first they would have to actively "opt out" of the extension effect, by notifying each 
local CS thereof. The licences granted by local CS would have to be adjusted to reflect these 
"opt-outs".  

This would be combined with the establishment of a country of origin principle applicable to 
the rights required for online exploitation of musical works so that a single licence with a CS 
would suffice to cover the EU territory. An online service considered to be "originating" from 
one MS would only need to clear the rights for the territory  of  that  MS,  instead of  clearing 
them  in  27  MS.  However,  identifying  the  "country  of  origin"  may  prove  particularly 
challenging  for  online  services,  notably  when  they  operate  exclusively  online  on  a  MT 
basis161.  The  introduction  of  the  "country  of  origin"  principle  would  affect  the  definition  of 
existing  rights  rather  than  addressing  the  requirements  for  efficient  licensing  by  CS.  Some 
organisations representing broadcasters are in favour of such a "country of origin" licensing as 
a specific regime for their activities.  

Licensing 
scope 

–  Licence presumed to cover all works which are not opted-out by rightholders (extension effect). 
–  For multi-territory services, rights must only be cleared in the country of origin of the service. 
–  Aggregation depends on whether rightholders opt out from the extended licences.  

Enhance 
the 
capabilities 
of licensors 

Legal 
Certainty 

Data 
handling 
capability 

Invoicing 

Rightholder 
services 

–  The relevance of data processing is largely shifted to the task of distributing income 

to rightholders (back office). 

–  No requirements on data-processing and invoicing by collecting societies. 
–  Local  societies  must  offer  a  "carve-out"  from  their  licences  with  an  adjustable  fee 

taking into account the repertoire opted out by rightholders. 

–  Extended licences require societies to establish an opt-out mechanism. 

–  MT licences subject to the rules applicable in the country of origin of the service, but this in turn 

is subject to being able to determine the country. 

–  CS granting multi-territory licences are subject to national rules. 

The summary and analysis of the impacts of Option B4 are in Annex O. Comparison of the 
impacts of Option B4 to the baseline scenario: 

Criteria ► 
Policy option▼ 

Option B4  

Effecti-
veness 

+/0 

Impact on 
the IM 

Impact on 
users 

Impact on 
consumers

Impact on 
CS 

Impact on 
rightholders 

Cultural 
diversity 

Compliance 
costs 

+ 

+ 

0 

0/- 
"-" – negative impact 

0 

0 

-- 

"0" – no change 

"+" – positive impact 

6.5. 

Option B5 – Centralised Portal 

Description: This option, supported by some organisations representing CS, would allow CS 
to pool their repertoire for MT licensing in a single transaction, coordinated through a central 
portal.  A  commercial  user  could  request  a  multi-repertoire  MT  licence  from  the  portal.  The 
participating  CS  would,  through  the  portal,  designate  a  licensing  society  from  amongst  its 
participants, and the licence would be concluded with that CS. The portal would set the costs 

161 

No  technical  criteria  could  be  used  without  risking  a  degree  of  arbitrariness:  works  available  for 
download  are  stored  and  mirrored  on  a  myriad  of  servers  located  in  a  variety  of  locations  across  the 
world. 

EN 

46 

   EN 

 
 
                                                 
of  administering  the  licence,  allocate  the  back-office  tasks  (data  processing)  amongst 
participant  CS  and  ensure  the  distribution  of  royalties.  Finally,  the  portal  would  require 
participating CS to comply with agreed minimum standards of service and make available the 
requisite IT tools to those CS requesting them. Participating societies would grant their rights 
to the portal on a non-exclusive basis.162  

This  option  relies  on  a  voluntary  form  of  cooperation  which  would  create  a  pan-European 
organization with a de facto monopoly power. This would exacerbate competition restrictions, 
notably customer allocation (because the portal rather than a commercial user would choose 
the licensing society) and price fixing (as administration fees would be decided by the portal 
rather  than  different  CS).  While  rightholders  and/or  rights  managers  could  theoretically 
continue  using  other  means  of  licensing  (direct  licensing)  and/or  other  platforms  that  may 
emerge  (as  the  portal  would  be  non-exclusive),  in  practice  it  is  unlikely  that  a  credible 
alternative would emerge that could coexist with the central portal (to be meaningful, it would 
require the involvement of the most significant CS). Customer allocation and price fixing are 
prohibited  by  the  Treaty  (Article  101(a)  and  Article  101(c)  TFEU)  and  their  negative 
consequences  on  the  IM  are  well  recognized  by  the  ECJ.163  Some  consulted  organisations 
representing CS insist however that the customer allocation would be essential as competition 
between  CS  could  lead  to  "a  race  to  the  bottom".  Negative  consequences  of  customer 
allocation and price restrictions could only be accepted under the EU competition rules if they 
are  outweighed  by  the  creation  of  significant  efficiencies  for  consumers.  To  date  no  such 
efficiencies  have  been  demonstrated.  Accordingly,  the  impacts  of  this  option  will  not  be 
further assessed.  

6.6. 

Comparison of policy options on multi-territory licensing  

Criteria ► 
Policy option▼ 
Option B1 - Status 
quo 

Option B2 - Passport 

Option B3 - "Parallel 
direct licensing" 
Option B4 - ECL with 
country-of origin  

Effecti-
veness 

Impact on 
the IM 

Impact on 
users 

Impact on 
consumers

Impact on 
CS 

Impact on 
rightholders 

Cultural 
diversity 

Compliance 
costs 

0 

++ 

+ 

+/0 

0 

++ 

+ 

+ 

0 

++ 

+(+) 

+ 

0 

+ 

+ 

0 

0 

+ 

- 

0 

++ 

+/- [*] 

0/- 

0 

0 

+ 

- 

0 

0 

- 

- 

-- 

"0" – no change 

"+" – positive impact 

"-" – negative impact 

[*] [depending on value of their rights] 

6.6.1. 

Impacts on the Internal Market 

Under Option B1, the IM would remain fragmented: rights licensing for online services would 
remain complex, as described in the baseline scenario. Option B2 (passport) would enhance 
trust and confidence between CS and promote voluntary cooperation for the delivery of MT 
licences.  It  would  also  facilitate  the  smooth  functioning  of  the  market  by  alleviating  legal 
uncertainty  and  ensure  common  rules  –  and  a  high  level  of  performance-  for  all  collective 
licensors across the EU. Option B3 (parallel direct licensing) has also positive impacts on the 
IM as it creates competitive pressure on CS to develop more efficient licensing practices in 
order  to  avoid  that  major  rightholders  directly  grant  licences  to  users.  However,  contrary  to 
option B2, it would not create a minimum set of common rules for licensors and its initials 
effects on the market are likely to be quite unsettling. Option B4 provides, a priori, a degree 

162 

163 

I.e. they would still have the right to grant MT licences to users, in their own repertoire, without using 
the portal.  
See e.g. Case 41/69 etc ACF Chemiefarma NV v Commission [1970] ECR 661. 

EN 

47 

   EN 

 
                                                 
of  legal  certainty  in  the  IM  but  it  does  not  address  the  significant  discrepancies  in  the 
efficiency of CS across the EU and it is not likely to simplify MT licensing in the IM because 
of the high likelihood of opt outs. It would also not lead to aggregation of repertoire. 

6.6.2. 

Impacts on the degree of competition 

Without policy intervention (Option B1), multiple licensing practices would continue to exist 
with  a  different  geographical  scope  (national  or  MT)  and  a  varied  level  of  aggregation 
(repertoire specific or multi-repertoire). The level of competition for users among CS would 
not  be  high  as  online  service  providers  wishing  to  launch  a  pan-EU  service  including  the 
entire EU repertoire would need to enter into licence agreements with all CS and additionally 
with  publishers  for  some  of  the  mechanical  rights.  This  option  would  be  neutral  as  far  as 
competition  for  rightholders  among  CS  is  concerned.  Option  B2  is  designed  to  promote 
voluntary  cooperation  between  CS  for  the  delivery  of  MT  licences.  The  market  would 
determine  how  many  licensing  entities  complying  with  Option  B2  requirements  would 
develop.  It  is  expected  that  market  would  settle  on  a  "reasonable  number"  of  licensors  and 
that this outcome would avoid monopolistic licensing conditions at EU or EEA level. These 
licensing entities which would be interested in aggregating the repertoire (as opposed to those 
that would only be interested in licensing their own repertoire on the MT basis) would be in 
competition  (also  with  other  licensing  agents)  to  attract  repertoire  of  rightholders,  other  CS 
and  possibly  also  non-EEA  repertoire.  The  level  of  competition  among  CS  complying  with 
the  requirements  under  Option  B2  with  regard  to  users  would  depend  on  the  extent  of 
overlaps  in  the  represented  repertoire.  Option  B3  would  create  competition  between  the 
different licensing entities (CS  and non-CS). The non-exclusive  mandates from  rightholders 
to  CS  would  create  a  situation  in  which  all  market  players  would  be,  in  principle,  able  to 
obtain rights to represent pan-EU repertoire. This would create competitive pressure on CS to 
develop more efficient licensing practices in order to avoid that rightholders directly (via non-
CS licensing agents) grant licences to users. Publishers would obtain a possibility to aggregate 
the  rights  in  their  own  catalogue.  Currently  they  can  only  directly  license  the  digital 
reproduction  right  in  their  Anglo-American  catalogue.  The  authors'  non-exclusive  mandates 
with  CS  would  allow  publishers  to  obtain  the  right  to  license  the  rights  they  are  currently 
missing from individual authors. New players, such as record labels, could enter the market 
and  represent  rightholders.  Commercial  users  could  obtain  licences  either:  (1)  directly  from 
the  owner  of  the  relevant  copyright  ("direct  licensing"  via  a  licensing  agent),  (2)  from 
individual collecting societies or (3) from a network of collecting societies that have decided 
to pool their repertoires. Option B4 would result in a certain level of competition between CS 
for  users  as  they  could  obtain  licences  for  the  same  repertoire  from  all  CS.  However,  it  is 
expected  that  this  competition  could  concern  only  a  limited  part  of  the  repertoire  as  the 
biggest rightholders including publishers and CS with the most commercial repertoire, would 
probably opt out from the extended collective licensing as this system would not put pressure 
on  CS  to  increase  their  efficiency  and  to  modernise  their  licensing  models.  For  the  same 
reason Option B4 would not increase competition between CS as regards rightholders. 

6.6.3. 

Impacts on stakeholders and cultural diversity 

As  regards  rightholders,  the  status  quo  (option  B1)  is  likely  to  deprive  them  from  revenue 
they could otherwise earn given the reticence or technical inability to monetise music online 
by  certain  CS,  while  revenue  from  "physical"  sales  will  continue  to  decline.  Improvements 
driven  by  competition  between  passport  holders  (Option  B2)  are  likely  to  result  in  more 
choice  for  rightholders  and  consequently  in  the  aggregation  of  their  rights  in  the  best 

EN 

48 

   EN 

 
performing "passport entities", thus benefiting from the licensing and distributive efficiencies 
(e.g. faster and more accurate payments) that should be generated in well-managed passport 
entities.  Option  B3  would  favour  large  rightholders  (e.g.  publishers):  they  would  be  in  a 
position  to  negotiate  deals  faster  and  to  choose  the  best  solution  for  the  technical 
administration  of  their  rights  (invoicing,  data  processing,  payments).  But  most  rightholders 
i.e.  smaller  rightholders  will  receive  lower  royalty  payments  if  they  remain  attached  to  CS 
(because  of  the  need  to  support  the  administrative  costs  of  the  CS  while  their  income 
diminishes)  or  may  be  'compelled'  to  assign  their  rights  to  publishers  or  record  producers. 
Under  option  B4,  rightholders  would  find  it  difficult  to  track  their  income  as  their  rights 
would  be  licensed  by  local  CS  for  use  across  the  EU  without  their  express  consent  and 
without them having a possibility to influence decisions. Given the lack of incentives on the 
improvement  of  the  data-processing  ability  of  CS,  slow,  inaccurate  payment  processing  is 
likely to remain as quality standards would not be raised. This option would also require the 
redefinition  of  the  rights  as  such;  hence  the  intervention  would  affect  the  situation  of 
rightholders more than it is necessary to achieve the objectives.  

As regards collecting societies, under option B1, small and medium sized CS would continue 
to  lack  the  technical  ability  to  process  MT,  multi-repertoire  licences.  To  some  extent,  they 
would continue to grant multi-repertoire licences limited to their domestic territories, on the 
basis  of  remaining  reciprocal  agreements  with  other  societies.  In  the  case  of  option  B2,  the 
risk  of  a  two-tier  licensing  infrastructure  emerging  (i.e.  commercially  attractive  repertoire 
being  served  by  a  better  licensing  infrastructure  and  obtaining  more  favourable  licensing 
terms than small, local or niche repertoire) is avoided. Smaller societies can avoid undergoing 
significant investments by relying on the infrastructure of passport holders, while continuing 
to  licence  local  services.  Option  B3  is  likely  to  be  detrimental  to  CS:  the  most  valuable 
repertoire and the  online  music services  which generate the most revenue could be licensed 
without using their services, thus immediately diminishing their turnover and proportionally 
increasing their costs. Option B4 provides short term reassurances to CS that they will have a 
role  to  play  in  their  domestic  market  but  does  not  provide  any  incentive  for  CS  to  improve 
their capability to deal with online service providers, or to raise data processing standards and 
does  not  ensure  that  they  will  have  the  rights  required  to  play  a  role  in  the  online  markets 
(because of the opt outs). 

As  regards  the  reciprocal  representation  agreements,  under  Option  B1,  their  role  would 
remain the same as today. Similarly, Option B4 would have a relatively neutral effect, as CS 
which  would  want  to  benefit  from  the  presumption  (that  they  have  the  authority  to  grant 
extended licenses) would need to show that they represent a sufficient number of rightholders, 
either directly or through reciprocal agreements. However the opt-outs from the CS are likely 
to happen and would have a negative impact. The MT licensing scheme under Option B2 does 
not require reciprocal agreements. The agreement between a CS and the "passport entity" to 
represent  its  repertoire  would  not  be  reciprocal.  Nonetheless,  these  agreements  would 
continue to exist to a more limited extent. Similarly, in the case of "parallel direct licensing" 
(Option  B3),  the  current  practice  of  reciprocal  agreements  allowing  CS  to  grant  multi-
repertoire licenses to their own territory would continue but with a more limited/less attractive 
repertoire. 

The  emergence  of  new  online  music  services  or  the  expansion  of  existing  ones  would 
continue  to  be  hampered  under  the  status  quo  (option  B1):  commercial  users  wanting  to 
launch  MT  and  multi-repertoire  services  will  continue  to  face  unnecessary  levels  of 
complexity and costs when clearing rights. On the contrary, option B2 would aim to stimulate 

EN 

49 

   EN 

 
the voluntary aggregation of repertoire by creating licensing hubs, combined with a level of 
service  in  line  with  the  demands  of  users:  facilitating  the  task  of  users  in  securing  licenses, 
and reducing their transaction costs. Option B3 is likely to accommodate a variety of online 
providers' needs. However, it may result in users facing the need to secure a higher number of 
licenses when their business model (which is the one prevailing today) is based on the offer of 
a large and varied repertoire which includes not only the international catalogue but also local 
catalogues.  Option  B4  will  not  simplify  matters  for  users:  they  would  still  need  to  get  a 
number of licences from rightholders and CS because of the opting out (as under the baseline 
scenario)  as  well  as  an  extended  licence  from  the  CS  granting  an  extended  licence  in  their 
country of origin. This option would not lead to the aggregation of repertoire and would not 
raise technical standards. Also, it lacks the flexibility of other licensing process.  

The  status  quo  is  not  to  the  advantage  of  consumers:  consumer  access  to  online  music 
services  will  continue  to  be  patchy  and  unevenly  spread,  to  the  detriment  of  consumers  in 
smaller countries. The emergence of passport holders (option B2) is expected to facilitate the 
scaling  up  of  existing  services  to  a  multi-territory  level,  as  well  as  the  launching  of  new 
services, offering more choice of services to consumers and broad choice of music. Option B3 
is  also  likely  to  have  positive  effect  on  consumers'  access  to  new  services,  but  it  could  be 
possible  that  the  repertoire-specific  nature  of  certain  licensing  platforms  might  lead  to  a 
reduction  in  breadth  and  scope  of  repertoire  that  is  available  from  pan-European  services. 
Option B4 would have a mixed impact on consumers: existing services or services which rely 
on a less innovative or risky business model may be accessible to consumers across the EU; 
however,  due  to  the  expected  conservative  licensing  model,  consumers  are  less  likely  to 
benefit from the launch of more innovative services.  

Concerning cultural diversity, under the current scenario (B1), smaller CS might not succeed 
in cross-border licensing as their own repertoire – while culturally significant – has a lower 
commercial  value  than  repertoire  that  is  popular  across  cultural  boundaries.  Thus,  a  direct 
negative  impact  on  the  availability  of  culturally  diverse  repertoire  outside  national  borders 
remains.  Option  B2  (passport)  positively  contributes  to  cultural  diversity:  online  services 
would all be able to offer a large repertoire, including local or niche repertoire. Under option 
B3  (parallel  licensing)  the  large  majority  of  rightholders,  i.e.  smaller  rightholders,  would 
receive lower royalty payments. The operational costs of CS would have to be divided among 
a smaller number of righholders and this could hinder the capacity of the CS to promote its 
repertoire.  The  commercial  opportunities  for  the  repertoire  held  by  smaller  CS  could  be 
undermined. Local, niche and "less mainstream" repertoires would suffer. The disappearance 
of  this  less  “mainstream”  repertoire  (e.g.  niche  or  local  repertoire)  would  be  detrimental  to 
cultural  diversity  in  Europe.  Option  B4  has  neutral  effects:  local  and  niche  repertoire  will 
continue to be licenced by local societies, however most likely in conditions which are less 
favourable than mainstream repertoire.  

6.6.4. 

Impacts on stakeholders: SMEs, micro-enterprises 

Option  B2  (passport)  is  likely  to  have  positive  impacts  on  SMEs:  it  will  favour  the 
development  of  new  and  innovative  services,  thus  providing  market  opportunities  to  new 
entrants, including SMEs; it will allow smaller CS to provide a good service to their members 
by  cooperating  with  larger  CS  and  in  terms  of  licensing  opportunities  (and  possible  new 
revenue) and quality of service, small rightholders are likely to be better served under option 
B2 than under any  of  the  other  options. Other options are less  positive for SMEs: they will 
result  in  more  rigid  market  conditions  for  service  providers,  making  life  more  difficult  for 

EN 

50 

   EN 

 
smaller players. Concerning smaller CS, option B3 has detrimental effects, while option B4 
may  be  detrimental  because  of  the  opt-outs.  For  smaller  rightholders,  option  B3  is  likely  to 
result  in  lower  royalties  while  option  B4  increases  the  monitoring  difficulties  for  them.  No 
exemption  for  micro-enterprises  is  proposed  as  there  are  no  authors'  societies  licensing 
music rights164 (even only on a national basis) that would fall under the exemption. 

6.6.5.  Effectiveness and proportionality 

As regards the effectiveness of the options, both option B2 (passport) and B3 (parallel direct 
licensing)  will,  overall,  achieve  the  desired  objectives,  and  therefore  improve  the  market 
situation.  However,  option  B2  appears  a  more  effective  option  to  secure  a  vibrant  internal 
market that will respect cultural diversity. Also, by building on the existing business model in 
which CS have an important role to play, it will create less uncertainties than the option B3 
which  breaks  from  the  existing  model.  The  effectiveness  of  option  B4  (extended  collective 
licence) is not better than the status quo: while some service providers may be in a position to 
better  obtain  licences,  others  would  not  (opt-outs)  and  rightholders  are  unlikely  to  be  better 
off than today. 

In  terms  of  proportionality  of  EU  intervention,  option  B4  would  seem  to  go  beyond  the 
necessary to address the identified problems as it would affect the definition of existing rights 
whilst  Options  B2  and  B3  provide  answers  for  the  specific  identified  problems.  The  other 
options do not raise concern in this respect. Option B2 is the one, as shown in the description 
of  the  impacts  above,  which  achieves  a  better  balance  between  the  different  interests 
involved: those of rightholders, of CS, of service providers and consumers, while at the same 
time  guaranteeing  a  sufficient  protection  of  cultural  diversity.  Other  options  are  less 
proportionate  as  they  seem  to  favour  certain  stakeholders:  direct  licencing  would  largely 
favour  music  publishers  to  the  detriment  of  CS,  in  particular  smaller  ones,  and  of  smaller 
rightholders;  while  the  extended  collective  licensing  would  favour  CS  without  necessarily 
providing for efficiency gains to the advantage of both rightholders and service providers. 

6.6.6.  Efficiency 

Option  B3  would  entail  the  lowest  compliance  costs.  It  would  lead  to  efficiency  gains  in 
particular for those rightholders opting to grant direct licences. Rightholders in niche or local 
repertoire,  however,  would  be  unlikely  to  benefit  from  such  efficiencies.  Option  B4  would 
entail compliance costs for CS, rightholders, and also for MS, which would have to step up 
the  oversight  of  CS  granting  ECLs.  These  costs  would  not  be  expected  to  lead  to 
improvements in the efficiency of CS to grant licences or to distribute income to rightholders. 
Option  B2  (passport)  entails  compliance  costs  mainly  for  licensing  entities  which  opt  to 
become  a  passport  holder.  The  main  cost-benefits  of  the  passport  option  are  that  the  costs 
would  be  incurred  by  those  entities  best  placed  to  sustain  them,  and  would  lead  to  an 
improvement in the efficiency of CS (in their relationship with users and with rightholders). 
Further, the passport allows smaller societies to benefit from these efficiencies by tagging on 
their  repertoire.  In  light  of  this  analysis,  the  passport  option  (B2)  (combined  with  a  G&T 
framework) would appear proportionate to the objectives.  

164 

As opposed to CS active in other fields (mentioned in section 5.5.4 with respect to measures related to 
G&T). 

EN 

51 

   EN 

 
                                                 
7. 

COMPARISON OF THE COMBINATIONS OF G&T AND "LICENSING" OPTIONS  

7.1. 

Combination of options 

As  shown  in  Chapter  4,  operational  objectives  in  the  two  areas  are  interconnected: 
improvements  in  the  transparency  and  governance  of  CS  will  positively  impact  on  their 
capability to carry out MT licensing of authors' rights for online use of musical works and the 
reverse is also true. Therefore, it is necessary to examine if different combinations of options 
from  both  areas  could  achieve  the  desired  objectives  and  which  combination  is  the  most 
proportionate. In the following paragraphs, a summary analysis of the combination of option 
B2  (passport),  which  is  the  most  effective  for  the  improvement  of  multi-territory  licensing, 
with  options  A3  (codification  of  existing  G&T  rules)  and  A4  (framework  of  G&T  rules)  is 
presented165. For further detail on other combination of options, see Annex R. 

The  combination  of  the  passport  (option  B2)  with  the  codification  of  existing  G&T  rules 
(option  A3)  would  not  compensate  for  the  weaknesses  of  Option  A3  in  addressing  all  the 
G&T  problems.  Whilst  the  passport  (option  B2)  would  bring  more  transparency  on  the 
income derived from online rights (by promoting rights management practices which account 
precisely  revenue  and  costs  at  the  level  of  individual  works),  it  would  not  bring  further 
transparency as to how a society finances the costs of its online operations (i.e. whether from 
cross-subsidisation  from  other  revenue  streams,  financial  income,  etc.).  Lack  of  financial 
transparency would thus remain. Similarly, while the passport acknowledges that rightholders 
and  societies  should  choose  how  best  to  licence  online  rights  (i.e.  by  choosing  the  best 
passport society), it does not strengthen the ability of rightholders to control their CS. 

Compared to codification, a framework of G&T rules (option A4) would further improve the 
oversight of all rightholders over CS and guarantee a fair handling of collected royalties. In 
this context, the passport would improve transparency and the fair handling of revenues for all 
rightholders: entities which come under the scope of the passport rules would have to provide 
a  sophisticated  and  accurate  level  of  transparency  in  the  reporting  and  distribution  of 
remuneration  collected  from  online  uses.  This  would  complement  the  framework  of  G&T 
rules  to  give  a  full  picture  of  the  activities  of  CS,  from  their  general  financial  activities 
(including their investments decisions) to their online activities. 

Codification (option A3) or a framework of G&T rules (option A4) would also affect the way 
to  improve  the  supply  of  multi-territory  licences,  mainly  because  they  would  increase,  the 
trust  and  confidence  of  rightholders  in  CS.  Over  time,  this  would  reduce  the  incentives  for 
rightholders  to  deliver  MT  licences  through  other  means  than  a  collecting  society.  Some 
rightholders have indicated that they would be prepared to re-entrust some of their rights to 
CS, should there be appropriate levels of G&T. This is more likely to be the case under option 
A4  than  under  option  A3,  as  the  latter  would  not  deliver  transparency  in  the  financial 
activities of CS, and would only marginally improve the ability of rightholders to control CS. 
Comprehensive  G&T  rules,  however,  would  contribute  significantly  to  improving  the 
effectiveness  of  the  passport.  Rightholders  would  have  a  clear  picture,  including  of  the 
implications  from  a  financial  point  of  view,  of  whether  their  CS  should  engage  itself  in 
licensing  under  passport  rules,  or  choose  to  entrust  their  rights  to  a  passport  entity.  Well 

165 

While  the  policy  options  for  improving  multi-territory  licensing  largely  differ  from  each  other,  the 
options  regarding  G&T  imply  a  certain  graduation  of  the  policy  intervention,  from  the  less  intrusive 
(option A2) to the stricter one (option A4, in particular sub-option A4b).  

EN 

52 

   EN 

 
                                                 
governed  and  transparent  CS  would  be  able  to  reach  the  most  appropriate  solution  for  the 
licensing of their rights on a MT basis in the interest of rightholders.  

7.2. 

Other impacts 

The options have no impact on the environment. 

The  options  have  no  direct  impact  on  third  countries.  Rightholders  and  commercial  users 
from third countries would however benefit from the improved enforcement (Option A2), the 
codification of existing principles (Option A3) and from better transparency and control over 
financial  management,  in  particular  over  cross-border  royalty  flows  (Option  A4)  the  same 
way  as  European  nationals.  As  regards  MT  licenses,  the  requirements  in  the  options  would 
not cover repertoires from third countries but in Option B2 such rightholders may indirectly 
benefit from the improved conditions as they may agree with a "passport entity" to grant MT 
licences for their repertoires in Europe.  

The options do not have a direct impact on employment. The improvement of multi-territory 
licensing in Europe, however, is likely to contribute to making it easier for commercial users 
to launch new music services. This could have a positive impact on employment by service 
providers.  As  better  G&T  standards  are  also  necessary  for  improving  the  conditions  of  MT 
licensing, indirectly they also contribute to the positive effect. In turn, better supply of music 
services  could  contribute  to  increase  the  size  of  European  digital  market,  resulting  in 
increased revenues for rightholders. While a positive effect would be undeniable, it is hard to 
estimate how many additional rightholders could be able to effectively live from their music 
revenues (as self-employed persons).  

7.3. 

Policy choice 

Based on the above analysis it seems that a combination Option A4 (G&T framework) and 
Option B2 (European Licensing Passport) would be most suitable to achieve the objectives 
set out in Chapter 4.  

8. 

CHOICE OF INSTRUMENT  

The  chosen  policy  options  would  best  be  implemented  in  a  single  instrument.  The  analysis 
above shows that both sets of options are strongly dependent on one another. Comprehensive 
G&T rules would have a significant impact on authors' CS, which play an important role in 
the  licensing  of  musical  works  for  online  uses,  and  would  contribute  to  improving  the 
licensing of musical works for online uses. A single instrument would ensure the coherence 
and effectiveness of both policy options. 

A non-binding instrument such as a recommendation encouraging MS to improve their legal 
framework  and  stakeholders  to  develop  self-regulatory  approaches  could  be  envisaged. 
However,  a  "soft  law"  approach  in  this  area  was  already  pursued  in  2005,  when  the 
Commission  adopted  a  Recommendation.  While  this  has  contributed  to  industry-driven 
developments, it is clear that this has not been sufficient to trigger the necessary changes in 
national  laws  and  in  stakeholders'  practices.166  Furthermore,  a  soft-law  approach  would  not 
ensure  improvements  across  all  CS  and  MS.  Given  that  CS  depend  on  each  other  to 

166 

See Annex L. 

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effectively  licence  the  European  repertoire,  there  is  a  risk  that  a  "soft-law"  approach  would 
fail to achieve the objectives set forth in this IA.  

A legislative instrument – Regulation or Directive – would appear to be more appropriate to 
address the issues identified. Only a binding instrument can guarantee that the policy options 
are introduced in all MS and that improvements follow for all CS across the EU.  

A Regulation allows for quick implementation and is particularly suitable when the objective 
is the full harmonisation of national rules in a certain area. However, in this case, the chosen 
policy  options  allow  MS  some  flexibility  to  articulate  harmonised  rules  with  their  own 
national  legal  framework  on  CS  (e.g.  their  legal  form,  additional  means  of  supervision). 
Further, the legal basis for the proposed action includes freedom to provide services, which 
only  provides  for  the  adoption  of  Directives.  Finally,  collecting  management  mechanisms 
reflect  different  traditions  existing  in  MS  which  are  an  important  element  of  the  cultural 
diversity that the EU action in this area should respect. A Regulation would deprive MS from 
the  flexibility  required  to  take  account  of  their  different  experiences  and  legal  frameworks. 
Imposing  a  single  European  model  of  collecting  management  would  neither  be  effective  to 
achieve  the  objectives  nor  would  it  be  compatible  with  the  principles  of  subsidiarity  and 
proportionality.  

A  Directive  would  therefore  best  ensure  the  achievement  of  the  objectives  of  the  proposed 
action,  whilst  allowing  individual  MS  to  adapt  their  existing  legal  frameworks.  A  Directive 
could  also  allow  for  different  degrees  of  harmonisation  depending  on  the  specific  aspects 
touched upon, given the different, although correlated areas (G&T and licencing) that will be 
regulated.  Where  a  need  should  arise  for  the  adoption  of  more  detailed  technical  rules 
reflecting market or technological developments, a Directive could confer on the Commission 
the power to adopt delegated or implementing acts. The need for a quick implementation of 
the new rules could be accommodated by proposing a short transposition deadline.  

9. 

MONITORING AND EVALUATION 

Monitoring and evaluation will be conducted in line with the objectives identified above. 

The monitoring process could consist of two phases: 

(1) 

The first would concentrate on the short-term, starting right after the adoption of the 
proposal.  It  would  focus  on  its  basic  implementation,  i.e.  establishment  and/or 
amendments  of  national  rules  on  G&T  and  the  provision  of  rules  related  to  the 
licensing  of  the  rights  of  authors  of  musical  works  for  online  services.  Before  the 
transposition deadline, the Commission would organise transposition workshops and 
meetings  with  MS'  representatives  (e.g.  group  of  experts)  to  assist  them  in  the 
transposition process and to facilitate the mutual exchange of information. After the 
transposition  deadline,  the  Commission  would  verify  the  timely  adoption  and 
correctness of the transposition measures. The number of MS which have transposed 
the Directive in a timely and correct manner would constitute a success indicator.  

(2) 

The second would be mid to long-term and would focus on direct effects of the rules 
such  as  the  improved  transparency  (including  as  regards  cross-border  flows  of 
income collected between CS), governance of CS and the improved MT licensing for 
online use of musical works. Whether success criteria are met can be assessed on the 

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basis of indicators available from a number of sources. The implementation of G&T 
criteria would, at this stage, lead to more information being available on the activities 
of  CS  –  more  information  should  be  available  publicly,  in  the  annual  (financial) 
reports as well as in  other  documents  of CS. The Commission could further obtain 
information  from  MS  by  using  a  group  of  national  experts  and  by  sending 
questionnaires,  which  each  MS  would  redirect  to  the  relevant  national  authorities. 
Information  from  stakeholders  could  be  obtained  from  a  survey  or  questionnaires 
sent to stakeholders, from complaints (to  dispute resolution bodies,  courts,  national 
authorities  or  the  Commission)  and  from  bilateral  contacts  with  stakeholders.  The 
information-gathering  should  start  2/3  years  after  the  transposition  deadline.  A 
comprehensive system with a well-defined set of indicators will be set up to monitor 
the progress under each objective. Monitoring indicators are presented in Annex S. 

A comprehensive evaluation could take place 5 years after the entry into force of the rules. 

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10. 

ANNEX A: REPORT FROM THE HEARING ON COLLECTING SOCIETIES, 23 APRIL 2010  

On  April  23  2010,  the  copyright  unit  organised  a  hearing  on  collective  rights  management. 
350 participants registered and almost all of them attended.  

The hearing focused on two main issues: licensing and governance.  

10.1.  Licensing  

A. The relationship between commercial users and collecting societies 

GESAC,  representing  34  European  collecting  societies,  highlighted  that  the  Santiago  model 
(rejected  by  DG  COMP)  would  have  avoided  the  current  internet  licensing  dilemma.  They 
argued  that  if  DG  COMP  had  accepted  the  "customer  allocation"  clause  contained  in  the 
Santiago agreements, every internet service provider could have obtained access to the world 
repertoire through the collecting society domiciled in its territory. The latter would then have 
granted a licence covering its own and the repertoires of all other 26 societies. The "customer 
allocation",  according  to  GESAC,  was  essential  to  avoid  competition  between  collecting 
societies, a phenomenon that GESAC considers as triggering "a race to the bottom".  

The EBU advocated "country of origin" licensing. They argued that it is wrong to assume that 
a "communication" occurs in every territory where the internet can be accessed. For the EBU, 
an act of "communication" only occurs in the territory where the broadcaster introduces the 
signal into an uninterrupted chain of communication. As this territory can only be identified 
with relative ease with respect to satellite transmissions, the EBU argued that, in the case of 
internet  transmissions,  the  "country  of  origin"  should  be  freely  chosen  by  the  broadcaster 
himself.  

In  this  context,  EBU  did  not  share  GESAC's  concern  about  "a  race  to  the  bottom"  as  the 
licence  fee  in  the  "country  of  origin"  could  well  integrate  the  amount  of  viewers  that  are 
domiciled  outside  this  territory.  Ideally,  the  "country  of  origin"  licence  should  be  an 
"extended  collective  licence",  i.e.,  a  licence  that  also  comprises  rightholders  that  are  not 
members  of  the  licensor  collecting  society.  This  would  provide  broadcasters  with  increased 
legal certainty against lawsuits by "outsiders" (authors that are not affiliated with a collecting 
society).  

On  the  other  hand,  the  EBU  stated  that  "country  of  origin"  licensing  should  only  apply  to 
broadcasting  and  broadcasting-like  services  (essentially  time  shifted  broadcasts,  such  as 
"catch-up" TV) but not to other services or service providers.  

Nokia  and  a  number  of  music  publishers  (EMI,  Warner,  Sony)  referred  to  new  business 
models where the traditional mass usage  model of collecting societies fails. Nokia deplored 
that it is hard to negotiate with collecting societies for new subscription services as its service 
is  not  based  on  mass  usage  of  unspecified  "world"  repertoire.  New,  repertoire-specific 
services cannot negotiate licensing agreements based on their individualised licensing needs. 

B. The relationship between rightholders and collecting societies 

RTL, a private broadcaster, advocated a system of non-exclusive collecting society mandates. 
RTL advocated that collecting societies should be obliged to accept non-exclusive mandates 

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whereby  authors  assign  some  of  their  rights  (e.g.  broadcasting)  to  collecting  societies  while 
other  rights  necessary  for  online  services  (e.g.  making  available)  could  be  retained  by  the 
author or the music publisher, for "direct licensing". This, according to RTL, would avoid the 
current  situation  whereby  music  publishers  have  to  withdraw  their  rights  in  order  to  license 
services such as Apple iTunes or Nokia directly. 

SACEM and GEMA indicated that they were absolutely opposed to non-exclusive mandates. 
In SACEM's view, the exclusivity of collecting society mandates is justified by the fact that 
rightholders should not be able to enter into separate arrangements with online music services 
or  even  with  music  publishers.  This  is  because  rightholders  would  not  obtain  favourable 
conditions  by  negotiating  alone  and  that  the  bad  deals  they  enter  into  will  set  precedents 
making it more difficult for collecting societies to negotiate an appropriate rate. GEMA also 
indicated  that  non-exclusive  mandates  would  further  strengthen  music  publishers  as  a 
corporate force within collecting societies.  

C. Collective licensing practices outside the music sector 

Participants often deplore that the collective licensing debate is overly focused on practices in 
the  music  sector.  Therefore,  the  hearing  also  examined  licensing  practices  in  three  other 
sectors: fine arts and photography, reprography and film.  

Societies active in visual art and photography have, for quite some time now, overcome the 
territoriality issue by setting up a joint portal where all of their works are pooled. Each partner 
society  has  a  mandate  to  license  any  work  contained  in  the  pool  to  any  user  anywhere  in 
Europe. There are no territorial restrictions and no customer allocation mechanisms with this 
online licensing portal. 

Societies  active  in  reprography  rarely  license  beyond  national  territories.  Reprography  is 
linked to the operation of copying machines which tend to be stationary. On the other hand, 
imposing  levies  on  private  copying  devices  is  potentially  a  cross-border  activity  (levies 
mostly affect goods in commerce). Nevertheless, the current administration of levies is purely 
domestic  --  due  to  the  fact  that  levies  are  administered  in  the  "country  of  destination". 
Societies  active  in  reprography  insist  on  maintaining  this  principle  as  they  believe  cultural 
diversity  requires  application  of  the  levy  rates  charged  in  the  "country  of  destination".  The 
ICT  industry,  on  the  other  hand,  is  willing  to  pay  levies,  but  only  once  in  the  "country  of 
origin".  One  notable  exception  to  territorial  licensing  by  reprography  societies  are  so-called 
virtual  learning  environments  (VLEs).  Here,  the  licence  covers  domestic  and  foreign-based 
students who access the VLE. VLEs are currently a minor part of the reprography societies' 
turnover. 

Reprography societies also already offer non-exclusive mandates, allowing their members to 
license  certain  users  directly.  Reprography  societies  also  allow  rightholders  to  'opt  out'  of 
certain uses or to limit the societies' mandate to certain uses. 

Collective licensing of film is essentially limited to cable retransmissions. These are licensed 
for each territory in which a cable network operates.  

10.2.  Governance 

The most interesting point with respect to governance is whether the self-regulatory approach 
promoted by the Commission in its 2005 online music recommendation has produced tangible 

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results.  On  balance,  it  appears  that  the  Recommendation  and  the  2006  joint  GESAC/ICMP 
declaration have produced some limited results.  

GESAC  argued  that  there  was  good  progress  in  implementing  the  2006  GESAC/ICMP 
declaration. In SACEM's view, the rule that publishers should be able to become members in 
collecting  societies  is  universally  respected,  as  is  the  recommendation  that  publishers  can 
have  up  to  1/3  of  the  seats  on  any  given  collecting  society's  board.  If  there  were  residual 
issues  linked  to  board  representation,  these  could  best  be  addressed  by  further  dialogue 
between  the  parties.  SACEM  also  pointed  out  that  it  was  in  full  compliance  with  both  the 
2005  online  music  recommendation  and  the  2006  GESAC/ICMP  joint  declaration,  thus 
hinting that, in its view, no further legislation was warranted with respect to governance.  

Music  publishers  argue  that  the  recommendation,  by  introducing  two  new  online  categories 
(interactive  and  non-interactive  online  exploitation),  has  strengthened  the  power  of 
rightholders.  However,  music  publishers  are  less  convinced  that  there  is  real  progress  with 
respect  to  their  voting  power  and  board  representation.  Especially  the  Eastern  European 
societies,  publishers  argued,  denied  their  industry  representation  on  the  board,  even  if  the 
society managed publishers' rights. 

Authors seemed to fear the corporate influence that music publishers are granted when they 
exercise voting power within collecting societies. This fear seems to outweigh their fear that 
current  collective  licensing  models  produce  little  revenue  for  online  exploitation  of  their 
works - a fact they equally deplore.  

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11. 

ANNEX B: SHORT SUMMARY OF MAIN STAKEHOLDERS VIEWS  

11.1.  Collecting societies 

GESAC (the European Grouping of Societies of Authors and Composers)167 argues that the 
societies  are  already  meeting  high  standard  of  transparency  and  governance  by  complying 
with the GESAC-ICMP Common Declaration and the CISAC Professional Rules adopted in 
2007  and  2009.168  In  July  2006,  the  ICMP  (the  international  umbrella  trade  association 
representing music publishers) and GESAC adopted a joint declaration in order to implement 
the  Commission's  recommendations  on  governance  and  transparency.  In  the  ICMP/GESAC 
Joint  Declaration169  the  parties  agreed,  inter  alia,  that  publishers  should  be  admitted  as 
members of collecting societies and on the maximum number of seats publishers may have on 
a  society's  board.  They  also  agreed  that  societies  should  report  regularly  to  all  rightholders 
they  represent,  whether  directly  or  under  reciprocal  representation  agreements,  on  any 
licences granted, on applicable tariffs, and on royalties collected and distributed. They would 
also  inform  rightholders  of  the  repertoire  represented,  the  territorial  scope  of  the  mandates 
granted,  and  on  existing  reciprocal  agreements.  However,  GESAC  also  points  out  that 
currently,  diverging  national  regulatory  frameworks  leads  to  an  un-level  playing  field  for 
European collecting societies.  

In  relation  to  the  online  licensing  of  musical  works,  GESAC  supports  voluntary  re-
aggregation of repertoires and protection of cultural diversity (equal access of repertoires to 
the  market  and  protection  of  authors'  societies'  role  in  the  promotion  of  local  repertoires). 
GESAC originally advocated a central portal, developed with CISAC170, based on voluntary 
and non-exclusive participation of all collecting societies with no competition as to the choice 
of licensing society. Collecting societies strongly oppose any 'intra-brand' competition and the 
non-exclusivity of mandates.  

Individual collecting societies nevertheless have differing approaches. Some large collecting 
societies  argue  that  national  regulation  hampers  their  multi-territorial  licensing  activities. 
They argue that they should also be able to attract and licence repertoire from other societies, 
or constitute licensing hubs with other societies. Other collecting societies, generally small or 
medium sized, are concerned at the emergence of a two-tier licensing system, whereby they 
would be excluded from licensing major European music services. Some want to aggregate all 
rights  in  their  hands  so  that  they  can  deliver  blanket  licences  on  a  multi-territory  basis  and 
suggest that inclusion of publishers' rights into this system should be mandatory. Others see 
their role as continuing to provide a blanket licence, on a territorial basis and with a carve-out 
for  repertoire  directly  licensed  by  large  societies  or  publishers,  to  any  service  operating  in 
their  territory.  This  blanket  would  be  act  as  "insurance"  to  the  service  provider  that  the 
remainder of the repertoire is covered in the licence. Finally some see their role as continuing 
to licence the services directed at mainly national audiences, but operating on a multi-territory 
basis  (multi-territory  multi-repertoire  licensing  with  customer  allocation  for  multi-territory 
services  aimed  mainly  at  a  national  audience).  Finally,  at  least  one  medium  sized  society 

167 

168 
169 
170 

See, among others, GESAC Position Paper on Certain Aspects of Collective Management of Copyright 
in the Single European Digital Music Market, 8 February 2011 
http://www.cisac.org/CisacPortal/consulterDocument.do?id=18258 
http://www.gesac.org/eng/positions/download/ICMPGESACDeclaration_final_EN_070706.pdf 
CISAC  (Confédération  internationale  des  sociétés  d'auteurs  et  compositeurs)  is  an  international 
organisation of collecting societies which manages performing rights. 

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argues  for  competitive  licensing  on  the  basis  of  system  of  reciprocal  agreements  without 
customer  allocation  (along  the  lines  of  the  agreements  concluded  by  record  producers 
collecting  societies  for  the  licensing  of  simulcasting,  webcasting  and  certain  forms  of  on 
demand streaming). In that system collecting societies would pool their rights together, each 
having the authority to grant multi-repertoire multi-territory licences to any user, and compete 
on administrative costs. 

11.2.  Creators  

Authors in principle advocate free choice to decide to which society to entrust their rights and 
possibility  to  move  repertoire  between  societies.  They  support  strong  authors'  rights 
management  societies,  which  represent  all  repertoires  in  an  equal  and  non-discriminatory 
manner,  with  emphasis  on  cultural  responsibility,  transparency  and  flexibility.  They  call  for 
non-discriminatory  distribution  rules  and  transparency  of  deductions.  Collecting  societies 
should  comply  with  minimum  standards  –  these  would  cover  structure,  governance  and  the 
role  of  management.  On  the  other  hand  they  guard  against  over-regulation.  They  strongly 
defend the maintenance of exclusive assignment of rights to collecting societies. They support 
re-aggregation  of  repertoire  into  authors'  rights  management  societies,  including  by 
mandatory means if necessary. 

Some representatives of performing artists also stress the importance of improved governance 
and  transparency  standards,  notably:  royalty  distribution  should  reflect  actual  usage  of 
individual tracks (harmonisation of reporting standards to guarantee distribution on the basis 
of  usage)  and  timely  reporting  on  usage.  They  call  for  competition  between  collecting 
societies  to  improve  standards.  The  Commission  should  consider  the  establishment  of 
separate data clearing houses to manage data on usage, leaving collecting societies to manage 
royalty distribution on the basis of reports generated by such independent organisations. They 
support the creation of a Global Repertoire Database.  

11.3.  Music publishers 

Music  publishers  argue  strongly  for  European  legislation  on  the  governance  of  collecting 
societies: better governance rules would ensure that rightholders are in a position to control 
and  improve  their  collecting  societies.  The  governance  rules  should  provide  for  regular 
general  assemblies,  ensure  the  eligibility  of  publishers  for  board  membership,  provide  for 
transparency  of  remuneration,  for  fair,  transparent  and  regular  elections  and  a  cap  on  the 
maximum  duration  of  board  tenure.  Music  publishers  also  advocate  increased  transparency, 
i.e.  administrative  costs  should  be  clear  and  there  should  be  non-discriminatory  distribution 
policies. Income should be distributed to rightholders on the bases of clear non-discriminatory 
distribution policies. 

Major music publishers call on the Commission to support important initiatives already under 
way  (such  as  the  work  on  the  Global  Repertoire  Database  or  the  emergence  of  licensing 
agents  such  as  CELAS  or  Armonia).  Key  elements  to  achieve  pro-competitive,  flexible  and 
robust licensing market would be: (i) support for the creation and promulgation of technical 
standards;  (ii)  improved  transparency,  efficiency  and  accountability  of  collective  rights 
managers; and (iii) the preservation  of the  basic  principles of copyright law and  contractual 
freedom so that those collective rights managers that deliver the best service to their members 
are  rewarded  with  the  possibility  of  attracting  rightholders  thereby  delivering  the  greatest 
possible aggregation. This should lead to 'bespoke' licences agreed on a commercial, market-
driven  basis  as  many  services  do  not  fit  into  the  existing  licensing  schemes.  The  licences 

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should  be  granted  on  a  multi-territorial  or  pan-European  basis  if  demanded  by  the  service 
provider. Some suggest to review the non-exclusivity of mandates and making withdrawal of 
digital rights more flexible. All rights in a given digital usage (e. g. the reproduction and the 
communication to the public rights in a download) should be licenced together by the licensor 
of the mechanical right.  

11.4.  Record producers 

IMPALA  (Independent  Music  Companies  Association)  supports  improved  governance  and 
transparency of collecting societies. They argue that common standards are needed to ensure 
the proper flow of revenues. They point out that independent record producers rely heavily on 
their  local  collecting  society  to  collect  revenue  from  abroad.  This  means  that  more 
transparency is needed in the cross-border distribution of income between societies (in Europe 
and internationally). They also argue for common accounting standards and effective dispute 
resolution  procedures  (arbitration  is  an  option)  to  guarantee  more  transparency  and 
governance.  Regarding  the  licensing  of  musical  works  for  online  uses,  IMPALA  supports 
efforts to improve multi-territorial licensing by collecting societies. This should ensure access 
to  all  repertoire,  with  Anglo-American  and  European  local  repertoires  treated  equally,  and 
would  maintain  strong  local  collecting  societies.  To  this  end  it  is  important  to  restore 
reciprocity  so  that  all  societies  are  able  to  license  the  entire  repertoire  without  a  race  to  the 
bottom on the licence fees. Major music publishers must be covered by the rules applied to 
collecting societies. A global track database should be created with neutral management and 
equal  treatment  for  all  society  members  in  terms  of  database  functionality,  membership, 
management fees, access to data and participation in earnings. Track based accounting should 
be standard and local repertoire should be included on an equal basis.  

IFPI (International Federation of the Phonographic Industry) notes that the fundamental issue 
limiting  the  development  of  digital  services  in  Europe  remains  the  problem  of  piracy. 
Regarding governance and transparency, IFPI argues that rightholders are in the best position 
to  improve  the  efficiency  and  transparency  of  collecting  societies.  It  would  be  sufficient  to 
ensure  that  the  Commission  and  national  authorities  enforce  the  already  existing  rules  and 
remove national rules upholding local monopolies. 

In relation to the licensing of musical works, IFPI advocates that authors' collecting societies 
should  grant  (which  they  refuse  for  the  time  being)  licences  to  record  producers  allowing 
them to act as 'wholesalers' of authors' rights for music service providers. This way online and 
mobile music providers could obtain "all rights included" licences from producers. Therefore 
authors' societies should not be allowed to refuse to license record producers where acting in 
such  capacity.  Alternatively,  IFPI  argues  that  authors'  societies  should  be  mandated  to 
conclude reciprocal agreements for the competitive licensing of rights, i.e. without customer 
allocation  clauses,  based  on  the  model  of  existing  agreements  amongst  record  producer 
collecting  societies.  Finally,  IFPI  argues  that  the  introduction  of  effective  and  fair  dispute 
resolution systems would improve licensing by authors' societies. 

11.5.  Commercial users 

A  coalition  of  users,  the  Copyright  Users  Platform  (CUP),171  calls  for  the  adoption  of 
European  legislation  on  the  governance  and  transparency  of  collecting  societies.  Societies 
should  have  a  duty  to  accept  every  interested  rightholder  as  a  member  and  an  obligation  to 

171 

Representing EBU, Cable Europe, AER, GSMA Europe, BEUC, Hotrec and Digital Europe 

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contract with every interested user on non-discriminatory grounds. Collecting societies should 
be fully transparent as regards repertoires they represent and the rights they are mandated to 
manage for those repertoires – this information should be published in a publicly accessible 
worldwide database. They must be subject to a clear and common accounting framework that 
provides  full  transparency  in  their  accounts.  Costs,  cross-subsidisation  of  different  revenue 
streams,  cultural  and  social  deductions  should all  be  identified  and  accounted  for.  Financial 
flows between collecting societies, i.e. the redistribution of income between societies, should 
also  be  transparent.  Users  should  be  informed  ahead  of  negotiations  about  criteria  for 
calculating tariffs, licensing  conditions and administrative requirements. Societies should be 
subject  to  independent  authorisation  regimes  and  independent  control.  Each  Member  State 
should be encouraged to set up fair dispute resolution mechanisms to solve rights clearance 
problems. 

Music service providers generally call for flexible, innovative, contractually negotiated multi-
territorial  licences.  There  should  be  a  limited  number  of  licensors  licensing  different 
repertoires on a pan-European level. They are sceptical about the notion of a 'one-stop-shop' 
which would not be sufficiently agile, flexible or competitive and caution against a "one-size 
fits all" approach. They support voluntary aggregation efforts, which are already taking place 
on  the  market.  They  support  the  creation  of  a  Global  Repertoire  Database  to  facilitate  the 
identification of repertoire and avoid 'double invoicing'. Some call for an aggregation of the 
mechanical  and  communication  to  the  public  rights  to  avoid  the  possibility  of  having  to 
license  them  from  separate  licensors.  Some  call  for  "full  scope  licensing",  e.g.  two  rights 
should not be licensed separately for the same type of use. Some music service providers state 
however  that  multi-territorial  licensing  has  not  had  a  positive  impact  because  it  increase 
fragmentation,  and  transaction  costs.  Moreover,  entities  licensing  a  large  share  of  repertoire 
on a multi-territory basis are in a position to require high royalties but are not subject to any 
ad  hoc  regulatory  requirements  (such  as  dispute  resolution).  Most  advocate  greater 
transparency  in  the  management  of  rights.  However,  some  guard  against  transposing  some 
aspects  of  the  regulation  of  "traditional"  licensing.  E.g.  rules  obliging  societies  to  publish 
static  tariffs  for  predefined  types  of  use  may  be  a  hindrance  to  the  development  of  bespoke 
licences  for  innovative  services.  Some  of  them  call  for  introduction  of  an  audit  right  for 
rightholders  against  societies  with  a  view  to  allowing  rightholders  to  check  whether  royalty 
payments have been distributed accurately. 

Representatives  of  the  ICT  industries  argue  that  a  proposal  should  promote  more  efficient 
and  streamlined  collective  management  of  rights.  There  should  be  tighter  supervision  of 
collecting  societies.  Financial  reporting  and  payment  schedules  should  be  harmonised,  and 
particular  areas  (non-distributable  income,  public  domain  works,  social  and  cultural  funds) 
should be more tightly regulated. Collecting societies should be required to provide an annual 
declaration of their assets and the value of those assets. They should provide audit rights for 
their  rightholder  members.  Collecting  societies  should  report  their  revenue  streams  for 
different  types  of  exploitation,  services  and  devices.  They  call  for  an  independent  dispute 
settlement body to deal with licensing and remuneration issues. They argue that a legislative 
proposal should also cover the issue private copying levies in depth.  

Public sector broadcasters, represented by the EBU, argue that an effective legal framework 
should  be  introduced  which  ensures  better  supervision  and  enhanced  governance  and 
transparency in the operation of collective licensing organisations, reflecting the right holders’ 
interest and the interests of users of copyright-protected works. The legal framework should 
set  out  the  definition,  the  main  tasks  and  obligations  of  collective  management,  including 

EN 

62 

   EN 

 
dispute resolution mechanisms. In relation to the licensing of musical works for online uses, 
EBU  advocates  for  'country  of  origin'  licensing,  where  providers  of  audio  or  audiovisual 
media services (e.g. a broadcaster) should be able to clear all rights, including for online and 
on-demand  use,  through  a  single  licence  under  the  law  of  the  provider's  country  of 
establishment.  This  should  be  combined  with  extended  collective  licences  as  an  additional 
model  for  clearing  rights  and,  in  particular  for  audio  and  audiovisual  media  services  where 
this is necessary and useful. Already existing collective arrangements for the use of musical 
works incorporated in the broadcasters' programmes should be extended to cover on-demand 
use for broadcast-like media services (on voluntary, and if it cannot be achieved on voluntary, 
compulsory  basis).  This,  in  principle,  would  however  not  apply  to  retail  (or  retail-like) 
services  but  would  include  services  such  as  podcasts.  The  EBU  also  argues  that  where  a 
broadcaster has obtained a licence allowing to carry out certain acts of communication to the 
public online, those acts should not require an additional licence of the reproduction right.  

Private  broadcasters'  views  vary.  The  governance  and  transparency  of  collecting  societies 
should  be  improved  (e.g.  in  accounting  and  by  the  separation  of  administrative  fees  from 
royalty fees). There should be transparent criteria for setting up a collecting society and more 
clarity  as  to  the  definition  of  a  collecting  society  (see  for  e.g.  the  CELAS  case),  i.e.  public 
authorisation,  independent  scrutiny  and  user  consultation/involvement  in  the  process. 
Effective  external  control  of  collective  management  societies  is  needed  in  order  to  prevent 
abusive dominant behaviour (e.g., excessive pricing, or discrimination in favour of the public 
broadcaster).  This  control  could  be  carried  out  by  one  or  more  of  the  following:  copyright 
tribunal,  other  independent  authorities,  arbitration  boards,  courts,  national  competition 
authorities, or the EU Commission. In relation to the licensing of musical works, some stress 
that a one-stop-shop for the global repertoire is essential and that non-compulsory solutions 
for  the  re-aggregation  of  repertoire  should  be  encouraged.  A  distinction  should  be  drawn 
between various users of music: online television services which use incidental or background 
music, on the one hand, services that only offers music on the other. In the former case, a one 
stop  shop  remains  essential.  Others  argue  essentially  that  mandates  to  collecting  societies 
should be non-exclusive, in order to allow "parallel direct licensing". They argue that "parallel 
direct  licensing",  coupled  with  accompanying  measures,  will  foster  innovative  and  efficient 
licensing in the EU.  

11.6.  Consumers  

Consumers would like to enjoy the widest possible choice and easy access (and payment) to a 
broad range of legal services. As the BEUC state in the 'BEUC Digital Agenda 2010-2014'172, 
consumers  want  to  get  access  to  the  content  of  their  choice,  irrespective  of  their  nationality 
and place of residence. They call for simplification of rights clearance and encouragement of 
multi-territory licensing of, among others, music online. They advocate the development of a 
competitive online market for digital content and adoption of regulatory measures regarding 
the entities entrusted with the collective rights management. ConsumerFocus173 calls for more 
effective supervision of collecting societies and for the establishment of minimum standards 
for  collecting  societies,  such  as:  the  provision  of  information  to  users  and  rightholders  on 
administrative  deductions  and  royalties  paid,  non-discriminatory  membership  rules  and  the 
use of appropriate technology to monitor usage of repertoire. 

172 

173 

http://docshare.beuc.org/docs/2/ENBAMCNAAAFPMAEILODKMPFNPDWD9DBYBK9D 
W3571KM/ BEUC/docs/DLS/2010-00204-01-E.pdf 
Establishing  minimum  standards  for  collecting  societies:  applying  EU  competition  case  law  (October 
2011) 

EN 

63 

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12. 

ANNEX C: GOVERNANCE AND TRANSPARENCY IN THE ACQUIS 

In  the  context  of  this  impact  assessment,  the  acquis  refers  to  judgements  of  the  CJUE, 
decisions  of  the  Commission  on  the  basis  of  EU  competition  law,  and  the  Commission 
Recommendation 2005/737 on  collective cross-border  management  of  copyright  and  related 
rights for legitimate online music services. The general principles applicable to the activities 
of collecting societies take into account the need to protect the collecting interests of authors 
and  publishers,  the  need  to  preserve  the  exclusive  property  rights  of  authors  and  their 
individual exercise, and the need to control the monopoly power of collecting societies. The 
general principles which have emerged from the case law of the Court174 are as follows: 

(1) 

(2) 

Collecting  societies  may  not  discriminate  between  their  members  on  the  basis  of 
their nationality or place of residence or establishment. 

Collecting societies entrusted with the exploitation of copyright may not impose on 
their members' obligations which are not absolutely necessary for the attainment of 
its  object  and  which  encroach  unfairly  upon  a  member's  freedom  to  exercise  his 
copyright. 

(3) 

Licences  and  tariffs  applied  by  collecting  societies  should  take  into  account  as 
precisely as possible the actual use of works. 

Membership and representation 

Non-discrimination: Membership, voting rights or access to services shall not be restricted to 
authors and publishers on the basis of their nationality, domicile or establishment. 

Membership requirements: Collecting societies may require a minimum yearly income stream 
for authors and publishers to accede to membership, voting rights or certain services. 

Collecting  societies  may  not  refuse  membership  on  the  basis  that  an  author  or  publisher 
manages some of its rights individually. 

Right to participate in governance and conflicts of interest: The representation of rightholders 
in the internal decision making process has to be fair and balanced. 

Collecting societies may not refuse membership to authors or publishers on the basis of their 
economic links with users. However, collecting societies may limit the participation of such 
members in the governance of the society.175 

Rightholder choice of collecting society per category of rights 

Rightholder  choice:  Members  are  free  to  decide  which  category  of  rights  to  entrust  to  a 
collecting society, for which territories, and to which collecting society.176 

174 

175 

Case  127-73,  BRT  v  SABAM;  Case  22/79,  Greenwich  Film  Production  v  SACEM  and  Société  des 
éditions  Labrador;  Case  7/82,  GVL  v  Commission;  Case  402/85,  Basset  v  SACEM;  Case  395/87, 
Ministère  public  v  Jean-Louis  Tournier;  Joined  cases  110/88,  241/88  and  242/88, François  Lucazeau 
and others v SACEM and others; Case C52/07, Kanal 5 Ltd, TV 4 AB v STIM. 
Commission Decision of 4 December 1981 relating to a proceeding under Article 86 of the EEC Treaty 
(IV/29.971-GEMA statutes), OJ L 094, p. 12. 

EN 

64 

   EN 

 
                                                 
Collecting societies should allow authors and publishers the possibility of withdrawing their 
rights at notice with effect, at the latest, three years after the notice, or, for online rights, on 
reasonable notice177 

Categories of rights: Collecting societies should allow authors and publishers to exercise their 
choice in relation to categories of rights which are separable from an economic perspective, 
taking into account national legislation on copyright.178 

Change of collecting society: When an author transfers rights from one collecting society to 
another,  the  income  managed  by  the  first  society  shall  be  taken  into  in  consideration  when 
considering the eligibility of that author or publisher to services of the other collecting society 
such as membership, social or cultural services. 

Social and cultural funds 

Collecting societies may provide social and cultural services, provided that: 

– 

– 

– 

– 

The  allocation  of  social  funds  is  not  at  the  discretion  of  the  collecting  society,  but 
gives members a legally enforceable right to benefits based on objective criteria; 

Eligibility to social funds is not subject to a requirement that the applicant has been a 
member for more than 5 years. 

Authors and publishers whose past contributions have made them eligible to a social 
or cultural fund do not cease to be eligible on the sole ground that they are no longer 
members of the collecting society. 

Collecting societies shall specify to their members whether they operate such funds 
on  the  basis  of  deductions  from  the  income  of  the  rights  entrusted  to  them,  and 
should report the amounts so deducted to members on an individual basis.179 

Distribution 

Collecting societies may not distribute income collected from the rights of its members in a 
way which favours certain group of members over others.180 

Collective  rights  managers  should  distribute  royalties  to  all  rightholders  or  category  of 
rightholders they represent in an equitable manner. 

Licensing and relationship with users 

Non-discriminatory tariffs: Collective rights managers should grant commercial users licences 
on the basis of objective criteria and without any discrimination among users.181 A collecting 

176 

177 

178 
179 
180 

Commission  Recommendation  2005/737;  Décision  de  la  Commission  du  2  juin  1971  relative  à  une 
procédure  d’application  de  l’article  86  du  Traité  CEE  (IV/26.760  GEMA),  OJ  L134/15  (hereafter 
"GEMA I"). 
Décision de la Commission du 6 juillet 1972 relative à une procédure d’application de l’article 86 du 
Traité  CEE  (IV/26.760  GEMA),  OJ  L166/22  (hereafter  "GEMA  II");  Commission  Recommendation 
2005/737m point 5(c). 
GEMA II. 
Commission Recommendation 2005/737, points 11 and 12. 
GEMA I. 

EN 

65 

   EN 

 
                                                                                                                                                         
society may not apply dissimilar conditions to equivalent services if it places them as a result 
at a competitive disadvantage, unless such a practice may be objectively justified.182  

Transparency:  Collective  rights  managers  should  inform  rightholders  and  commercial  users 
of  the  repertoire  they  represent,  any  existing  reciprocal  representation  agreements,  the 
territorial scope of their mandates for that repertoire and the applicable tariffs.183 

Controls  on  pricing:  Tariffs  and  royalties  charged  by  collecting  societies  may  be  subject  to 
control by competition authorities.184  

Methods of calculating tariffs: Tariffs should identify precisely the use of the works and the 
audience, to the extent that this does not result in disproportionate costs for the management 
of the rights. Tariffs should be proportionate overall to the quantity of works users or likely to 
be used.185  

Blanket licensing: collecting  societies should grant licences limited  to sub-divisions  of their 
repertoire  unless  this  would  not  fully  safeguard  the  interests  of  authors,  composers  and 
publishers of music  and  would  increase the costs of managing contracts and monitoring the 
use of protected musical works. 

181 
182 

183 
184 

185 

Commission Recommendation 2005/737, points 11 and 12. 
Case  C52/07,  Kanal  5  Ltd,  TV  4  AB  v  Föreningen  Svenska  Tonsättares  Internationella  Musikbyrå 
(STIM) upa. 
Commission Recommendation 2005/737, point 6. 
Joined  cases  110/88,  241/88  and  242/88,  François  Lucazeau  and  others  v  Société  des  Auteurs, 
Compositeurs et Editeurs de Musique (SACEM) and others.  
Case  C52/07,  Kanal  5  Ltd,  TV  4  AB  v  Föreningen  Svenska  Tonsättares  Internationella  Musikbyrå 
(STIM) upa. 

EN 

66 

   EN 

 
                                                                                                                                                         
13. 

ANNEX D: MAJOR EU ONLINE SERVICES 

Table D1. Availability of main online services in EU Member States (January 2012). 

e
n
o
f
a
d
o
V

e
b
u
T
u
o
Y

M
F

t
s
a
L

i

c
s
u
M

y
n
o
S

d
e
t
i

m

i
l

n
U

y
f
i
t
o
p
S

e
g
n
a
r
O

a
b
m
a
J

e
c
a
p
S
y
M

e
n
u
Z

3
P
M
n
o
z
a
m
A

P
m
W

i

r
e
t
s
p
a
N

l

a
t
o
T

i

c
s
u
M
a
k
o
N

i

s
e
n
u
T
1 

i

l

a
t
i
g
d

i

7
1 

i

c
s
u
M
e
1 

r
e
z
e
e
D

MT 

LU 

CY 

SI 

HU 

EE 

LV 

LT 

BG 

EL 

RO 

DK 

SK 

CZ 

FI 

PT 

BE 

PL 

SE 

IE 

NL 

IT 

FR 

DE 

AT 

ES 

UK 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

1 

3 

3 

3 

3 

3 

4 

4 

4 

4 

4 

4 

6 

6 

6 

7 

7 

8 

8 

10 

10 

10 

10 

12 

13 

13 

14 

15 

Total 

27 

26 

25 

16 

15 

11 

11 

10 

10 

9 

7 

8 

6 

4 

4 

2 

2 

Source:  pro-music.org.  Pro-music  provides  information  about  legitimate  online  music 
services. The information is compiled by organisations active in the music sector, including 
GERA  (Global  Entertainment  Retail  Association-Europe),  IFPI  and  IMPALA  (record 
producers), GIART and FIM (performers), ICMP and IMPA (music publishers), and IMMF 
(music managers). 

EN 

67 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Table D2: Major EU online services – explained (accessed January 2012)  
7digital186  was  established  in  2004  and  has  a  catalogue  of  over  17  million  tracks.  It  is  an 
online  store  offering  pay-per-download  music.  7digital  operates  digital  download  stores  in 
over 37 countries in addition to providing digital download services for a range of business 
partners, including the major labels, across the world.  
AmazonMP3187 Amazon.com, Inc. launched its online music store, Amazon MP3, in the US 
in  September  2007,  selling  downloads  exclusively  in  MP3  format  without  DRM.  It  began 
rolling  out  the  MP3  service  worldwide  in  January  2008,  opening  in  the  UK  in  December 
2008. 
Deezer188  was  first  launched  in  France  in  2007.  Deezer  offers  web-based  streaming  music 
services  (ad-supported  and  subscription-based)  and  holds  a  catalogue  of  over  15  million 
tracks. 
eMusic189  is  an  online  music  store  that  operates  a  download-to-own  subscription  service. 
eMusic launched the world's first digital music subscription service in 2000. Until July 2009, 
eMusic sold only music from independent labels. It has concluded agreements with the major 
labels and has a catalogue of more than 13 million downloadable songs.  
iTunes190  is  a  download-to-own  store  operated  by  Apple  Inc.  since  April  2003.  It  provides 
access to over 20 million tracks worldwide.  
Jamba191, headquartered in Germany, offers more than 4 million songs worldwide available. 
In  some  Member  States  (e.g.  Spain),  the  company  operates  under  the  name  "Jamster".  It 
provides subscription-based music content through mobile telephones and computers. 
LastFM192 was launched in the UK in 2002 and was acquired by CBS Interactive in 2007. It 
offers  ad-supported  streaming  services  in  the  US,  the  UK  and  Germany  and  subscription-
based streaming in other countries. A small number of tracks are available for free download, 
where authorised by individual bands or labels (independents). 
My Space193 is  a  US  owned  company with  an  ad-supported social music  website holding a 
collection of over 47 million of free streaming music online. This service allows the artists to 
upload their own works.  
Napster194  offers  both  unlimited  streaming  and  DRM-free  downloading,  with  access  to  a 
catalogue  of  over  15  million  tracks.  Napster  currently  operates  in  2  EU  Member  States: 
Germany and the UK.  
Nokia  Music195  has  offered  a  subscription-based  download  service  in  Europe  since  autumn 
2007. Nokia Music is a pay-per-download service with a catalogue of over 11 million tracks. 
Orange  Music  Store196  belongs  to  France  Télécom.  It  offers  pay-per  download  music 
downloading services in 7 different Member States. 
Sony Music Unlimited197 is a subscription-based service launched in December 2010 in the 
UK and Ireland. It provides access to over 10 million songs on demand. 

186 
187 
188 
189 
190 
191 
192 
193 
194 
195 
196 
197 

http://about.7digital.net/ 
http://www.amazon.co.uk/ 
http://www.deezer.com/ 
http://www.emusic.com/ 
http://www.apple.com/ 
http://www.jamba.de/ 
http://www.last.fm/ 
http://www.myspace.com/ 
http://www.napster.co.uk/ and http://www.napster.de/ 
http://music.ovi.com/in/en/pc 
http://www.orange.com 
http://www.sonyentertainmentnetwork.com 

EN 

68 

   EN 

 
                                                 
Spotify198 was founded in 2006 and is based in Europe. It provides subscription-based and ad-
supported streaming services, giving access to approximately 15 million tracks.  
Vodafone199  is  an  international  mobile  telecommunications  company  based  in  the  UK.  It 
offers a pay-per and subscription based download music service and holds a catalogue of over 
6 million tracks. 
WiMP200 is a Norwegian music streaming service that allows to play music from a library of 
several million tracks. This subscription-based service is available in SE and DK. 
YouTube201  was  founded  in  February  2005  and  is  headquartered  in  the  US.  It  is  a  video-
sharing  website  which  currently  offers  free  licensed  streamed  music  videos  in  11  Member 
States. 
Zune202 (Microsoft) has offered a subscription-based music streaming service in Europe since 
autumn 2010. It offers 11 million tracks, covering the catalogues of smaller music labels as 
wells as the four majors. 

198 
199 
200 
201 
202 

http://www.spotify.com 
http://www.vodafone.com 
http://www.wimpmusic.se  
http://www.youtube.com 
http://www.zune.net 

EN 

69 

   EN 

 
                                                 
Table  D3.  Average  number  of  major  services  per  region  (average  weighed  by  population, 
source: table D1). 

12,5

11,6

10,5

5,9

Northen Europe

Western Europe

Southern Europe

Eastern Europe

Western  Europe;  AT,  FR,  DE,  NL,  BE,  LU;  Soutern Europe: ES, IT, PT, EL,  MT, CY, SI; 
Nothern  Europe:  UK,  IE,  SE,  FI,  DK,  EE,  LV,  LT,  Eastern  Europe:  PL,  SK,  CZ,  BG,  RO, 
HU. 

Table D4. Total availability of online services in EU Member States (source: pro-music.org). 

68

44

29

21

11

33

22

25

19

9

10

3

5

5

4

4

4

3

75

34

32

24

13

13

12

7

4

AT BE BG CY CZ DK EE

FI

FR DE EL HU IE

IT

LV LT LU MT NL PL PT RO Sk

SI ES SE UK

EN 

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14. 

ANNEX E: DIGITAL MUSIC REVENUE 

14.1.  Recording industry 

Table E1.1: Digital sales as percentage of trade value, 2010; million EUR 

Trade value 2010 (€m)  

Physical 

Digital 

Totala 

Digital as % of 
total 

22.73 
44.25 
DK 
28.13 
62.18 
SE 
260.55 
690.00 
UK 
27.45 
91.58 
ES 
10.13 
34.05 
IE 
3.90 
14.40 
EL 
0.30 
1.20 
BG 
109.58 
480.83 
FR 
8.25 
37.05 
FI 
27.23 
133.28 
IT 
12.83 
69.68 
AT 
133.65 
857.25 
DE 
10.35 
88.50 
BE 
15.90 
137.85 
NL 
2.55 
28.05 
PT 
1.05 
14.48 
CZ 
0.23 
4.50 
SK 
2.03 
56.63 
PL 
0.38 
11.70 
HU 
677.18 
2857.43 
Europe 
1521.98 
1536.53 
US 
734.25 
2163.90 
JPN 
a total includes physical and digital sales 

66.98 
90.30 
950.55 
119.03 
44.18 
18.30 
1.50 
590.40 
45.30 
160.50 
82.50 
990.90 
98.85 
153.75 
30.60 
15.53 
4.73 
58.65 
12.08 
3534.60 
3058.50 
2898.15 

33.93 
31.15 
27.41 
23.06 
22.92 
21.31 
20.00 
18.56 
18.21 
16.96 
15.55 
13.49 
10.47 
10.34 
8.33 
6.76 
4.76 
3.45 
3.11 
19.16 
49.76 
25.34 

Source: IFPI Recording Industry in Numbers 2011 

EN 

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Table E1.2: Percentage change in digital sales by trade value, 2009 – 2010 

60%

40%

20%

0%

-20%

-40%

-60%

-80%

-100%

SE FI

L
N

Z
K C
U

S
K E
D

E
D

E
T FR IT IE B
A

L
PT E

G
B

U
H

Europe

Source: IFPI Recording Industry in Numbers 2011 

Table E1.3: Physical and digital sales by trade value 2006-2010 

D
S
U
n
o
i
l
l
i

M

7000

6000

5000

4000

3000

2000

1000

0

2006

2007

2008

2009

2010

US

US

Japan

physical

digital

physical

Japan

digital

EU

EU

physical

digital

Source: IFPI Recording Industry in Numbers 2011 

EN 

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Table E1.4: US Recorded Music Revenue, 2011; USD per capita 

Source: http://www.businessinsider.com/these-charts-explain-the-real-death-of-the-music-
industry-2011-2 

EN 

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14.2.  Authors' collecting societies 

Table E.2.1: Digital share of authors' mechanical reproduction rights, worldwide 

Total 
Revenue
million 
EUR  

2010.0
1934.0
1792.0
1615.0
1702.0

2006 
2007 
2008 
2009 
2010 

Total Digital 
Revenue 
million EUR 

Share of 
Digital 
% 

108.5 
119.9 
130.8 
142.1 
170.2 

5.4
6.2
7.3
8.8
10

Streaming 

Downloading 

Webcasting 

Ringtones 

Other 

% share 
2.9
4.8
8.3
15.6
18.8

Million 
EUR 

3.1
5.8
10.9
22.2
32.0

% share 
18.6
33.8
44.5
53.8
58.2

Million 
EUR  % share 
1.5
1.8
3.7
2.5
2.1

20.2
40.5
58.2
76.5
99.0

Million 
EUR  % share 
64.1
46.7
33.9
27.7
20.9

1.6
2.2
4.8
3.6
3.6

Million 
EUR  % share 
12.9 
12.9 
9.6 
0 
0 

69.6
56.0
44.3
39.4
35.6

Million 
EUR 

14.0 
15.5 
12.6 
0.0 
0.0 

Source: CISAC Global Economic Survey 2011 and 2012. 

Mechanical rights are the rights of authors which, historically, are licensed for the recording of music on sound carriers such as tapes, LPs, CDs. 
E.g. to press CDs, a record producer needs to obtain a licence in the mechanical rights of the author. These mechanical rights are also licensed for 
online exploitation, from streaming to downloads. However, for such online uses, a licence is usually also needed for the authors' performing 
rights (a.k.a. "communication to the public"). CISAC only provides the breakdown for digital in relation to mechanical rights, which is why this 
table refers only to the mechanical right. Further, CISAC only accounts for rights licensed by its members, who are collecting societies. The table 
accordingly does not take into account mechanical rights which are licensed by entities which are not collecting societies, e.g. publishers or their 
agents. For 2010, the data for ringtones (reported as declining but not quantified) and webcasting has been extrapolated, as CISAC did not report 
the detail of those income streams in its 2012 Global Economic Survey. 

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Table  E.2.2:  Digital  share  of  authors'  mechanical  reproduction  rights,  worldwide  (source: 
Table E2.1) 

180

160

140

120

100

80

60

40

20

 €

n
o

i
l
l
i

m

0
2006

2007

Downloads

Streaming

Webcasting

Ringtones

Other

2008

2009

2010

Table E.2.3: Digital share of major EU collecting societies' collections 

Million 
EUR 

e
c
n
a
m
r
o
f
r
e
P
c
i
l
b
u
P

s
t
h
g
i
R

n
o
i
t
c
u
d
o
r
p
e
R

s
t
h
g
i
R

2007 

2008 

2009 

Internet & new media
Total public performance rights (excluding international)

Digital as share of total performance rights (excl. int.)

20.10 

23.10 

33.30 

2 174.50 

2 299.20 

2 329.50 

0.92% 

1.00% 

1.43% 

Growth digital

Growth total excl. int.

2007-2009 growth digital

2007-2009 growth total excl. int.

 Internet & new media 

Total reproduction rights (excluding international)

Digital as share of total reproduction rights (excl. int.)

Growth Digital

Growth total excl. int.

2007-2009 growth digital

2007-2009 growth total excl. int.

14.93% 

44.16% 

5.73% 

1.32% 

65.67% 

7.13% 

48.60 

514.7 

31.70 

636.5 

39.20 

561.5 

4.98% 

6.98% 

9.44% 

23.66% 

23.98% 

-11.78% 

-8.33% 

53.31% 

-19.14% 

Source: Replies to commission's consultation of collecting societies of 17 December 2010. 

EN 

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Table E.4: Per capita spending on music, 2010 

US 

JAPAN 

€7.53 

€7.37 

EUROPE 
AVERAGE 
€2.05 

FRANCE  GERMANY 

ITALY 

SPAIN 

UK 

€2.80 

€2.41 

€0.67 

€0.96 

€6.17 

€16.32 

€31.60 

€10.90 

€14.51 

€18.12 

€4.09 

€3.95 

€22.96 

46.15% 

23.32% 

18.82% 

19.31% 

13.30% 

16.34% 

24.33% 

26.89% 

Digital 
retail 
spend 
Total  retail 
spend 
Digital as a 
percentage 
of total 

Source: IFPI Recording Industry in Numbers 2011 

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15. 

ANNEX  F:  ECONOMIC  DIMENSION  OF  COLLECTIVE  RIGHTS  MANAGEMENT  IN 
EUROPE 

Introduction to the economic dimension of collective rights management in Europe 

Authors: There are over one million authors who are members of collecting societies in the 
EU. The majority of these authors are active in the music sector but the number also includes 
audiovisual  authors  (directors and  screenwriters),  writers  (book  writers,  journalists  etc.)  and 
authors of original works of art.  

Of  all  societies,  authors'  societies  collect  the  largest  amount  of  royalties.  €  7.5  billion  in 
royalties were collected worldwide by members of the International Confederation of Authors 
and Composers Societies (CISAC) in the fields of music, drama, literature, audio-visual, and 
graphic and visual arts in 2010.203  

In Europe, there are 101 European authors' societies which are members of CISAC and which 
collected  €  4.6  billion  in  2010,  i.e.  61%  of  global  royalties.  The  largest  share  of  royalties 
(82.8%)  comes  from  the  music  sector.  Western  European  societies  collect  93%  of  total 
royalties collected in Europe.  

Most of the revenue of authors' collecting societies pertains to the reproduction right and to 
radio and television broadcasting. Revenues from cable retransmission and satellite and from, 
private  copying  and  reprography  are  also  significant.  Other  revenue  streams  (resale  rights, 
rental and lending rights) are less significant. 204  

Related rights: There are over 500,000 performers who are members of a collecting society 
in  Europe  (such  as  actors,  musicians  and  singers).  There  are  29  societies  that  manage 
performers'  rights  in  the  music  sector  in  the  EU  (12  of  which  manage  the  rights  of  both 
performers  and  record  producers).  These  performers'  collecting  societies  collected 
approximately €460 million in 2009.205 They derive about two-thirds of their revenues from 
equitable  remuneration  for  broadcasting  and  public  performance,  revenues  from  private 
copying  levies  are  also  significant.  Record  producers  also  manage  part  of  their  rights 
collectively  through  24  societies  (12  of  which  are  the  same  as  for  performers,  see  above). 
Collectively  managed  revenue  mainly  stems  from  equitable  remuneration  for  broadcasting 
and  public  performances  and  amounted  to  slightly  less  than  €  460  million  in  2009.206 
Collectively  managed  rights  amount  to  less  for  performers  and  record  producers  than  for 
music authors largely because rights relevant to music sales (CD sales, downloads, streaming 
services,  the  bulk  of  income),207  unlike  authors'  rights,  are  not  collectively  managed  for 
performers and producers. Audiovisual producers, who otherwise licence most of their rights 

203 
204 

205 
206 
207 

CISAC (2012) Global Economic Survey 2010.  
Overall  income  from  reprographic  rights  amounted  to  €  843  million  in  2009.  This  includes  income 
collected  by  societies  which  are  members  of  the  International  Federation  of  Reprographic  Rights 
Organisations (IFFRO), see below tables F.5.1 and F.5.2; and income collected by collecting societies 
which are members of CISAC. Some societies are members of both CISAC and IFFRO. 
See below 16.3. 
See below, table F.2.1. 
Non-collectively  managed  recorded  music  sales  in  the  EU  amounted  to  €  3.5  billion  (trade  value)  in 
2010, see below, table E.1.1. 

EN 

77 

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directly, collect a share of the cable retransmission right which amounts to approximately € 
107 million.208  

Overall:  collecting  societies  collected  around  €  6  billion  in  the  EU  in  2009.209  The  vast 
majority  of  this  income  fell  to  collecting  societies  managing  authors'  rights.  Most  of  this 
income is derived from musical creations. The share of digital revenue210 for CISAC societies 
is  still  small.  It  represented  only  1.7%  of  the  collections  of  CISAC  societies  in  2010 
(worldwide). In relation to major EU authors' societies, in 2009, digital revenue amounted to 
1.4% of performing rights income and 9.4% of reproduction right income. However, digital 
growth  significantly  outpaces  overall  growth.  While  reproduction  rights  income  for  those 
societies contracted by 19% (driven by diminishing CD sales) between 2007 and 2009, digital 
reproduction rights income increased by 53%. In the same period, overall performance rights 
income increased by 7%, while digital performance rights income increased by 66%. Digital 
income should continue to grow as consumer spending on digital music is increasing in the 
EU.  Moreover,  digital  music  sales  –  which  accounted  for  19%  of  the  market  for  recorded 
music  in  the  EU  (49%  in  the  US)  in  2010  are  steadily  increasing.211  The  latest  figures 
available confirm the trend with an 8% growth of digital music revenues globally in 2011 (as 
compared to 5% in 2010).212 

D
S
U
n
o
i
l
l
i

M

7000

6000

5000

4000

3000

2000

1000

0

2006

2007

2008

2009

2010

US

US

Japan

physical

digital

physical

Japan

digital

EU

EU

physical

digital

Table  F.0.1:  Physical  and  digital  sales  by  trade  value  2006-2010.  Source:  IFPI  Recording 
Industry in Numbers 2011 

208 
209 

210 
211 

212 

See below, table F.7.1. 
See below, table F.8.1; the overall value of European copyright industries is estimated at €400 billion 
(European Competitiveness Report 2010, Commission Staff Working Document, SEC(2010) 1276 final 
and Eurostat). 
See below, tables E.2.1, E.2.2 and E.2.3. 
See  below,  tables  E.1.2  to  E.1.4.  The  latest  figures  available  (for  2011)  confirm  the  trend  in  markets 
such  as  France  or  the  UK  (where  the  digital  market  for  recorded  music  now  represents  24.6%  and 
23.5% respectively). 
IFPI Digital Music Report 2012, available at http://www.ifpi.org/content/library/DMR2012.pdf . 

EN 

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15.1.  Collecting Societies 

Table F.1.1: Sample of EU collecting societies illustrating their different sizes and types 

Society 

GEMA 
SACEM 
MCPS-PRS 
SIAE 
SGAE 
SACD 
SABAM 
GVL 
BUMA-STEMRA 
PPL 
STIM 
VG Wort 
AGICOA SE 
SCAM 
AKM 
KODA 
SCPP 
TEOSTO 
SENA 
ADAMI 
Bild-Kunst 
NCB 
AISGE 
SPA 
CFC 
ALCS 
AIE 
AGEDI 
UCMR-ADA 
KOPINOR 
Stichting Reprorecht 
Literar-Mechana 
KOPIOSTO 
REPROBEL 
GRAMEX DK 
Austro-Mechana 
COPYSUEDE 
CEDRO 
AUVIBEL 
Bonus Presskopia 
SAMI 
INTEGRAM 
SOZA 
VEGAP 
CREDIDAM 
UPFR 
LATGAA 
AGATA 
EGEDA 

MS 
DE 
FR 
UK 
IT 
ES 
FR 
BE 
DE 
NL 
UK 
SE 
DE 
SE 
FR 
AT 
DK 
FR 
FI 
NL 
FR 
DE 
DK 
ES 
PT 
FR 
IE 
ES 
ES 
RO 
NO 
NL 
AT 
FI 
BE 
DK 
AT 
SE 
ES 
BE 
SE 
SE 
CZ 
SK 
ES 
RO 
RO 
LT 
LT 
ES 

Year 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2008 
2010 
2010 
2010 
2010 
2010 
2010 
2009 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 
2010 

Collections (€) 

862 961 000.00 
819 620 000.00 
709 097 267.56 
605 000 000.00 
341 200 000.00 
219 731 531.36 
192 966 000.00 
177 918 200.00 
175 900 000.00 
167 273 617.46 
145 810 000.76 
131 690 308.00 
111 600 000.00 
97 500 000.00 
86 200 000.00 
82 464 000.00 
64 877 000.00 
58 456 114.39 
58 356 000.00 
58 335 059.00 
56 336 281.68 
49 443 352.57 
46 968 992.61 
37 771 245.00 
37 760 000.00 
32 247 816.61 
31 212 620.69 
30 022 200.00 
29 843 299.16 
29 595 163.97 
28 932 000.00 
28 503 000.00 
25 234 034.38 
24 580 974.00 
24 085 583.50 
24 000 000.00 
23 566 432.32 
23 309 508.51 
22 262 885.05 
17 782 810.65 
14 363 289.40 
14 216 579.66 
9 260 530.00 
7 936 618.00 
6 344 610.42 
4 717 035.52 
4 356 923.08 
1 419 589.90 
N/A 
5 853 029 475.19 

Operating Costs (€) 
127 072 000.00 
191 317 864.58 
77 432 854.61 
203 900 000.00 
65 763 000.00 
47 191 193.00 
37 345 445.00 
12 091 700.00 
25 160 000.00 
23 273 570.83 
21 463 412.08 
9 300 000.00 
14 569 793.00 
12 322 278.03 
12 522 454.29 
9 102 000.00 
8 285 996.00 
9 087 898.04 
9 333 000.00 
8 369 841.00 
3 849 750.98 
8 350 169.41 
4 073 925.73 
8 560 698.00 
4 830 000.00 
3 496 830.41 
4 862 729.68 
1 557 408.82 
1 896 903.48 
3 451 438.10 
3 573 980.00 
1 764 000.00 
4 001 698.46 
2 924 957.00 
3 398 207.40 
3 769 431.94 
1 979 821.44 
4 790 824.00 
1 114 628.00 
1 106 052.76 
4 988 908.50 
3 708 788.17 
1 837 864.00 
2 501 676.00 
1 226 646.88 
1 087 851.72 
986 497.05 
431 797.38 
3 380 297.34 
1 018 408 083.10 

Rightholders: Au = Authors, Pub = Publishers, Perf = Performers, Prod = Producers 
Works: M = Music, L = Literary, AV = Audio visual, V = Visual, D = Dramatic, Phono = Phonograms 

EN 

Personnel Costs (€) 

Employees 

Members* 

Rightholders 

Rights 

65 000 
137 000 
75 064 
82 500 
96 955 
51 393 
36 400 
135 725 
20 000 
53 800 
64 874 
431 362 
45 
29 576 
18 559 
36 500 
3 000 
25 106 
19 684 
24 000 
48 516 
5 
7 932 
19 917 
433 
54 694 
16 531 
369 
6 976 
22 
N/A 
13 137 
44 
15 
63 000 
18 000 
14 
19 275 
10 
15 
23 000 
12 360 
1 924 
2 010 
10 563 
54 
5 027 
2 899 
N/A 
1 733 285 

Au M , Pub M 
Au M, Pub M 
Au M, Pub M 
Au M, Au L, Au AV, Au V 
Au M, Au AV, Pub M 
Au AV, Au D 
Au M, Au L, Au AV, Au V, Au D, Pub M 
Perf M, Prod M 
Au M, Pub M 
Perf M, Prod M 
Au M, Pub M 
Au L, Pub L 
Prod AV 
Au L, Au AV, Au V 
Au M, Pub M 
Au M, Pub M 
Prod Phono 
Au M, Pub M 
Perf M, Prod M 
Perf 
Au, Pub L, Prod AV 
Au M 
Perf AV 
Au, Pub 
Au, Pub 
Au L 
Perf Phono 
Prod Phono 
Au M 
Au, Pub 
Au, Pub 
Au, Pub 
Au, Pub, Perf 
Au, Pub 
Prod M, Perf M 
Prod Phono 
Au, Perf 
Au, Pub 
Au, Perf, Prod Phono, Prod AV 
Au, Pub 
Perf 
Prod Phono, Perf 
Au M, Pub M 
Au V  
Perf 
Prod M 
Au M, AU L, Au AV, Au V, Au V, Pub M 
Perf, Prod Phono 
Prod AV 

Bding, Cable, PPerf, Repro, PC, Digital 
Bding, Cable, PPerf, Repro, PC, Digital 
Bding, Cable, PPerf, Repro, Digital 
Bding, PPerf, Repro, PC, Digital, Lending, Resale 
Bding, Cable, PPerf, Repro, PC, Digital, Rental, Lending 
Bing, PPerf, Repro, PC, Digital 
Bding, Cable, PPerf, Repro, PC, Digital, Resale 
Bding, Cable, PPerf, PC 
Bding, Cable, PPerf, Repro, PC, Digital, Lending 
Bding, PPerf 
Bding, Cable, PPerf, Repro, PC, Digital 
Cable, Repro, PC, Lending 
Cable 
Bding, Cable, PC, Lending 
Bding, Cable, PPerf 
Bding, Cable, PPerf, PC, Digital 
Bding, PPerf, PC 
Bding, PPerf, PC, Digital, Lending 
Bding, PPerf 
Bding, PPerf, PC 
Bding, Cable, Repro, PC, Lending, Resale 
Repro 
Bding, PPerf, PC, Rental 
Bding, Cable, PPerf, Repro, PC, Digital, Lending 
Repro 
Cable, Repro, Digital 
Bding, PPerf, PC 
Bding, PPerf, PC 
Bding, Cable, PPerf, Repro, Digital 
Repro 
Repro 
Cable, Repro, PC 
Cable, Repro, PC, Lending 
Repro, PC, Lending 
Bding, PPerf 
Bding, Repro, PC, Lending 
Cable, Repro, PC 
Repro, PC, Lending 
PC 
Repro 
Bding, Cable, PPerf, PC, Lending 
N/A 
Bding, Cable, PPerf, Repro, PC, Digital 
Bding, Cable, PPerf, Repro, PC, Rental, Lending 
N/A 
Bding, Cable, PPerf, PC 
Bding, Cable, PPerf, Repro, PC, Digital, Lending, Resale 
N/A 
Bding, Cable, PPerf, PC, Rental 

67 788 000.00 
125 186 189.01 
39 192 623.33 
95 500 000.00 
32 547 000.00 
17 750 457.00 
22 637 380.00 
N/A 
13 169 000.00 
13 643 569.90 
9 502 270.03 
N/A 
6 486 813.00 
7 347 000.00 
8 038 877.56 
7 310 000.00 
3 439 066.00 
5 667 693.47 
3 142 000.00 
N/A 
2 477 366.12 
4 708 762.36 
2 221 531.47 
6 670 954.00 
3 120 000.00 
1 833 787.19 
3 170 637.28 
287 715.23 
1 140 819.56 
2 179 090.74 
1 717 879.00 
923 000.00 
2 602 982.26 
1 938 735.00 
1 840 339.72 
1 749 221.22 
1 286 748.14 
2 662 422.00 
595 342.16 
759 890.01 
3 198 599.18 
791 646.89 
1 348 716.00 
1 530 954.00 
242 619.53 
387 170.60 
625 490.62 
231 331.09 
1 727 023.14 
532 318 713.82 

1068 
1399 
N/A 
1346 
451 
230 
289.5 
N/A 
195 
250 
128 
66 
N/A 
79.72 
153 
N/A 
45 
90 
45.6 
74.04 
37 
60.9 
N/A 
162 
43.67 
34 
64 
9 
106 
21 
20 
15.4 
40.3 
24.6 
N/A 
28 
17 
45 
7 
8 
35 
N/A 
N/A 
30 
41 
25 
N/A 
N/A 
51 
6 835 

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Rights: Bding = Broadcasting rights, Cable = Cable retransmission, PPerf = Public performance rights, Repro = Reproduction rights, PC = Private copy, Digital = Digital rights, Rental = Rental rights, Lending = Lending rights, Resale = Resale rights  
*Members in some CS may be other CS or associations representing rightholders. 

Sources: Annual reports, Reports of the Commission Permanente de Contrôle des SPRD, IFPI. Data in the table is intended to provide an order of magnitude of the collections (or turnover) of collecting societies, of 
their operating expenses, of their personnel costs and number of employees. However, the data for each collecting society is not systematically and directly comparable, e.g. as annual reports do not use the same 
definition  of  operating  expenses  or  provide  the  number  of  employees  in  full-time  equivalent  (FTE).  Generally,  the  reported  operating  expenses  do  not  include  financial  items  and  exceptional  items.  Reported 
operating expenses are not equivalent to the administrative fee charged by the collecting societies for their services. This fee is set by the collecting society taking into account other income and other costs and 
accordingly does not necessarily reflect the operating expenses of the societies. 

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15.2.  Authors' societies 

15.2.1.  General characteristics of CISAC societies 

A study published by CISAC in 2012213 identified 101 authors' collecting societies active in 
Europe,  of  which  70  are  in  the  EU.  These  societies  manage  the  rights  of  authors  in  the 
musical, audio-visual, dramatic, literary and visual arts sectors. Of these societies, 31 societies 
manage musical works in the EU214.  

According to CISAC, authors' societies around the world collected € 7.5 billion in royalties in 
2010 for all sectors (musical, audio-visual, literary, dramatic, visual arts). Europe accounted 
for 61% of worldwide royalty collections, or € 4.6 billion, its share remaining fairly constant 
over time. 

Table F.2.1: Collections on behalf of authors in 2009 and 2010; by region 

2009 
Africa  
North America  
Latin-Caribbean 
Asia  
Europe215 
Total 

Revenues collected, 2009 
% of total
0.59
19.14
3.50
14.09
62.67
100

Million EUR
42.48
1 369.21
250.34
1 007.42
4 482.40
7 151.84

Revenues collected, 2010
% of total
0.60
19.20
4
15.30
61
100

Million EUR 
44.00 
1 447.00 
302.00 
1 151.00 
4 600.72 
7 545 000.00 

Source: CISAC (2011) Global Economic Survey 2009 and CISAC (2012) Global Economic 
Survey 2010 

Almost  93%  of  the  €  4.6  billion  royalties  collected  in  Europe  were  collected  in  Western 
Europe and the rest in Eastern Europe.  

Collective  rights  management  plays  a  particularly  important  role  in  the  music  sector  which 
represents 86% of the world-wide royalties collected (€ 6.5 billion in 2010). With regard to 
authors'  rights,  the  music  sector  accounted  for  a  full  82.8%  of  the  royalty  collections  for 
authors in Europe in 2010 (some € 3.8 billion), with audio-visual accounting for 9.6% (some 
€ 442 million), dramatic works for 3.7% (some € 170 million), and visual and literary works 
just 2.1% (some € 97) and 1.6% (some € 75.6 million) respectively.  

213 

214 

215 

"Authors' Royalties in 2010: An Unexpected Rebound", Global Economic Survey of the Royalties 
Collected by the CISAC Member Authors' Societies in 2010. 
http://www.cisac.org/CisacPortal/initConsultDoc.do?idDoc=22951 
A number of these societies also manage rights other than those in musical compositions. At least, one 
collecting  society  operates  on  behalf  of  authors'  rights  in  music  in  each  Member  State.  Sometimes, 
different societies manage the performance and mechanical rights (e.g. in Austria, the Netherlands and 
Denmark). Licensing in Luxembourg is managed by SACEM (France) and in Malta by PRS for Music 
(UK). 
In  the  CISAC  report,  "Europe"  is  a  very  broad  geographic  area  covering  the  CIS,  Balkans  and  EEA 
countries.  

EN 

81 

   EN 

 
 
                                                 
Table F.2.2: Collections on behalf of authors in 2010 by region and sector; million EUR  

Music 

Visual Arts  Audio-visual  Dramatic  Literary  Others 

Total 

Eastern Europe 
Western Europe 
Europe Total 
World Total 

263.228 
3546.462 
3809.690 
6522.776 

1.926 
94.802 
96.728 
102.615 

36.373 
405.623 
441.997 
492.564 

24.305 
145.524 
169.829 
183.824 

3.750 
71.883 
75.633 
100.134 

584 

330.168 
6.257  4270.551 
6.841  4600.719 
143.584  7545.498 

Source: CISAC (2012) Global Economic Survey 2010 

Table F.2.3: Collections on behalf of authors in Europe in 2010 by origin  

2010 
Radio / TV 
Phonograms 
Live Music / Theatre 
Cable / Satellite 
Video / Cinema 
Digital / Multimedia 
Other 
Total 

Origin of revenues collected, Europe 
% of total 
Million EUR 
29 
1334.208 
28.5 
1311.205 
14 
644.100 
10.7 
492.277 
3 
138.021 
1.7 
78.212 
13.1 
602.694 
100.0 
4600.719 

Source: CISAC (2012) Global Economic Survey 2010 

Table F.2.4: Collections on behalf of authors in Europe in 2010 by rights; % 

8.2%

19.3%

Public performance rights

Mechanical reproduction
rights

Other

72.6%

Source: CISAC (2012) Global Economic Survey 

15.2.2.  Royalty collection of major European author societies 

In  December  2010  the  European  Commission  launched  a  closed  consultation,  targeted  at 
European  collecting  societies,  in  view  to  collect  data  to  enable  the  analysis  of  the  Impact 
Assessment.  

EN 

82 

   EN 

 
 
 
The  addressees  of  the  questionnaire  were:  AKM  (AT),  SABAM  (BE),  OSA  (CZ),  GEMA 
(DE),  KODA  (DK),  AEPI  (EL),  SGAE  (ES),  SACEM  (FR),  IMRO  (IR),  TEOSTO  (FI), 
ARTISJUS  (HU),  SIAE  (IT),  LATGAA  (LT),  SACEM  Lux  (LU),  BUMA  STEMRA  (NL), 
TONO (NO), ZAIKS (PL), SPA (PT), SOZA (SK), STIM (SE), PRS for music (UK). 

Not all responses contained the same amount of data in a comparable form; therefore all cross 
sectional analyses are for illustration purposes only.  

Table  F.2.5:  Royalty  collections  of  major  European  authors'  collecting  societies  by  area; 
million EUR  

 Million EUR 

2007 

2008 

2009 

PUBLIC PERFORMANCE RIGHTS
· Live performance
· Public Performance
· TV & Radio broadcasting
· Internet & new media
· International
REPRODUCTION RIGHTS
· Physical products
· Internet & new media
· International
CABLE RENSTRANSMISSION
AV
RENTAL & LENDING
PRIVATE COPY LEVY
Other
TOTAL216

2519.5 

2688.4 

2758.7 

568.1 

531 

875.9 

20.1 

345 

775.7 

611.5 

31.7 

139.2 

41.7 

113.6 

0.9 

145.4 

122.2 

582.7 

573.8 

953.2 

23.1 

389.2 

691.8 

529 

39.2 

130.3 

44 

118.4 

0.9 

112.6 

141.5 

591.2 

566.8 

963.5 

33.3 

429.2 

643.8 

472.2 

48.5 

129.1 

54 

113 

0.9 

96.1 

110 

3875.7 

3957.5 

3913.7 

Source: Replies to Commission's consultation of collecting societies of 17 December 2010. 

216 

Total is a sum of "Total" reported from the respondents to the questionnaire.  

EN 

83 

   EN 

 
                                                 
Table  F.2.6:  Royalty  collections  of  major  European  authors'  collecting  societies  by  area  in 
2009; % 

2.5%

3%

2.8%

1.4%

16.9%

Public performance rights

Reproduction rights

Cable retransmission

Audio visual

Private copy

Other

73.2%

Source: Table F.2.5 

The  table  above  shows  that  in  Europe,  most  of  the  royalties  are  collected  from  public 
performance rights (almost ¾), reproduction rights (almost 1/5).  

EN 

84 

   EN 

 
 
15.2.3.  Rightholders 

Table F.1.8: Members and works of major European authors' collecting societies 

Members of collecting societies 

Works 

Population (m)b 

Administrative costs 

Number  

% of EU total 

Number 

% of EU total 

Million 

% EU totald 

% 

Austro-Mechana 
SABAM 
OSA 
GEMA 
KODA 
AEPI 
SGAE 
TEOSTO 
SACEM 
Artisjus 
IMRO 
SIAE 
LATGA-A 
BUMA-STEMRA 
ZAIKS 
SpaAutores 
STIM 
SOZA 
PRSforMusic 

AT 
BEa 
CZ 
DE 
DK 
EL 
ES 
FI 
FR 
HU 
IE 
IT 
LT 
NL 
PL 
PT 
SE 
SK 
UK 
Total EU 
a annual reports for FY 2009 
b Eurostat 
c without missing countries total population is 501.10 million 
d 10.9 Buma; 21.6 Stemra; simple average 16.25 
e weighed average by royalties collected 

18000 
35200 
7000 
65000 
36000 
11741 
96955 
25106 
137819 
9766 
7500 
82550 
5000 
20000 
9000 
15000 
61708 
1979 
75064 
720388 

2.50 
4.88 
0.97 
9.02 
5.00 
1.63 
13.45 
3.48 
19.13 
1.35 
1.04 
11.46 
0.77 
2.77 
1.25 
2.08 
8.56 
0.27 
10.42 
100.00 

791000 

400000 
3000000 
724000 
260087 
5000000 
500000 
2694631 
208623 
120000 
3453006 

270000 
150000 
952365a 
100000 

4.48 
0.00 
2.26 
16.98 
4.10 
1.47 
28.29 
2.83 
15.25 
1.18 
0.68 
19.54 
0.00 
0.00 
1.53 
0.85 
0.00 
0.57 

18 623 712 

100.00 

8.38 
10.84 
10.51 
81.80 
5.53 
11.31 
45.99 
5.35 
64.71 
10.01 
4.47 
60.34 
3.33 
16.57 
38.17 
10.64 
9.34 
5.42 
62.01 
464.72c 

1.67 
2.16 
2.10 
16.32 
1.10 
2.26 
9.18 
1.07 
12.91 
2.00 
0.89 
12.04 
0.66 
3.31 
7.62 
2.12 
1.86 
1.08 
12.37 
92.74 

11.88 
12.97 
16.08 
15.2 
10.6 

15.7 
11 

20.3 
17.165 

16.25d 
16 

22.1 
19.17 
11 
13.88e 

Source: Replies to commission's consultation of collecting societies of 17 December 2010 (except when other source is explicitly stated) 

EN 

85 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15.3.  Record producers' societies 

Table F.3.1: royalties collected by producer and joint producer-performer societies (2009; source: IFPI) 

g
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Societies

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SCF

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INTERGRAM

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Joint 
Producer - 
Performer 
societies

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Zavod IPF

PPL

FR

PL

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HU

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MU

MU

MU

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MU

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MU

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Perfs, Prods

Perfs, Prods

Perfs, Prods

Perfs, Prods

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610

28

370

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0 Nat / EN

160 Nat

0 Nat

0 Nat / EN

500 Nat

344 Nat / EN

3200 Nat

0 Nat / EN

610 Nat (FR/NL)

28 Nat

370 Nat / EN

0

8212

17384 Nat 

154 Nat / EN

618

11742

12360 Nat / EN

8000

7822

64307 Nat

8000 Nat / EN

127903

135725 Nat

0 Nat / EN

81

2818

2899 Nat / EN

366

205

6500

5430

2014

50000

19684 Nat / EN

5796 Nat

2219 Nat / EN

56500 Nat

Total joint Producer - Performer Societies

23592

199907

325028

Estimated Total Producer share of joint societies

Total all societies

Estimated Total Producer share 

31804

199907

EN 

t
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(

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91.25

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0.58

8.61

3.68

12.23

24.92

12.73

4.42

13.13

3.70

47.36

6.02

0.80

0.11

0.58

0.53

2.29

8.23

1.58

0.00

2.54

0.63

3.50

228.65

26.81

20.00

2.18

15.24

22.27

9.60

1.06

0.17

2.71

3.72

2.50

177.92

12.09

0.96

1.81

65.94

4.76

1.91

138.54

461.12

230.56

689.77

459.21

0.19

0.40

9.19

0.73

0.60

24.57

57.94

28.97

84.75

55.78

6.6%

13.3%

18.5%

6.8%

14.3%

18.7%

33.0%

12.4%

0.0%

19.3%

17.1%

7.4%

11.7%

5.3%

7.9%

17.8%

16.7%

26.1%

6.8%

20.1%

22.3%

13.9%

15.3%

31.4%

17.7%

12.6%

12.3%

)

m
€
(

69.37

4.43

0.25

3.88

3.68

7.05

26.88

11.40

3.00

10.70

3.28

22.19

166.11
9.75

1.98

5.14

9.77

7.45

70.54

0.00

0.48

51.59

1.98

0.27

81.83

240.80

240.80

)

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€
(
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0.00

0.00

0.00

0.12

0.01

0.15

0.00

0.00

0.00

0.02

0.57

0.31

0.11

0.00

0.88

0.03

0.96

0.00

0.00

6.77

0.00

0.00

24.90

33.96

1.56

0.00

0.02

0.00

0.00

0.01

0.02

0.00

0.00

0.98

0.00

0.03

2.63

0.75

0.00

0.34

2.31

0.14

7.32

0.00

0.26

12.20

0.00

0.00

3.72

27.05

34.53

29.68

I

P
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69.37

4.77

0.25

3.92

3.68

11.24

45.41

12.60

3.04

13.47

3.28

38.02

209.05
9.75

5.86

20.12

7.45

165.83

0.00

1.00

96.13

5.18

0.41

110.47

422.18

211.09

631.24

420.15

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The  rights  of  phonogram  producers  which  are  collectively  managed  can  be  managed  by  a 
collecting society entirely controlled by phonogram producers (a "producer society"). In this 
situation  performers'  rights  are  generally  managed  in  parallel  by  a  collecting  society 
controlled by performers only (a "performer society"). In most cases, the rights of performers 
and of phonogram producers are managed through a single society which is controlled jointly 
by  performers  and  record  producers  (a  "joint  producer  –  performer"  society).  In  a  joint 
producer  –  performer  society,  it  can  be  assumed  that  the  performers  and  the  producers  will 
generally split the income from the society equally between themselves. This is generally the 
case  for  so-called  equitable  remuneration  from  broadcasts,  bars  and  discotheques.  In  table 
F3.1,  the  total  collectively  managed  income  of  producers  from  joint  producer  –  performer 
societies is thus half of the total income of those societies. Added to the income of producer 
societies, it yields the total collectively managed income of record producers. 

All figures are for 2009 at 2010 exchanges rates. Payments received from abroad and made 
abroad do not fully reflect international flows in this area, as record producers often  collect 
international  revenue  directly  from  non-domestic  collecting  societies,  and  not  through  their 
local  collecting  society.  Small  independent  record  producers  and  performers  tend  to  collect 
their international revenue through their local collecting society. 

EN 

87 

   EN 

 
15.4. 

Performers' societies 

Based  on  the  assumption  that  collectively  managed  income  of  record  producers  is 
approximately equivalent to that of performers (see section 16.2), it can be inferred that the 
collectively  managed  income  of  performers  would  equal  that  of  producers.  Alternatively, 
older data can be used to extrapolate the collectively managed income of performers. 

Table  F.4.1:  main  performer's  societies  and  joint  producer-performer  societies  (marked  in 
grey) in the music sector 

Member State 

Society 

AT 

BE 

BG 

CZ 

DE 

DK 

EE 

EL 

EL 

ES 

FI 

FR 

FR 

HU 

IE 

IT 

LT 

LV 

NL 

NL 

PL 

PL 

PT 

RO 

SK 

SK 

SL 

SW 

UK 

LSG 

URADEX 

PROPHON 

INTERGRAM 

GVL 

GRAMEK DK 

EEL 

ERATO 

APOLLO 

AIE 

GRAMEX FI 

ADAMI 

SPEDIDAM 

EJI 

RAAP 

IMAIE 

AGATA 

LaiPA 

NORMA 

SENA 

STOART 

SAWP 

GDA 

CREDIDAM 

OZIS 

SLOVGRAM 

Zavod IPF 

SAMI 

PPL 

EN 

88 

   EN 

 
 
15.5. 

Private copying levies 

Table F.5.1: Levies collected (in million €) by major EU authors' music societies 

Austria 
Belgium 
Czech Republic 
Denmark 
Finland 
France 
Germany 
Greece 
Hungary 
Italy 
Latvia 
Lithuania 
Netherlands 
Portugal 
Poland 
Slovakia 
Spain 
Sweden 
Total  

2009 

1.9 
4.1 
0.7 
1.9 
55 
10.8 
1.5 

13.2 

0.2 
3.3 
0.7 
1.1 
0.1 

1.6 
96.1 

Source:  Replies  to  the  Commission's  consultation  of  collecting  societies  of  17  December 
2010. 

Table  F.5.2:  Levies  collected  (in  million  €)  –  data  submitted  by  authors'  music  collecting 
societies 

 Million EUR 

2007 

2008 

2009 

PRIVATE COPY LEVY
TOTAL REVENUE
% PCL IN TOTAL

145.4
3875.7
3.8%

112.6 
3957.5 
2.8% 

96.1
3913.7
2.5%

Source: Replies to commission's consultation of collecting societies of 17 December 2010 

Table F.5.3: Aggregate revenues in Europe from Copyright levy schemes 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

172.6 

291.3 

376.5 

567.8 

562.2 

548 

549.4 

526.3 

414.9 

Aggregate 
revenues 
(m €) 

Source: "Private Copying and Fair Compensation: An empirical study of copyright levies in 
Europe", Martin Kretschmer, October 2011. 

EN 

89 

   EN 

 
 
 
 
 
 
 
15.6.  Reprography 

Table F.6.1: Royalty collection and distribution in the field of reprography by Member State; million EUR (source: IFFRO) 

Million EUR, 2009 (Total amount:) 

AT 

BE 

DE 

DK 

EL 

ES 

FI 

FR 

HU 

IR 

IT 

LU 

NL 

PT 

RO 

SI 

SW 

UK 

collected for all licensing 

22.500 

26.003 

560.141 

33.650 

2.660 

24.467 

24.710 

40.350 

1.353 

1.232 

4.475 

0.392 

14.420 

0.009 

0.275 

0.348 

15.950 

70.378 

collected for reproduction licensing 

0.000 

24.311 

492.599 

32.750 

2.660 

24.185 

13.179 

40.350 

1.353 

1.232 

4.475 

0.355 

14.420 

0.009 

0.275 

0.348 

15.950 

70.378 

collected nationally for reproduction licensing 

7.249 

23.733 

487.070 

32.589 

2.637 

23.641 

13.126 

37.720 

0.246 

1.232 

3.488 

0.311 

13.909 

0.009 

0.275 

0.348 

15.318 

58.133 

received for licensing from other RROs world-wide 

6.900 

0.637 

10.293 

0.161 

0.024 

0.546 

0.053 

2.630 

0.000 

0.511 

0.987 

0.044 

0.511 

0.000 

0.000 

0.000 

0.632 

12.245 

distributed to national rightholders 

8.400 

24.081 

63.410 

26.152 

1.483 

18.064 

9.940 

31.900 

1.109 

0.554 

2.027 

0.000 

27.196 

0.000 

0.000 

0.000 

13.287 

57.455 

distributed to foreign RROs 

distributed from all licensing 

1.750 

1.609 

7.200 

3.669 

0.000 

1.023 

1.148 

2.700 

0.000 

0.398 

0.196 

0.000 

3.660 

0.000 

0.000 

0.000 

1.217 

6.662 

20.650 

25.690 

182.883 

32.710 

1.483 

19.087 

11.088 

34.600 

1.109 

0.966 

2.084 

0.000 

30.856 

0.000 

0.000 

0.000 

14.504 

64.117 

Table F.6.2: Royalty collection and distribution in the field of reprography; million EUR (source: IFFRO) 

Million EUR, 2009 dataa 
Total amount collected for all licensing :  
Total amount collected for reproduction licensing :  
Total amount collected nationally for reproduction licensing :  
Total amount received for licensing from other RROs world-wide :  
Total amount distributed to national rightholders :  
Total Amount distributed to foreign RROs :  
Total amount distributed from all licensing :  
a UK 2010 data 
b EU IFRRO members: AT: Literar-Mechana; BE: REPROBEL; DE: VG Bild-Kunst, Verwertungsgesellschaft Bild-Kunst AND VG WORT, Verwertungsgesellschaft WORT; DK: COPY-DAN Writing; EL: OSDEL, 
Greek  Collecting  Society  for  Literary  Works;  ES:  CEDRO,  Centro  Español  de  Derechos  Reprográficos;  FI:  KOPIOSTO;  FR:  CFC,  Centre  Français  d'exploitation  du  droit  de  Copie;  HU:  HARR,  Hungarian  Alliance  of 
Reprographic Rights; IR: ICLA, The Irish Copyright Licensing Agency; IT: AIDRO, Associazione Italiana per i Diritti di Riproduzione delle Opere dell'ingegno AND SIAE, Società Italiana degli Autori ed Editori; LU: luxorr, 
Luxembourg Organization for Reproduction Rights - luxorr, asbl; NL: Stichting Reprorecht; PT: AGECOP, Associação para a Gestão da Cópia Privada; RO: CopyRo, Societate de Gestiune Colectiva a Drepturior de Autor; SI: 
SAZOR GIZ; SW: Bonus , Bonus Presskopia; UK: CLA, The Copyright Licensing Agency Ltd. (2010 data) 
c
 Minus AIDRO (IT), KOPIOSTO (FI), COPY-DAN Writing (DK), Literar-Mechana (AT) and VG WORT (DE). For DE, however, VG Bild-Kust is a CISAC member. Share of VG Bild-Kust calculated on the basis of the 
share of collected income of VG WORT (VG WORT collected 434.38 m out of 560.14 total Germany) => only 22% of DE income is collected by VG Bild-Kust. 

TOTAL non-CISACc 
632.217 
577.828 
555.227 
25.762 
224.302 
22.852 
334.235 

TOTAL EUb 
843.314 
738.829 
721.035 
36.174 
285.056 
31.232 
441.826 

EN 

90 

EN 

 
  
 
 
15.7.  Resale Right 

Table  F.7.1:  Resale  Right:  Number  of  artists  benefiting  and  revenues  from  the  resale  right  in 
Europe. 

2010 

Living artists  

Deceased artists 

Total 

Number 
benefiting 

Revenues 
(EUR) 

Number 
benefiting 

Revenues 
(EUR) 

38 
133 

110045
81461

380 

472862

Number 
benefiting 
38 
513 

Value 
(EUR) 

110045
554323

931 
2 

297000

963 
9 

560000

829a 

1812394

1195a 

5035395

6119

3117.6

55918

4676.40

8644

16956

651103.51
857000
3931
189888
6847789
3427103

1894 
11 

2054 
1021 

62037

7794
1417

58 

26 

104511

25600

6 

972.6

44 

 23268.19

50 

22295.59

94812.3

68414.57

1110 

2414566

1396 

6214222

163226.87
1145202
2695510

16868776

966 

6631 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 
France 
Germany 
Greece 
Hungary 
Ireland 
Italy 
Latvia 
Lithuania 
Luxembourg 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovakiab 
Slovenia 
Spain 
Sweden 

UK 

TOTAL 
a only ADAGP 
b provisional data 

Source:  Replies  to  the  Consultation  on  the  implementation  and  effect  of  the  Resale  Right 
Directive (7 January – 11 March 2011).217 

217 

http://ec.europa.eu/internal_market/copyright/resale-right/resale-right_en.htm  

EN 

91 

   EN 

 
  
 
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
 
  
 
  
 
  
  
 
  
 
  
 
  
 
  
 
  
  
  
  
 
  
 
  
 
  
 
  
 
  
 
  
  
  
  
 
  
 
  
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
 
  
  
  
 
  
 
  
 
  
 
  
 
  
 
  
  
  
  
 
  
 
  
  
 
  
 
                                                 
15.8.  Audiovisual producers (cable retransmission) 

Table F.8.1. Cable retransmission income for audiovisual producers from AGICOA 

Member 
State 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Rep. 
Denmark 
Estonia 
Finland 
France218 

Germany 
Greece 
Hungary 
Ireland 
Italy 
Latvia 
Lithuania 
Luxembourg 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Spain 
Sweden 
UK 
Grand Total 

All revenue 
streams, 2010 
(million USD) 

Share per 
Member State 

Cable 
retransmission 
2010 (million 
EUR) 

Share per 
Member State 
(2006) 

318.20 
478.10 
10.90 
7.40 

391.20 
4.70 
139.80 
3 069.70 

3 128.70 
70.70 
57.20 
172.80 
1 306.20 
4.50 
6.50 
5.10 
0.00 
683.70 
320.90 
123.60 
12.40 
12.00 
6.80 
1 075.00 
484.40 
4 712.80 
16 603.30 

1.92%
2.88%
0.07%
0.04%
0.00%
2.36%
0.03%
0.84%
18.49%

18.84%
0.43%
0.34%
1.04%
7.87%   
0.03%
0.04%
0.03%
0.00%
4.12%
1.93%
0.74%
0.07%
0.07%
0.04%
6.47%
2.92%

28.38%   

0.74
14.56
0.10
0.00
0.00
3.87
0.09
0.00

23.20   

16.38
0.00
0.70
6.38

0.06
0.10
0.55
0.00
26.27
5.53
1.17
1.67
0.22
0.45
3.09
1.99

0.88% 
17.35% 
0.12% 
0.00% 
0.00% 
4.62% 
0.10% 
0.00% 

19.52% 
0.00% 
0.84% 
7.61% 

0.07% 
0.12% 
0.65% 
0.00% 
31.30% 
6.59% 
1.40% 
1.99% 
0.27% 
0.54% 
3.69% 
2.37% 

100.00%

107.12

100.00% 

Source: Screen Digest (all revenue streams); AGICOA annual reports. AGICOA income per 
Member  States  is  based  on  AGICOA  annual  reports  from  2006.  Amounts  for  2010  are 
calculated on the basis of the overall collections reported by AGICOA in 2010, distributed by 
territory according to the data for 2006. In some cases, producers receive royalties from their 
respective  national  collecting  societies,  in  addition  to  income  received  from  AGICOA.  The 
overall  amount  of  collections  from  the  cable  retransmission  right  on  behalf  of  audiovisual 
producers is accordingly higher than the amounts collected by AGICOA. 

218 

Figures  for  French  collecting  society  PROCIREP,  which  is  not  included  in  AGICOA  revenues. 
Accordingly,  France  is  not  counted  in  the  share  of  cable  retransmission  income  per  Member  States, 
which is based on AGICOA data.  

EN 

92 

   EN 

 
  
  
  
                                                 
15.9.  Collectively managed income overall 

Table F.9.1: Income per rightholder type 

CISAC societies 
Additional reprography income  
Artists resale right* 
Total Authors and successors in title 
Performers  
Record producers 
Film producers* 
Total 
* Data for 2010 

Source 

table F.1.1 
table F.5.2 
table F.6.1 

Annex 17.3 
table F.2.1 
table F.7.1 

Collections 
(million EUR) 

4 482 
632 
17 
5 131 
459 
459 
107 
6 156 

EN 

93 

   EN 

 
  
  
  
16. 

ANNEX G: CROSS BORDER ROYALTY FLOWS 

Table G.1. Intra EU royalty flows relative to collections for some major authors' societies 

€ 000' 
Received from EU
Paid to EU 
Total Collected 

AUME 
2 687.00 
4 792.00 

KODA 
GEMA 
41 491.00
5 913.68
57 754.63 26 639.95
24 015.00  823 007.00 82 464.00

Total 
LATGAA 
225 674.72 
283.12
1 279.23
210 559.17 
4 072.03 32 376.21 763 821.77  193 000.00 486 485.02 37 771.25 144 024.51 2 591 036.79 

OSA 
1 707.29 107 046.81 
15 933.53 
3 802.03

SABAM 
10 228.93
60 363.83

SIAE 
21 880.11
27 979.15

STIM 
33 210.87
8 739.69

SPA 
1 225.92
3 275.14

PRS 

Societies selected on the basis of available data for 2010 (annual reports) and 2008 (European Parliament, Collecting Societies and Cultural Diversity 
in The Music Sector (2009), for PRS, GEMA and SIAE). Note that the flow of royalties between societies does not represent the entirety of cross-
border flowers, as some non-domestic rightholders collect income directly from foreign societies or via a local sub-publisher (see e.g. table G.2.). This 
is  especially  the  case  for  mechanical  rights  in  musical  works.  Collecting  society  AUME  only  administers  reproduction  rights,  while  other  societies 
administer  performing  rights  or  performing  rights  and  mechanical  rights  together.  All  collecting  societies  represented  in  the  table  manage  authors' 
rights in musical works, but some societies represented also manage rights in other types of works (e.g. LATGAA, SIAE). 

Table  G.2.  Illustration  of  non-domestic  income  paid  to  sub-publishers,  compared  to  payment  to  non-domestic  societes,  for  GEMA  (source:  GEMA 
annual report 2010) 

105.634

101.34

108

106

104

102

100

98

96

94

n
o

i
l
l
i

m

€ 

99.882

98.625

Payments to non-
domestic societies

Payments to sub-
publishers

EN 

2009

2010

94 

EN 

 
  
 
17. 

ANNEX  H:  TRANSPARENCY:  ACCOUNTING,  REPORTING  AND  PERFORMANCE 
INDICATORS 

17.1.  Annual reporting and accounting 

Table H.1.1: Annual reporting of collecting societies active in online music licensing 

O
M
C

B
E
W

t
r
o
p
e
r

l
a
u
n
n
A

a
e
n
i
l
n
o

r
e
h
t
o

d
n
a

e
v
i
t
a
r
t
s
i
n
i
m
d
A

b
s
n
o
i
t
c
u
d
e
d

d
e
t
n
e
s
e
r
p
e
r

s
r
o
t
c
e
S

AT 

AT 

BE 

BG 

CZ 

DE 

DK 

EE 

EL 

ES 

FI 

FR 

AKM 
Austro-
Mechana 

SABAM 
MUSIC 
AUTOR 

OSA 

GEMA 

KODA 

EAU 

AEPI 

SGAE 

TEOSTO 

SACEM 

HU 

Artisjus 

IE 

IT 

IMRO 

SIAE 

Nat/EN 

Nat 

Nat/EN 

Nat/EN 

Nat/EN 

Nat/EN 

Nat/EN 

Nat 

Nat/EN 

Nat 

Nat/EN 

Nat/EN 

Nat/EN 

EN 

Nat/EN 

2010  Nat/  2009 
EN 

2010 EN 

2010 FR 

2010 Nat/ENd 
2010  Nat/  2009 
EN 

2010 EN 

2010  Nat/  2008 
EN 

2010 Nat/EN 

2010 EN/FR 

2008 Nat/ENd 

2010 EN 

2009 Natd 

11.24%  MU 

e  MU 

14.2% 

MU,L,D, 
AV,AGP 

  MU 

18.23%  MU 

14.7%  MU 

11.3%  MU 

MU, D, 
AV,AGP 

  MU 

  MU,D,AV 

13.1%  MU 

15.38%  MU 
21.4% A 

4% C  MU,L,AGP 

12.4%  MU 

MU,L,D, 
AV,AGP 
MU,L,D, 
AV,AGP 
MU,L,D, 
AV,AGP 

LT 

LATGA-A 

Nat/EN 

2010 Nat/EN 

19.1% 

LV 

AKKA-LAA 

Nat 

BUMA-
STEMRA 

NL 

PL 

ZAIKS 

PT 

RO 

SE 

SK 

SV 

SPA 

UCMR-ADA 

STIM 

SOZA 

SAZAS 

Nat 

Nat  

Nat 

Nat/EN 

Nat/EN 

Nat 

MU,L,D, 
AGP 
MU,L,D, 
AV,AGP 

2010 Nat 

2010 Nat/EN 

2010 Nat/EN 

2010 Nat 

  MU 

11.3%  MU 

19.54%  MU 

  MU 

EN 

UK 
PRS for Music 
a last checked in September 2011 
b Deductions: A = administrative, C = cultural  
c Sectors: MU = music, L = Literary, AV = Audiovisual, AGP = Visual arts, D = Dramatic 
d accounts not published online 
e 50% of private copying levies goes to cultural funds 

2009 EN 

10%  MU 

s
r
e
d
l
o
h
t
h
g
i
R

d
e
t
n
e
s
e
r
p
e
r

18559 

20000 

36340 

6834 

64778 

36500 

 11000 

100108 

 25106 

137000 

6000 

 85000 

 5027 

)

m
€
(

r
e
v
o
n
r
u
T

86.2 

24.0 

193 

32.4 

863 

82.5 

28.0  

341.2 

58.4 

819.6 

47.5 

38.1 

605 

4.3 

37.7  

145.8 

9.2 

 15.5 

 710 

64874 

1924 

80297 

Nat/EN 

2010 EN 

STEMRA  MU 

 20000 

176 

12.1% BUMA 
23.1% 

EN 

95 

   EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
  
  
 
  
 
 
 
  
  
 
 
  
  
 
 
  
  
  
 
  
17.2.  Distributions 

Table H.2.1: Distribution rules and payments periodicity 

AT 

BE 

CZ 

DE 

DK 

EL 

ES 

FI 

FR 

IR 

IT 

LT 

NL 

NO 

PL 

PT 
SE 

SK 

foreign 

domestic 

Online distribution key 
Royalty  income  (of  each  registered 
use  =  full  census)  above  a  certain 
threshold is distributed 
and 
Treating 
members in the same way 
Streaming: 75% P, 25% M 
Downloading: 25% P, 75% M 
Streaming: 2/3 P, 1/3 M 
Downloading: 1/3 P, 2/3 M 
Based  on  actual  documentation  for 
each exploitation of each work 
Streaming: 75% P, 25% M 
Downloading: 25% P, 75% M 
Based  on  the  repertoire  sales  reports 
provided by the ISPs 
According 
rules 
Streaming: 2/3 P, 1/3 M 
Downloading: 1/3 P, 2/3 M 
Rules  set  on  a  provider  by  provider 
basis 
Streaming: 75% P, 25% M 
Downloading: 25% P, 75% M 
Intermediate: 50% P, 50% M 

internal  distribution 

to 

In accordance with the law 
Per 
stream  basis; 
track  or  per 
development  of  online  distribution 
keys is work in progress 

line by line distribution made possible 
by thorough reporting from customers 
Streaming: 65% P, 35% M 
Downloading: 35% P, 65% M 
Intermediate: 50% P, 50% M 
Streaming: 75% P, 25% M 
Downloading: 25% P, 75% M 
On the basis of music reports 
Per  analogy  with  all 
repertoire 
announcements  processed  from  any 
other usage 
Streaming: 75% P, 25% M 
Downloading: 25% P, 75% M 
Interactive streaming: 50% P, 50% M 

Periodicity of payments  

Every 3 months 

On a "semestrial" basis  

Every 6 months 
Online every 6 months 
CELAS: every month 
Distribution 
distribution areas 

frequencies  vary 

for  different 

Every 6 months 
Every  3  months  (influenced  by  irregularities  of 
payments by the ISPs) 

Every 3 months 

Every 3 months 
11  payments  a  year  to  direct  members;  every  3 
months to affiliate societies 

Every 6 months 
Every 3 months to domestic rightholders; every 
12 months to foreign rightholders 

Online every 12 months 
Every  3  months  to  own  members;  every  6 
months  to  sister  societies;  national  distributions 
every 12 months 

Depending on a way of exploitation 

Every 3 months 
Online every 3 months 

Online every 12 months  

Performing: every 3 months;  
Mechanical: mostly every month 

UK 
P = performing 
M = mechanical 

Source: Replies to Commission's consultation of CS of 17 December 2010 

EN 

96 

   EN 

 
 
18. 

ANNEX I: DATA PROCESSING AND DATABASES 

The  licensing  of  musical  works  on  a  multi-territory  basis  for  online  services  requires  the 
extensive use of data processing capabilities. This is chiefly because the scale of reported uses 
of  music  is  considerable.  For  instance,  one  collecting  society  processed  20  million  lines  of 
data for a single online service (Spotify).219 Another society reported three million downloads 
from  a  single  major  service  provider  in  2010,  and  that  it  processed  the  equivalent  of  three 
billion acts (downloads or streams).220 There is evidence that online service also enable more 
choice for consumers than other business models (e.g. broadcasts or CD sales): this translates 
into more works being accessed and processed by societies, but in many cases generating less 
revenue (the so-called "long tail" effect). According to one society, online services reported 
the use of more than 670000 different musical works in 2010. For a major download service, 
94%  of  downloads  concerned  tracks  which  had  been  downloaded  less  than  50  times.221 
Without  adequate  automated  processes,  the  processing  of  those  uses  would  not  be 
economically viable.222 

The traditionally territorial nature of collective licensing of musical works also explains the 
need for accurate databases and processing capabilities. Collecting societies have traditionally 
administered  licences  on  a  territorial  basis.  Their  databases  accordingly  covered  primarily 
their  own  territory.  In  addition,  collecting  societies  have  traditionally  licensed  the  entire 
repertoire  in  their  national  territories.  This  means that  the risks  of conflicts as to who owns 
works in a given territory were minimal, as no other society was licensing the same type of 
rights in the same territory. Inaccurate data was only relevant to the distribution of income to 
rightholders  and  other  collecting  societies.  It  was  largely  invisible  to  users.  Multi-territory 
licensing  on  the  other  hand  has  brought  at  least  two  new  challenges:  (i)  databases  must  be 
multi-territorial and (ii) databases of societies and licensors must be consistent and coherent. 
I.e. if two collecting societies claim to own the same work, a user will be invoiced twice for 
the  same  work.  Currently,  users  and  rightholders  report  that  existing  databases  still  show 
numerous duplicates and other inconsistencies.  

While necessary for  online  uses,  automated data processing also has significant benefits for 
the administration of licences. It can be used for the reporting of uses from users to licensing 
entities,  for  the  invoicing  of  those  uses  to  users  by  licensing  entities,  and  for  payments  to 
rightholders.  This  yields  several  benefits.  Users  can  expect  more  accurate  invoicing,  fewer 
conflicting  invoices  and  lower  costs,  as  the  reporting  of  uses,  even  to  several  licensors, 
becomes  automated.  Rightholders  can  expect  more  accurate  and  faster  payments,  and  get 
precise information on how, where and against what returns their works are used. 

219 
220 
221 
222 

STIM Annual Report 2010, p. 17 
SACEM Annual report 2010, p. 12 and 27. 
Idem. 
According to one estimate, an automated match would cost on average €0.02, while a match requiring a 
manual intervention would cost €14. It is estimated that for 100% share of a work, a collecting society 
collects in the region of €0.08 per work downloaded, see e.g. "Two steps closer to a global copyright 
database",  in  Summary  of  CISAC’s  World  Copyright  Summit  #3,  Brussels,  June  7  &  8,  2011, 
http://www.cisac.org/CisacPortal/initConsultDoc.do?idDoc=22436, p. 37. 

EN 

97 

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18.1. 

From reporting uses to paying rightholders 

Rightholder 

5

Collecting 

2

Society A 

Coll Soc A 
Database 

Coll Soc B 
Database 

Risk of 
duplicates / 
inconsistent 
data 

Online  
Service 
Provider 

1

3 

4 

Collecting 

5 

Society B 

1

3

4

2

l

r
e
d
o
h
t
h
g
R

i

Table I.1: Simplified music reporting, invoicing and distribution process 

The  process  by  which  music  uses  are  reported,  invoiced,  paid  by  online  service  providers 
(OSPs) and distributed to rightholders can be summarised according to the table above. 

First,  the  online  service  provider  reports  usage  of  musical  works  to  the  society,  i.e. 
information on how many tracks have been downloaded or sold. It is in theory possible that a 
user  reports  to  a  licensor  only  the  shares  of  works  which  that  licensor  holds.  The  service 
provider  could  report  to  collecting  society  A  only  works  which  A  has  authority  to  licence. 
However,  in  general,  online  service  providers  obtain  music  files  and  corresponding 
information from record producers (e.g. iTunes has made the attribution of IRSC – a unique 
identifier for a recording - a precondition to a recording being sold on its service). They do 
not have access to any information enabling them to identify the underlying musical works. 
Accordingly, in practice, the OSP generally reports back to the collecting society the use of 
tracks of recorded music (typically IRSC, title, performer). Automated processes for reporting 
are in use. For instance DDEX is a reporting format available free of charge and which is used 
by  many  licensors  (e.g.  CELAS,  GEMA,  PAECOL,  PRS  for  Music,  NCB,  SABAM, 
SACEM,  SGAE).  The  drawbacks  of  this  approach  remains  that  it  is  dependent  on  accurate 
information  on  the  recording  being  reported,  and  that  the  licensor  is  likely  to  receive 
information which ultimately concerns works which he does not have the authority to licence. 
Thus  CELAS,  licensing  works  of  EMI  publishing,  might  process  information  which  is  also 
relevant to works belonging to Sony ATV. 

Second, the collecting society or licensor "matches" the information provided by the OSP to 
the share of works it has authority to licence. The collecting society or licensor must be able 
to match information on the record to information on the underlying works, and then to match 
those  works  to  the  rights,  territories  and  work  shares  it  controls.  I.e.  for  a  multi-territorial 
licence,  the  collecting  society  or  licensor  must  hold  the  relevant  information  for  all  the 

EN 

98 

   EN 

 
 
 
 
 
 
 
 
 
 
 
territories  it  licences.  Further,  it  must  have  the  ability  to  match  recording  information  to 
information pertaining to works. Licensors or societies concerned have access to information 
on  works  and  their  ownership,  because  rightholders  they  represent  provide  them  with  such 
information – e.g. by registering their works. However, the societies or licensors do not have 
the same level of access to information on recordings – they do not represent record producers 
or  performers.  Finally,  the  main  difficulty  with  the  "matching"  process  is  that,  despite  the 
development of tools to minimise such occurrences, there can be inconsistencies between the 
databases of collecting society A and the databases of collecting society B. Typically, it may 
be that each society claims 75% of the same work. 

Thirdly,  on  the  basis  of  the  reports  provided  by  the  OSP  and  of  its  database,  the  society  or 
licensor  then  invoices  the  OSP.  Where  an  inconsistency described above occurs, the user is 
likely to receive an invoice of 150% for a same work. Moreover, where one licensor invoices 
on a yearly basis, and another on a monthly basis, the user will only realise this overlap on 
receiving the last "invoice". In all likelihood, the user will have already paid the first licensor 
when he is presented with a second invoice. 

Fourthly, the OSP pays the collecting society or licensor the amount invoiced. If the user has 
received conflicting invoices, he may have agreed a process with the licensors to resolve such 
errors  and  reconcile  the  conflicting  invoices.  Some  societies  and  licensors  use  a  dispute 
reporting facility to deal with such occurrences. For instance, ARMONIA, CELAS, GEMA, 
SACEM,  SACEM/DEAL,  PRS  for  Music  and  PAECOL  use  the  so-called  "Claim 
Confirmation & Invoice Details" (CCID) to facilitate the process. 

Fifthly,  on  the  basis  of  the  information  processed  (usage  reports,  matching,  possible 
resolution of conflicts), the licensor or collecting society pays the rightholder.  

18.2.  Underlying data and current database systems 

The setting up of automated processes is relatively complex due to the large number of works 
and  rightholders  involved.  The  precise  number  of  copyright  protected  musical  works 
registered with collecting societies is not known, some suggesting there are around 13 million 
works  in  the  world,  other  that  there  are  as  many  as  50  million.223  While  circa  500,000  new 
works may be registered by collecting societies each year,224 many works are rarely or never 
used (the industry term "active works" refers to those works that are used). Matters are further 
complicated by the fact that there are numerous owners of different shares in a single musical 
work – which may have one or more composers, one or more lyricists, one or more arrangers 
(which may or may not qualify as authors) and one or more publishers. There can be as many 
as 15 rightholders in a single work. 

Traditionally,  collecting  societies  have  operated  their  own  databases,  separately  developed 
and  implemented,  and  generally  using  a  work  code  or  identifier  which  is  specific  to  the 

223 

224 

EN 

#3, 

Brussels, 

See e.g. "Two steps closer to a global copyright database", in Summary of CISAC’s World Copyright 
Summit 
2011, 
June 
http://www.cisac.org/CisacPortal/initConsultDoc.do?idDoc=22436,  p.  69.  Major  EU  collecting 
societies  reported  a  total  of  more  than  18  million  works  registered  (which,  for  some,  includes  works 
other than musical works), see Annex F, table F.1.8. 
E.g. according to the SACEM Annual report 2010, close to 690 000 new works were added to the world 
repertoire in 2010. 

& 

8, 

7 

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   EN 

 
                                                 
society. However, a number of international codes are also used, in particular for the purposes 
of exchanging information between collecting societies.  

The most widely used identifier for musical works is the ISWC (international standard work 
code). It is an ISO standard, developed by CISAC, and which allows for the attribution of a 
unique identifier by designated local or regional numbering agencies. In Europe, these local 
or  regional  agencies  are  local  collecting  societies.  Each  society/local  number  agency  is 
appointed to attribute an ISWC number to musical works created be authors which are their 
members (on the basis of the authors' record in the IPI database, see infra). When an author 
changes his society, his new society is responsible for the attribution of an ISWC to his newly 
created works. 

The ISWC number is recorded with metadata including (i) one original title for the work, (ii) 
all the creators of the work (composers, authors, arrangers, translators etc.) identified by their 
IPI numbers. Neither the ISWC nor its associated meta-data indicate the shares of composers 
or copyright owners of the work or the date or place where the work was initially published. 

A  central  ISWC  validation  centre  is  operated  for  CISAC  and  references  26  million  unique 
ISWC codes.225 

In order to identify rightholders, the IPI (Interested Party Information) format is often used 
by  CISAC  societies.  It  is  administered  by  Swiss  collecting  society  SUISA.  It  provides 
information on the name of rightholders, nationality, and information on the rights they hold 
or have entrusted to a collecting society. 

The  industry  generally  acknowledges  that  the  data  on  works  ownership  is  not  sufficiently 
accurate  –  some  users  arguing  that  they  receive  double  invoices,  and  that  they  cannot  be 
expected to process data provided on excel spreadsheets, and some societies arguing that their 
rights  are  not  always  clearly  excluded  from  licences  from  other  societies.  A  number  of 
initiatives have been put forward to address the issue. 

In 1998 CISAC created "CIS-Net", which uses IPI and ISWC to allow societies' databases to 
interoperate  to  some  extent.  "CIS-Net"  is  a  distributed  database:  each  society  within  the 
network  has  its  own  proprietary  database.  Through  CIS-NET,  societies  are  allowed  to  give 
other societies of view of their databases, and to view the databases of other societies. Today, 
74 contributing societies and 101 user societies are participating in CIS-Net and are covering 
a global population of 50 million works, but is estimated there are still inaccurate records.  

Collecting  societies  PRS  for  Music  and  STIM  created  a  joint  venture,  ICE  (International 
Copyright Enterprise), which records multi-territory ownership data for their repertoires. ICE 
is  now  reported  to  include  15  million  works.  Amongst  other  benefits,  ICE  allows  the  two 
societies  to  reconcile  the  data  in  their  respective  repertoires  and  the  catalogues  of  some 
Anglo-American publishers, ensuring that there are no inconsistencies or duplicates. ICE aims 
to  provide  an  "authoritative"  database:  a  record  is  authoritative  when  the  ownership 
information is provided by the rightholder. 

225 

See e.g. http://www.wipo.int/meetings/en/2011/wipo_cr_doc_ge_11/pdf/collective.pdf. The database is 
administered  by  FastTrack  and  referred  to  as  "Common  Search  Index".  CISAC  has  invested  €1.65 
million  in  the  creation  of  the  ISWC  identifier  over  the  last  decade.  As  there  are  around  24.8  million 
works in the ISWC, the cost per work amounts to less than €0.07 per work.  

EN 

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In full awareness of the need for a comprehensive  database,  a group of stakeholders started 
work  on  the  Global  Repertoire  Database226  (GRD),  which  would  be  an  authoritative 
comprehensive multi-territory information about the ownership of musical works, and would 
be openly accessible to all interested parties (authors, users, collective managers, publishers, 
etc.).  The  working  group  comprises  eight  companies,227  and  in  June  2011  Cisac  decided  to 
join  the  working  group.228  The  GRD  working  group  has  recommended  that  ICE,  the  joint 
venture between PRS and STIM, should be the technology partner, and that Deloitte should 
be project manager.  

226 
227 

228 

http://www.globalrepertoiredatabase.com/  
Amazon,  EMI  Music  Publishing,  iTunes,  Nokia,  PRS  for  Music,  SACEM,  STIM,  Universal  Music 
Publishing. 
The  main  issues  CISAC  is  concerned  with  are:  1)  account  should  be  taken  of  CIS-Net  and  existing 
databases;  2)  governance:  who  is  in  charge  of  the  database;  3)  financing:  the  creation  of  the  GRD 
should  not  create  any  extra  burden  to  the  societies  but  should  only  re-deploy  current  funds  for 
maintaining existing databases; 4) data ownership and privacy: CIS-Net is not a public database due to 
complex privacy laws around the world.  

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19. 

ANNEX J: MUSIC PUBLISHING  

Table J.1: Major music publishers' market share 

EMI Music Publisher 
Sony/ATV 
Universal Music Publishing Group 
Warner Chappell 
Total 
Source: Music & Copyright229 

2008 
18.3 
11.7 
23.2 
14.9 
68.1 

2009 
19.3 
12.3 
22.9 
14.4 
68.9 

Table J.2: Major record producers' market share 

EMI 
Sony Music Entertainment 
Universal Music Group 
Warner Music Group 
Total 
Source: Music & Copyright 

2008 
11.6 
19.5 
28 
14.7 
73.8 

2009 
12.2 
20.9 
27.2 
15.0 
75.3 

2010 
19.7 
12.5 
22.6 
13.9 
68.7 

2010 
12.4 
20.8 
28.0 
14.6 
75.8 

229 

http://musicandcopyright.wordpress.com/2011/03/23/universal-music-group-reasserts-its-recorded-
music-dominance-in-2010/  

EN 

102 

   EN 

 
 
 
                                                 
Table J.3: Main income streams of UK publishers (excluding income for PRS) 

69,2

26,9

31,7

38,3

21,9

24,8

23,4

63,6

23,3

28,1

39,5

22,6

33,6

24,7

European collecting societies

North American collecting
societies

Other collecting societies

Printed music sales (inc. sales,
hire, licensing)

Sync licensing (UK-based)

Sync licensing (non UK-based)

Grand right licensing

2009 (m£)

2010 (m£)

Source: Adding up the Music Industry 2010, PRS Economic Insight, August 2011. 

Grand  rights  are  generally  the  rights  to  publicly  perform  a  work,  e.g.  typically  an  opera  or 
classical  music  performance  by  an  orchestra;  sync  or  synchronisation  rights  are  the  right  to 
use a musical composition for an audiovisual production. Print music consists of the sale or 
sheet music (of musical works and arrangements thereof) and folios, the reprinting of lyrics in 
books or other publications, and the rental of sheet music (e.g. for orchestras).  

EN 

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20. 

ANNEX K: LICENSING PRACTICES FOR ONLINE USE OF MUSIC  

Table  K.1:  Repertoire  that  had  been  licensed  on  a  pan-European  basis  to  a  major  online 
service, up to December 2010. 

Repertoire 

SGAE (ES) 

SPA (PT) 

Licensor(s) 

SGAE or Armonia 

SGAE or Armonia 

SACEM (FR) 

SACEM or Armonia 

PRS for music (UK) 

PRS for music 

IMRO (IR) 

TEOSTO (FI) 

STIM (SW) 

SIAE (IT) 

GEMA (DE) 

Choice from PRS for music, SACEM  

TEOSTO / NCB  

STIM / NCB 

SIAE or Armonia 

GEMA 

Source: Replies to commission's consultation of collecting societies of 17 December 2010. 

EN 

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Table K.2: Licensing of publishers' rights 

Publisher 

Licensing Entity 

Sony ATV  

Universal  

EMI  

Warner Chappell  

Peer Music 

IMPEL 

SGAE (Sony ATV Latin repertoire) 

PAECOL/GEMA (Sony ATV non-Latin repertoire) 

SACEM/DEAL  

CELAS (joint-venture, GEMA and PRS for music) 

PEDL: choice from PRS for music, SACEM, 

BUMA, GEMA, STIM, SABAM, SGAE 

SGAE (Peer Music Latin repertoire) 

PRS for music (Peer Music non-Latin repertoire) 

PRS for music 

Table K.3: Rights available from some pan-European licensing entities (2010) 

Participants 

Rights / repertoire 

Licensing 
organisation 

Publishers 

Collecting 
societies 

Reproduction  

Communication to the 
public 

CELAS 

EMI 

PRS, GEMA 

PAECOL 

Sony ATV  GEMA 

PEDL 

Warner 
Chappell 

ARMONIA 

Universal 
Peer Music 
(Latin) 
Sony ATV 
(Latin) 

PRS for music, 
SACEM, 
BUMA, GEMA,
STIM, SABAM,
SGAE 

SACEM, SIAE, 
SGAE, SPA 

Non-BIEMa: EMI works 

Non-BIEM: EMI works 

BIEM: n.a. 

BIEM: n.a. 

Non-BIEM: Sony ATV 

works 

BIEM: GEMA works, 

IMRO works 

Non-BIEM: Warner 

Chappell 

Non-BIEM: Sony ATV 
works, excluding PRS for 
music works 

BIEM: GEMA works 
Non-BIEM: Warner 
Chappell works, excluding 
PRS for music works 

BIEM: n.a. 

BIEM: n.a. 

Non BIEM: SONY ATV 

and PEERMUSIC (latin 
repertoire) works, 
Universal works 

Non-BIEM: Universal, 

SONY ATV and 
PEERMUSIC (latin 
repertoire) works, excluding 
PRS for music works 

BIEM: SACEM, SIAE, 

BIEM:SACEM, SIAE, 

SGAE, SPA works 

SGAE, SPA works 

a BIEM is the international organisation representing mechanical rights societies. BIEM repertoire refers to 
repertoire of predominantly all continental collecting societies. Non-BIEM repertoire refers to Anglo-American 
repertoire. 

EN 

105 

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21. 

ANNEX  L:  IMPLEMENTATION  OF  THE  COMMISSION  RECOMMENDATION  OF  2005 
AND OVERVIEW OF NATIONAL REGULATORY FRAMEWORKS 

22.1 

Implementation of the Commission Recommendation of 2005 

The Commission Recommendation 2005/737/EC of 18 May 2005 on collective cross-border 
management of copyright and related rights for legitimate online music services230 constituted 
an  initial  attempt  to  improve  the  licencing  of  copyright  and  related  rights  for  the  online 
exploitation of music. As recital 8 of the recommendation explained, "[i]n the era of online 
exploitation of musical works […] commercial users need a licensing policy that corresponds 
to the ubiquity of the online environment and which is multi-territorial." It further stated that 
it  was  "therefore  appropriate  to  provide  for  multi-territorial  licencing  in  order  to  enhance 
greater  legal  certainty  to  commercial  users  in  relation  to  their  activity  and  to  foster  the 
development of legitimate online services […]." In addition to providing for a new licencing 
policy,  this  Recommendation  set  out  some  general  principles  on  governance,  transparency 
and  accountability  of  collecting  societies  as  regards  their  the  relationship  with  right-holders 
and commercial users.  

The impact of this Recommendation has, however, been moderate. First of all, it was coldly 
received  by  the  European  Parliament.  In  a  resolution  of  13  March  2007,231  the  European 
Parliament challenged the value of the Recommendation: "whereas it is unacceptable that a 
'soft law' approach was chosen without prior consultation and without the formal involvement 
of Parliament and the Council, thereby circumventing the democratic process, […]. 1. Invites 
the Commission to make it clear that the 2005 Recommendation applies exclusively to online 
sales of music recordings, and to present as soon as possible – after consulting closely with 
interested parties – a proposal for a flexible framework directive to be adopted by Parliament 
and  the  Council  in  co-decision  with  a  view  to  regulating  the  collective  management  of 
copyright and related rights as regards cross-border online music services […]."  

Secondly, concerning the stakeholders reception of the 2005 Recommendation, a monitoring 
exercise  undertaken  by  the  Commission  in  2008232  showed  that  the  taking-off  of  EU-wide 
licencing was slow. Shortly after the release of the 2005 Recommendation large rightholders, 
and  more  particularly  major  publishers,  withdrew  the  cross-border  management  of  their 
digital  repertoire  from  the  system  traditionally  offered  by  collecting  societies  and  set  up 
several  new  licencing  platforms  for  the  cross-border  management  of  their  on-line  rights.233 
The largest four music publishers transferred the management of some of their rights, for EU-
wide  licencing,  to  newly  created  entities:  CELAS,234  PEDL,235  DEAL,236  PAECOL237  and 

230 
231 

232 

233 

234 

OJ L 276, 21.10.2005, p.54. 
European Parliament Resolution of 13 March 2007 on the Commission Recommendation of 18 October 
2005 on collective cross-border management of copyright and related rights for legitimate online music 
services (2005/737/EC) (2006/2008/INI), P6_TA(2007)0064, OJ C 301E, 13.12.2007, p. 64. 
Monitoring of the 2005 Music Online Recommendation, 7.2.2008.  
Available at: 
http://ec.europa.eu/internal_market/copyright/management/management_en.htm#monitoring  
See Violaine Dehin, 'The Future of Legal Online Music Services in the European Union: A Review of 
the EU Commisison's Recent Initiatives in Cross-Border Copyright Management', European Intellectual 
Property  Review  2010,  v.  32,  No  5,  p.  220,  228.  See  also  Monitoring  of  the  2005  Music  Online 
Recommendation, 7.2.2008, p. 5.  
CELAS (Central European Licensing and Administration Services) was created by GEMA (a German 
collecting  society)  and  PRS  for  Music  (PRS  for  Music  is  the  brand  name  of  the  operational  alliance 

EN 

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   EN 

 
                                                 
PEL.238 Until 2010, the withdrawals were initiated by major publishers only and were limited 
to  mechanical  rights  of  Anglo-American  repertoires.239  Only  recently,  some  independent 
publishers  have  entered  into  similar  schemes  following  an  initiative  lanched  by  PRS  for 
Music (UK): IMPEL.240  

Despite  the  creation  of  the  new  licencing  platforms,  the  first  EU-wide  end-user  licencing 
contract  was  only  signed  in  January  2008,  more  than  3  years  after  the  publication  of  the 
Recommendation.241  Since  then,  more  EU-wide  licences  have  been  granted.242  However,  as 
presented  in  the  problem  definition  section  of  this  impact  assessment,  the  market  has  not 
developed  enough  and  most  initiatives  for  cross-border  licencing  systems  stemmed  from 
major publishers only.243  

The 2008 report on the monitoring of the 2005 Recommendation prepared by the Commission 
services  outlined  that  stakeholders  had  reported  various  obstacles  in  setting-up  EU-wide 
licensing  arrangements:  i.e.  litigation  between  collecting  societies  would  impede  progress 
(e.g. they questioned other societies' mandate to license their repertoire on an EU-wide basis) 
and  the  question  of  the  identification  of  works  to  be  licenced.  As  outlined  in  the  problem 
definition  section  of  this  impact  assessment,  different  obstacles  to  multi-territory  licensing 
remain: e.g. multi-territory licencing remains subject to legal uncertainty and it is demanding 

a 

at 

to 

for 

join 

later 

date. 

open 

other 

collecting 

between two UK collecting societies: MCPS and PRS). CELAS is a legal entity set up to represent EMI 
Music Publishing's Anglo-American and German repertoire for online and mobile uses in 40 European 
countries. See: http://www.celas.eu/  
Warner/Chappel  Music,  the  publishing  arm  of  the  Warner  Music  Group,  created  a  system  of  Pan 
European  Digital  Licencing  (PEDL)  with  6  collecting  societies:  BUMA-STEMRA  (NL),  PRS  for 
Music  (UK),  SABAM  (BE),  SACEM  (FR),  SGAE  (ES)  and  STIM  (SE).  Through  this  system,  the 
participating collecting societies are able to offer EU-wide digital licences covering Warner/Chappell's 
Ango-American  repertoire.  Under  the  PEDL  initiative,  Warner/Chappel  Music  is  granting  non-
exclusive  rights  in  its  catalogue  to  those  collecting  societies  which  comply  with  a  set  of  common 
standards  intended  to  ensure  efficient  and  transparent  management  of  rights.  The  PEDL  initiative 
remains 
See: 
societies 
http://www.warnerchappell.com/pedl/pedl.jsp  
DEAL  (Direct  European  Administration  and  Licencing)  was  crated  by  Universal  Music  Publishing 
Group  with  the  French  collecting  society  SACEM,  covering  the  repertoire  of  Universal  Music.  See: 
http://www.sacem.fr/cms/site/en/home/about-sacem/documentation/2009-press-releases/universal-
music-publishing-group-and-sacem-announce-name-of-pan-european-licensing-model-as-well-as-a-
variety-of-pan-european-deals-with-major-internet-companies  
PAECOL  (Pan-European  Central  Online  Licencing)  is  a  subsidiary  of  German  collecting  society 
GEMA  created  for 
the  SONY/ATV  Anglo-American  repertoire.  See: 
https://www.gema.de/en/gema/organization/paecol-gmbh.html  
PEL (Pan-European Licencing Initiative of Latin American Repertoire) manages the Latin repertoire of 
SONY/ATV. PEL is managed by Spanish collecting society SGAE. 
Cf. Violaine Dehin, op. cit., p. 229. 
Independent Music Publishers’ European Licensing (IMPEL) is a collective of independent publishers 
who have joined together to license their Anglo-American mechanical digital rights on a pan-European 
basis. IMPEL has chosen PRS for Music as its partner society to license and administer the participating 
publishers’ rights on its behalf, and has the full support of the Music Publishers Association. IMPEL 
began  operations  on  1  Jan  2010.  Currently,  16  publishers  have  joined  IMPEL.  Additionally,  PRS  for 
Music also manages the Anglo-American mechanical digital rights of peermusic, Chrysalis and Imagem 
Music alongside the IMPEL rights. See: http://www.prsformusic.com/impel/Pages/default.aspx  
A  contract  signed  by  CELAS  with  mobile  operator  Omnifone,  covering  the  'MusicStation'  download 
service  operated  by  the  latter.  This  contract  allowed  MusicStation  to  provide  access  to  EMI  music 
repertoire for digital exploitation in Europe. 
Cf. Violaine Dehin, op. cit., p. 228. 
3  collecting  societies,  SACEM  (FR),  SIAE  (IT)  and  SGAE  (ES)  also  joined  forces  in  the  Armonia 
project: http://www.armoniaonline.eu/  

the  management  of 

235 

236 

237 

238 

239 
240 

241 

242 
243 

EN 

107 

   EN 

 
                                                                                                                                                         
and costly (for example as regards the processing of data linked to the works used). Hence, 
the impact of the 2005 Recommendation has been limited. 

(represented 

representing  authors 

The governance, transparency and accountability provisions of the 2005 Recommendation 
also  attracted  initial  interest  from  stakeholders.  Music  publishers  (represented  through 
ICMP/CIEM244)  and  collecting  societies 
through 
GESAC245)  issued  in  July  2006  a  "Common  Declaration  on  Governance  in  Collective 
Management Societies and on Management of On-line Rights in Music Works"246 (hereinafter, 
the  "Common  Declaration").  The  Common  Declaration  made  an  express  reference  to  the 
Commission  Recommendation  and  stated  that  "ICMP/CIEM  and  GESAC  have  agreed  to 
move forward in successive steps, within a defined time-frame, on a certain number of issues 
relating to the governance of all societies in the European Union managing music rights in 
music  works  on  a  collective  basis  on  behalf  of  rights  holders,  i.e.  authors,  composers  and 
music  publishers  […]".  The  Common  Declaration  provided  for  some  general  principles  on 
membership  in  collecting  societies,  representation  on  board  of  directors  of  collecting 
societies, general meeting of members of collecting societies as well as on transparency and 
accountability of collecting societies to right holders.  

Beyond  this  Common  Declaration,  authors’  societies  member  of  CISAC247  also  adopted  in 
2008 the Professional Rules for Musical Societies and for Visual Arts Societies and in 2009 
the Professional Rules for Dramatic, Literary and Audiovisual Societies248. These documents 
set  minimum  quality  standards  on  governance  and  membership,  transparency,  licensing, 
collections,  documentation  and  distribution.  The  Professional  Rules  also  include  provisions 
for the settlement of disputes between authors’ societies and their members or sister societies. 

Concerning the collecting societies dealing with the reproduction rights, IFRRO249 published 
a voluntary code of conduct in 2007250 setting the standards of service that rightholders and 
users could expect to receive when dealing with reproduction rights organisations. 

The  table  L.22.1  below  provides  a  comparison  of  the  2005  Recommendation  and  some  of 
these initiatives. This table shows that the scope of the self-regulation efforts does not fully 
correspond to that of the Recommendation.  

Concerning  practice,  compliance  problems  remain.  For  instance,  as  regards  the  Common 
Declaration, ICMP/CIEM and GESAC committed to "immediately encourage their respective 
members to commence the implementation of the points agreed in this Common Declaration 
within the next twelve months, e.g. by requesting from their national authorities the necessary 
modification of  the relevant applicable laws." However, in 2008, ICMP/CIEM and GESAC 
recognised that many collecting societies were still not in compliance with the principles of 
the  Common  Declaration.251  Indeed,  neither  the  Common  Declaration,  nor  the  CISAC  and 

244 

245 
246 
247 
248 
249 
250 
251 

ICMP  is  the  world  trade  association  representing  the  interests  of  the  music  publishing  community 
internationally. See: http://www.icmp-ciem.org/  
GESAC is the European Grouping of Societies of Authors and Composers. See: http://www.gesac.org/ 
http://www.gesac.org/eng/positions/download/ICMPGESACDeclaration_final_EN_070706.pdf  
International Confederation of Societies of Authors and Composers. 
http://www.cisac.org/CisacPortal/listeArticle.do?numArticle=1030&method=afficherArticleInPortlet  
International Federation of Reproduction Rights Organisations. 
http://www.ifrro.org/content/ifrro-code-conduct-reproduction-rights-organisations  
Cf. Monitoring of the 2005 Music Online Recommendation, 7.2.2008, p.8.  

EN 

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IFRRO initiatives include a formal monitoring mechanism involving any type of sanctioning 
in case of non-compliance.252 

Evidence provided to the Commission services, as explained in the problem definition section 
of  this  impact  assessment,  continues  to  show  that  indeed  problems  remain  (see  also  table 
L.22.1).253 This shows the limits of both the soft law approach and the self-regulatory efforts 
to enforce principles in this area. 

The  impact  of  the  Commission  Recommendation  on  Member  States  legislation  has  also 
been limited, thus contributing the slow motion observed in this area so far. As regards multi-
territory licencing, the problem remains that the national legal frameworks (see section 22.3 
of  this  Annex,  below)  applicable  to  collecting  societies  are  designed  for  licencing  activities 
which  take  place  on  a  national  basis,  resulting  in  considerable  uncertainty  (see  the  problem 
definition  section  of  this  impact  assessment).  As  regards  the  governance,  transparency  and 
accountability  provisions,  some  Member  States  have  recently  amended  their  legislation  to 
improve their rules on these issues, but this is not the case in all Member States. Section 2.2 
of this Annex shows some of the features of a selected sample of Member States. As regards 
dispute  settlement  (cf.  §15  of  the  Recommendation,  which  is  addressed  at  Member  States), 
only  a  few  Member  States  (UK,  DE,  AT,  DK)  have  specialised  dispute  resolution 
mechanisms regarding tariffs and licencing conditions. 

In  any  event,  as  regards  the  scope  of  the  2005  Recommendation,  it  should  be  further  noted 
that it only applied to collecting societies managing rights in the music sector. Therefore, as 
regards  the  governance,  transparency  and  accountability  of  collecting  societies,  only  some 
collecting societies were concerned. While the music sector accounts for the vast majority of 
funds  managed  by  collecting  societies  (see  above  Annex  F),  a  large  number  of  collecting 
societies managing funds outside that sector were left unaffected by the Recommendation.  

252 

253 

The  CISAC  Professional  Rules  include  a  complaint  mechanism  within  CISAC  so  that  a  collecting 
society  can  inform  CISAC  if  another  collecting  society  is  not  respecting  those  Rules.  The  type  of 
sanction  that  CISAC  could  enforce  against  a  collecting  society  in  case  of  non-compliance  with  those 
Rules is unclear.  
IMPALA, the Independent Music Companies Association, explains that small record labels are facing 
serious difficulties in obtaining public performance, broadcast and other revenues that are due to them 
in Europe. To this end, it published a code of conduct encouraging record company collecting societies 
to 
See: 
and 
http://www.impalamusic.org/info_01_issuecoll_socs.php  

transparency 

governance 

standards. 

improve 

their 

EN 

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TABLE L.22.1 – 2005 Commission Recommendation and self-regulatory initiatives 

2005 
Recommendation 

Commission 

ICMP-GESAC 
Declaration 

Common 

CISAC  Professional  Rules  for 
Musical Societies254 

IFRRO Code of conduct 

Identified problems 

§3  Rightholder's  free  choice  of 
collecting society.  

§5(a)  Rightholder's  freedom  to 
determine the online rights to be 
entrusted 
collective 
for 
management. 

§5(b)  Rightholder's  freedom  to 
determine the territorial scope of 
the mandate. 

§5(c)(d)  Rightholder's  right  to 
rights  and 
withdraw  online 
another 
to 
transfer 

rights 

§9  Each  Member  Society  shall 
at  all  times  […]  (a)  be  open  to 
creators  and  publishers  of  all 
nationalities. 

(RROs) 

Reproduction 

representation 

§2.1 
Rights 
Organisations 
have 
open 
for  all 
eligible 
in 
applicable 
accordance  with 
national and supranational laws, 
including competition law. 

rightsholders 

them, 

decided 

§5(b) Rights holders will be free 
to elect the CMS of their choice 
to manage their online rights (or 
to  manage  their  rights  directly) 
in 
by 
as 
conformity  with  the  categories 
of  online  exploitations  defined 
below,  and  to  change  from  one 
the 
society 
administration  of  those  rights 
which 
to  have 
they  decide 
collectively managed. 

another 

to 

See §5(b) above. 

form 

§5(c) establishes new categories 
by 
exploitation 
of 
(interactive  and  non  interactive 
exploitation).  The  rightholder's 
freedom  needs  to  fit  into  those 
categories. 

See §5(b) above. 

- 

- 

See §5(b) above. 

§9  Each  Member  Society  shall 
at  all  times  […]  (c)  permit  a 
creator 
to 
terminate his affiliate agreement 

publisher 

and 

- 

- 

- 

In a number of member states, it 
is reported that music publishers 
are  not  allowed  to  be  members 
of collecting societies. 

reported  as 
Difficulties  are 
regards 
the  application  and 
practical  implementation  of  the 
new categories (beyond existing 
GEMA  categories)  established 
in  the  ICMP-GESAC  Common 
Declaration. 

The right to withdraw is difficult 
to  exercise 
in  some  cases 
because  of  the  lengthy  notice 
Spanish 
cf. 
periods: 

254 

Version adopted by the general assembly of CISAC in June 2010. 

EN 

110 

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collecting society. 

§6  information  to  users  and 
collecting 
rightholders 
by 
repertoire, 
societies 
agreements, 
representation 
territorial scope of mandates and 
applicable tariffs. 

on 

§4.  Collecting  societies  will 
the 
inform  right  holders  of 
repertoire 
the 
territorial scope of the mandates 
granted, 
existing 
reciprocal agreements. 

represented, 

and 

on 

with  such  Member,  provided 
that  such  Member  may  impose 
reasonable conditions in relation 
to 
termination  of  such 
the 
agreement. 

- 

§1.2  RROs  provide  information 
about  their  operations  that  is 
clear and easy to understand 

§2.2.  RROs  ensure  that  their 
dealings  with  their  constituents 
are  transparent  by  publicising 
and  explaining  their  operations, 
practices and procedures. 

Competition authority report. 

lack 

enough 

ownership 

Not 
detailed 
information. Cases of inaccurate 
or  "double"  invoicing  for  users 
who  can  be  billed  twice  by 
different  licensors  for  the  same 
of 
work.  Licensors' 
accurate 
data 
encourages service providers, as 
explained  above,  to  meet  the 
repertoire  gap  with  a  national 
licence  which  is  tailored  as  an 
insurance  against  any  claims  in 
licensed. 
works  not  already 
Furthermore,  as  a  consequence 
of  deficient  electronic  data 
exchange, 
are 
receiving  invoices  from  some 
licensors with significant delays, 
and 
are 
experiencing even longer delays 
in receiving their payments. 

some  users 

rightholders 

some 

§7  collecting  society's  notice  to 
users  and  to  other  collecting 
societies  on  changes 
the 
repertoire. 

to 

[Unclear if covered by §4.] 

§9  granting  of  licences  to  users 
on the basis of objective criteria 
and  without  any  discrimination 
among users. 

-  

[§  18  of  the  Professional  Rules 
require  the  collecting  societies 
to  keep  documentation  on  the 
scope of its repertoire.] 

§17 Each Member shall: […] (b) 
grant  licences  on  the  basis  of 
objective  criteria,  provided  that 
a  Member  shall  not  be  obliged 
to  grant  licences  to  users  who 

§4.1.3 RROs explain clearly the 
source  and  content  of 
their 
repertoire. 

Values:  RROs  maintain  fair, 
equitable,  impartial,  honest, and 
non-discriminatory  relationships 
with  rightsholders,  users  and 

EN 

111 

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previously 

have 
failed 
to 
such  Musical 
comply  with 
Society’s  licensing  terms  and 
conditions; 

§17 Each Member shall: […] (d) 
not  unjustifiable  discriminate 
between users. 

other parties; 

§4.1.1  RROs  manage 
their 
relations  with  copyright  users 
and 
representatives 
efficiently and equitably. 

their 

§10  equitable  distribution  of 
royalties to rightholders. 

-  

[…] 

(e) 
income 
deductions) 

§8  Each  Member  shall  at  all 
distribute 
times 
(less 
licensing 
reasonable 
to 
creators,  publishers  and  sister 
societies  on  a  fair  an  non-
discriminatory manner. 

§3.1.3  RROs 
distribute 
diligent, 
transparent manner; 

collect 
remuneration 
efficient 

and 
in  a 
and 

Poor  handling  of  collected 
royalties 
problem 
(see 
definition). 

RROs 

received 

distribute 
§5.1 
remuneration 
to 
rightsholders:  5.1.1  efficiently 
and 
5.1.2 
expeditiously; 
approximating  actual  use  as  far 
as  possible;  5.1.3  transparently, 
by publicising distribution plans 
which  explain  the  manner  and 
frequency  of  payments  with 
sufficient  detail;  and  5.1.4  in 
accordance  with 
applicable 
national and international laws.  

to 

processes 

It is reported that some societies 
place additional burdens on non-
domestic  rightholders  or  apply 
distribution  rules  which  are  not 
favourable 
non-domestic 
rightholders:  i.e.  some  societies' 
put 
distribution 
a 
foreign 
disadvantage 
their 
rights.  For  instance  there  have 
been 
the 
distribution  was  based  on  the 
salaries 
the 
received 
rightholders  in  the  country  of 
the  collecting  society  in  the 
previous year.  

rightholders 

to  claim 

where 

cases 

by 

at 

§11 deductions from royalties to 
be  specified  in  contracts  and 
statutory membership rules. 

-  

- 

deduct 

§5.3  RROs 
from 
collections  amounts  of  which 
they 
inform  rightsholders  as 
appropriate  for  their  expenses 
and  operating  costs  which:  […] 
5.3.2.  accord  with  and  are 
authorised by applicable statutes 

some 

societies 

In  the past,  it has been  reported 
apply 
that 
additional  deductions  (the  so-
called 
cultural 
"CISAC  deductions")  only  with 
to 
respect 
foreign CS and not to their own 

to  distributions 

social 

and 

EN 

112 

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collecting 

§12 
inform 
deductions made. 

societies 
rightholders  of 

- 

to 
the 

§13 In each Calendar Year, each 
Member shall make available to 
each  of  its  Affiliates:  […]  (c)  a 
clear explanation of the purpose 
and 
all 
amount 
Deductions which it makes from 
the monies due to such Affiliate;  

the 

of 

and by national laws.  

members. 

deduct 

§5.3  RROs 
from 
collections  amounts  of  which 
they 
inform  rightsholders  as 
appropriate  for  their  expenses 
and  operating  costs  which: 
5.3.1. are proper and reasonable 
and in proportion to their actual 
efforts  and  services  delivered; 
[…] 

There  are  instances  reported  of 
collecting societies which would 
not  give  full  access  to  amounts 
deducted in respect of social and 
cultural deductions 

deduct 

from 
§5.5  RROs 
if  authorised  by 
collections, 
national law and/or their statutes 
and/or distribution  plan  rules  so 
to  do,  allocations  for  social 
and/or  cultural  purposes;  and 
the 
they  do 
whenever 
authorisation  for,  as  well  as  the 
amount  and  nature  of 
the 
allocation,  is  clearly  explained 
to  the  rightsholders  concerned. 
RROs  avoid  discrimination  on 
grounds 
or 
otherwise.  

nationality 

so, 

of 

§13(a)  equal  treatment  of  all 
rightholders  in  relation  to  the 
management service. 

- 

§9  Each  Member  Society  shall 
at all times […] (b) refrain from 
discriminating  between  creators 
and publishers or between sister 
societies  in  a  manner  which  is 
legally  unjustifiable  or  which 
cannot be objectively justified. 

§3.1.1  RROs  manage 
their 
relationships  with  rightholders 
efficiently, 
and 
impartially. 

equitably 

There  are  still  occurrences  of 
discrimination  between  voting 
members  of  societies  and  other 
rightholders.  E.g.  see  decision 
200  of  8  April  2011  of  the 
Slovenian 
Competition 
Protection  Office  against  the 
of 
Slovenian 
and 
Composers, 
Copyright 
Publishers 

Society 
Authors 

for 

EN 

113 

EN 

 
  
fair 

and 

§13(b) 
balanced 
representation of rightholders in 
the 
internal  decision  making 
process 

§2(a)  Music  publishers,  as 
members,  will  be  eligible  to 
Boards  of  directors,  and  will 
have,  as  a  minimum,  at  least 
one-third  of  the  seats  dedicated 
to  music  rights  holders  on  the 
Board. 

§9  Each  Member  Society  shall 
at  all  times  […]  (d)  (where  the 
board  is  composed  of  creators 
and  publishers)  maintain  a  fair 
balance  on  its  board  between 
creators  on  the  one  hand  and 
publishers on the other hand. 

- 

§3  General  meetings  of 
the 
members  of  collecting  societies 
or any equivalent bodies will be 
called  at  least  once  a  year  and 
music publishers will have a fair 
and  balanced  representation  in 
the  voting 
such 
meetings of members. 

rights  at 

Protection (SAZAS).  

It is reported that, in practice, in 
some  authors  societies  (e.g.  in 
EL,  LT,  RO  and SI)  there  is  no 
music 
representation 
publishers  in  the  boards.  It  is 
also  claimed  that  publishers  do 
not have voting rights in authors 
societies in some countries (e.G. 
EL and PL). 

of 

It is also reported that publishers 
may not be chair of the board in 
certain cases (e.g. in DK). 

It  is  also  reported  that  some 
music collecting societies would 
fail to comply with the one third 
rule 
Common 
the 
Declaration)  as  regards  board 
membership  (e.g.  in  BG,  HU, 
IT, LV, PL and RO).  

(in 

Collecting  societies  (CS)  which 
have entrusted other CS in other 
MS  with  the  representation  of 
their repertoire in those MS (i.e. 
through 
reciprocal 
representation  agreements)  are 
often 
from 
prevented 
the  decision-
in 
participating 
making  process  of  the  societies 
that accepted the representation, 
irrespective  of 
income 
generated by that repertoire. 

the 

§14 

annual 

information 

to  §4.  Collecting  societies  will  §13 In each Calendar Year, each 

[§3.1.4  RROs  explain  clearly  Out  of  27  major  national  CS, 

EN 

114 

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rightholders on licences granted, 
applicable  tariffs  and  royalties 
collected and distributed. 

report  regularly  to  all  rights 
holders  they  represent,  whether 
directly  or  under 
reciprocal 
representation  agreements,  on 
on 
any 
on 
applicable 
royalties 
and 
distributed.  

tariffs, 
collected 

granted, 
and 

licences 

and  regularly  the  basis  of  their 
operation.] 

Member shall make available to 
each  of  its  Affiliates:  […]  (b)  a 
summary  of  its  domestic  and 
international  Licensing  Income 
in  respect  of  the  fiscal  year 
immediately  precedes 
which 
such  Calendar  Year;  […]  and 
(d)  a  clear  explanation  of  its 
distribution rules. 

nine do not make annual reports 
available  online;  eight  do  not 
have  any  financial  statements 
available  online  and  five  only 
have  incomplete  or  simplified 
financial  statements  online.  In 
practice, 
that 
rightholders  cannot  obtain  a 
verifiable 
the 
that  13  out  of  27 
income 
collecting 
have 
distributed in a year. 

indication  of 

this  means 

societies 

Essential  benchmarks  for  the 
performance  of  societies  (other 
than  administration  costs)  are 
often  not  available  from  annual 
reporting documents: for several 
major  societies  information  on 
how  royalties  are  collected,  the 
amount  of  royalties  distributed 
in  the  year,  the  time  taken  to 
the 
royalties 
distribute 
proportion  of  royalties  which 
remain  undistributed  after  a 
number  of  years, 
is  not 
available. 

or 

Very  few  collecting  societies 
provide  an  indication  of  cross 
border royalties flows (e.g. how 
much  is  collected  abroad,  from 
which  societies,  and  how  much 
is remitted abroad). 

EN 

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22.2  Latest  developments  in  national  regulation  as  governance,  transparency  and 
accountability of collecting societies. 

National  legislation  provides  examples  of  provisions  that  have  been  judged  appropriate  to 
deal with perceived  problems regarding the financial management by collecting  societies as 
well as their relationship with rightholders and users. This section will present some of these 
recent  examples  in  the  following  areas:  financial  management  (collection,  handling  and 
distribution  of  royalties),  transparency  (financial  reporting)  of  the  collecting  societies, 
governance  of  the  collecting  societies  (participation  of  members  in  the  decision  making 
process) and dispute resolution. 

Financial management: collection, handling and distribution of royalties 

Collecting  societies  manage  significant  amounts  of  funds  pending  distribution,  which  may 
take time.255 While many laws seem to acknowledge that the societies only hold money which 
does  not  belong  to  them,  on  behalf  of  rightholders,  few  legislators  have  drawn  the  full 
conclusions from this.  

Belgium, however, has included in its legislation strict rules regarding the handling of income 
not-yet-distributed to rightholders. In particular, these rules aim to clarify that such income is 
not  the  property  of  the  collecting  society.  The  result  is  that  societies  must  distinguish  their 
own assets and revenues from other income received on behalf of rightholders. These assets 
and  that  income  must  be  held  in  separate  bank  accounts  and  accounted  for  separately.  In 
addition, the Belgian law provides that those funds should not be used to fund the society, and 
not  be  used  for  speculative  purposes.256  Furthermore,  the  assets  of  the  society  itself  are  in 
some  cases  preserved  from  certain  acts:  the  society  cannot  grant  loans,  credit  or  provide 
security.  

Transparency by collecting societies: financial reporting 

Many Member States require some form of financial reporting from collecting societies (this 
is certainly the case when incorporated as limited liability companies).  

However, comparability of data is not ensured. Indeed, general accounting standards may be 
ill-adapted for this purpose: one reason is that collecting societies, while being entrusted with 
rights  under  a  variety  of  contractual  or  legal  instruments  (assignment,  mandates,  etc.)  are 
generally  understood  to  act  on  behalf  of  members  and  process  rights  and  funds  on  their 
behalf. 

The French experience suggests that there is merit in ensuring that additional rules are set out 
so that the reporting framework applicable to collecting societies provides more added value. 
The supervisory authority overseeing collecting societies in France estimated that added value 
of those additional rules as follows:  

• 

255 
256 

they facilitate choice and control by rightholders (e.g. they allow them to assess the 
performance of their society, compare it with others, understand how their income is 

Few national laws provide a meaningful deadline for the distribution of income to rightholders.  
In  the  Netherlands  a  recent  draft  law  submitted  to  parliament  on  the  supervision  of  collective 
management  organisation  administering  copyrights  and  related  rights  was  also  foreseeing  some 
limitation on the type of investments that a collecting society could undertake.  

EN 

116 

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calculated, and effectively participate in a informed manner in the decision making 
process), by users and sister collecting societies, as well as supervision of collecting 
societies; 

they  allow  industry-wide  trends  to  be  visible,  as  well  as  comparisons  between 
collecting societies; 

They  are  applicable  to  all  the  documents  to  be  communicated  by  the  collecting 
societies  to  rightholders,  statutory  auditors,  and  supervisory  authorities,  and  they 
eliminate inconsistencies between those reports; 

they  allow  for  easier  readability  of  the  money  flows  in  collecting  societies  and  the 
drawing  up  of  performance  indicators  (used  by  the  supervisor,  e.g.  ratio  between 
money  collected  and  money  distributed,  money  collected  and  administration  fees 
etc.).  

they  to  some  extent  allow  for  certain  accounting  wheezes  to  be  weeded  out  (e.g. 
societies  using  non-distributable  income  or  financial  income  to  fund  administrative 
costs, or capital gains, etc.). 

• 

• 

• 

• 

Thus the French supervisor drew up its own reporting lines and reconstitute the information 
where possible. It drew lines in particular for: 

– 

– 

– 

– 

– 

– 

rights collected (directly or from another society), amounts available and rights used,  

rights  allocated  to  rightholders  (which  benefit  the  rightholder  in  the  course  of  the 
year:  here  SACEM  for  instance  considered  that  once  money  was  attributed  to 
rightholders, but not yet paid, such money was allocated);  

management  costs  (some  societies  did  not  clearly  distinguish  between  outgoings 
such  as  management  costs  and  payments  to  rightholders)  and  financing  of 
management  costs  and  its  various  sources  (fee  on  collections  and/or  distributions, 
membership  fees,  financial  income,  other  revenues  –  one  society  funded  its 
administrative costs on the basis of non-distributable income),  

administrative deductions (those to cover the society's costs and those made to cover 
the  costs  of  another  society,  those  made  on  amounts  collected  and  those  made  on 
amounts distributed),  

cultural and social funds,  

cash flow and financial income (including the use of financial products). 

In other Member States, additional information is made available in the annual management 
report that accompanies the annual accounts. For example: 

– 

for each income line: (i) the amounts collected; (ii) costs (AT) or more specifically, 
direct  costs  attributed  to  collection,  and  indirect  costs  attributed  to  collection  (BE); 
(iii)  the  amounts  attributed  (reparties)  to  rightholders,  the  amounts  distributed  to 
rightholders, the amounts remaining to be distributed (BE, AT); 

EN 

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– 

– 

– 

the amounts due by rightholders for management services (AT, BE: supported by the 
financial data); 

the  entire  resources  of  the  collecting  society,  the  rights  collected,  and  the 
correspondence with their usage. 

information on social or culture funds (FR, AT). 

Governance  of  collecting  societies:  participation  of  members  in  the  decision-making 
process 

Rules foreseeing the participation of their members in the governance of collecting societies 
are  relatively  general,  and  in  most  cases  they  would  be  subject  to  the  appreciation  of 
supervisory  authority.  Often  these  rules  rely  on  the  assumption  that  members  of  collecting 
societies are in fact partners or associates. Such members should have at the minimum voting 
rights  in  the  general  assembly,  and  the  power  to  designate  the  governing  bodies  of  the 
societies. 

Members may take part in the functioning of the collecting society by (i) having the right to 
vote  on  certain  issues,  or  (ii)  by  becoming  part  of  the  governing  bodies  of  the  collecting 
societies. 

While many national laws provide an "umbrella" clause which does not distinguish between 
these two modes of participation,257 this is not the case in other Member States which provide 
for more explicit rules:  

– 

– 

– 

(i)  In  Romania,  decisions  pertaining  to  methods  for  collecting  and  distributing 
remuneration  (and  other  important  decisions)  must  be  approved  in  the  general 
assembly, as well as the annual report. In Greece, the view of rightholders must be 
expressed  at  least  annually  and  "taken  into  account"  in  particular  in  relation  to 
remuneration and distribution methods. 

(ii)  Representation  in  governing  bodies:  In  Belgium,  members  are  entitled  to  be 
represented  in  the  governing  bodies  of  the  collecting  society;  in  Spain,  the 
management is composed of members and in Portugal, the governing bodies of the 
societies must be formed by members. 

There may also be rules aiming to ensure the best possible manner for members to 
exercise  their  rights.  Thus  French  law  provides  for  an  elaborate  notification 
mechanism  and  most  national  laws  (closely  mirroring  company  law)  require  that 
some  documents  are  available  or  communicated  to  members  prior  to  the  general 
assembly; in UK, the MMC required that writer members could exercise their right 
to vote and speak and the general assembly by proxy, in order to facilitate votes. 

There  are  however  problems,  as  outlined  above,  regarding  the  participation  of  music 
publishers in the decision-making process of some collecting societies. 

257 

In  AT,  in  their  statutes,  the  collecting  societies  should  ensure  that  beneficiaries  are  involved  in  an 
appropriate  manner  in  the  decision  making.  In  Portugal,  there  is  a  general  principle  of  "democratic 
organization  and  management"  and  "participation  of  associated  or  cooperative  members"  in  the 
activities of the collecting societies. 

EN 

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Dispute Resolution 

Some  Member  States  provide  for  specific  dispute  resolution  systems  to  settle  potential 
disputes  between  collective  societies  on  the  one  hand  and  collecting  societies,  users,  user 
associations or rightholders on the other. Such dispute resolution systems include: 

– 

– 

– 

mediation  (e.g.  AT,  CZ,  ES,  PT,  PL)258:  In  some  cases  mediation  is  envisaged  to 
solve  disputes  (AT,  PT)  whereas  in  others  it  intends  to  assist  the  parties  in  the 
negotiation of agreements/contracts (CZ, ES).  

arbitration (e.g. AT, DE,259 ES, PT, RO, EL)260: the arbitration systems often focus 
on the matter of tariffs negotiations or disputes between collecting societies and users 
rather than on potential conflicts between collecting societies and rightholders; 

special  courts  (AT,  UK,  DK):  some  Member  States  provide  for  a  specific  Tribunal 
dealing  with  copyright  issues.  Apart  from  disputes  arising  from  the  negotiation  of 
general contracts, which must be referred to arbitration, in AT controversies related 
to  the  collective  management  of  rights  must  be  submitted  to  the  Copyright  Senate. 
The Copyright Senate rules on appeals against decisions of the supervisory authority, 
on the payable rates for the grant of a usage right, on disputes between parties arising 
from a general contract, amongst others. The Copyright Senate is composed of three 
judges and its decision has the same effect than an ordinary judicial settlement. 

Other MS' legislations (e.g. BE, FR, HU) do not seem to provide specific alternative 
resolution mechanisms. Further, specific disputes are being tackled by other instances such as 
competition authorities, especially as regards the setting of the tariffs.  

. 

258 

259 

260 

Apart from AT, which establishes a general mediation system covering all kind of disputes between on 
the one hand a collecting society, a user organisation or a rightholder, and a collecting society on the 
other hand, national laws (CZ, DE, ES, PT, PL) provide for mediation mechanisms to tackle specific 
issues  linked  to  collective  management,  namely:  the  negotiations  of  contracts  (CZ,  ES),  tariffs  (PT), 
already approved tariffs and cable retransmission (PL). 
DE  has  a  sort  of  hybrid  system  combining  aspects  of  arbitration  and  of  ordinary  litigation.  The 
decisions taken by the arbitration board are enforceable once they have been signed by the parties. This 
aspect  clearly  differentiates  arbitration  from  judicial  litigation.  On  the  other  hand,  its  mandatory 
character at the request of one of the parties, as well as the fact that the rules governing the procedure 
are  laid  down  by  the  Ministry  of  Justice,  reaffirms  the  hybrid  character  of  the  German  arbitration 
system. 
As  in  the  case  of  mediation,  arbitration  mechanisms  solve  disputes  arising  from  specific  situations 
relating  to  the  collective  management  of  rights:  general  contracts  (i.e.  those  concluded  between 
collecting societies and user associations) (DE, AT) or the obligation to pay royalties (DE, EL). In ES 
and  PT,  a  general  arbitration  clause  allows  arbitrators  to  adjudicate  any  disputes  among  collecting 
societies, between collecting societies and rightholders, between collecting societies and users or user 
associations. 

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22.3  Overview of national regulatory frameworks 

Law 

Supervision 

Transparency 
accounts 

Relations 
members 

of 

with 

1. AT 
Bundesgesetz über Verwertungs-gesellschaften 2006 (the latest amendment: Federal Law Gazette I No 50/2010 (NR: GP XXIV RV 611 AB 761, p. 70. BR: 8327 AB 
8338, p. 786.) 
Permanent supervision and authorisation granted by the "Aufsichtsbehörde für Verwertungsgesellschaften", an authority under the Ministry of Justice. The decisions 
of the supervision authority may be appealed before the "Urheberrechtssenat", an independent tribunal. Only judges may be members of that tribunal, its president has 
to be a judge of the Supreme Court.  
Annual  financial  statement  and  a  detailed  annual  report  (figures  on  membership,  administered  rights,  revenues,  administrative  costs,  cultural  deductions  and 
distributed royalties), examined by an independent auditor.  
The auditor has to inform the supervision authority of any irregularities or shortcomings.  
CMOs  are  obliged  to  conclude  a  contract  with  rightholders  at  their  request;  they  must  act  efficiently,  effectively  and  proportionately  in  managing  their  members' 
rights.  
Distribution  keys  must  be  settled  and  non-arbitrary.  Distribution  must  be  as  accurate and  comprehensible  as  is  reasonably  possible.  Performance  and  broadcasting 
rights in works of greater cultural significance have a higher weighting than those in works of lower cultural significance. Original works have a higher weighting than 
adaptions of works. 
Balanced representation between different interest groups. 
CMOs must make the following documents available to their members:  
-operating licence; 
- organisational rules; 
- general contract conditions; 
- distribution rules; 
- rules for payments from social and cultural institutions; 
- annual reports. 

Relations with users 

CMOs must grant licences on reasonable terms, in particular a reasonable tariff. 
In case of disagreement on the tariff, the licence is deemed to be granted when the user pays the undisputed part of the tariff and deposits the rest at a bank or at court. 
Obligation on CMOs to give information whether they are authorised to license the envisaged use of a specific work or other subject matter.  
CMOs must publish on their website: 
- a list of their members, mentioning possible restrictions of their mandate as regards content or territory; 
- a list of the framework contracts concluded with user organisations;  
- a list of tariffs. 
Encouragement to set up framework contracts with rules on tariffs which are deemed to be part of each individual contract between the CMO and a user.  

Dispute Settlement 

Disputes over tariffs as well as disputes arising out of framework contracts between CMOs and user organisations may be brought before an independent tribunal.  
If a CMO and a user organisation cannot agree on setting up a framework contract, each of them may ask the tribunal to set up a binding framework regulation with 
the same effect.  
Upon request the supervisory authority may act as a mediator in disputes among collecting societies and in disputes between collecting societies and their members or 
user organisations.  

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Law 

Supervision 

Transparency 
accounts 

of 

2. BE 
Law of 30 June 1994 regarding copyright and related rights (with amendments, esp. amending Act of 10 December 2009 on the status and control of collecting societies 
(Moniteur Belge 23/12/09) 
A supervisory authority is set up in the Federal Ministry for the Economy. Its overall attributions are to ensure that societies comply with the law and with their own bylaws. 
It has powers of discovery, receives copies of annual reports, accounts, auditors' reports. It may eventually take steps for the authorisation of the society to be withdrawn. In 
certain cases, it can take actions to record acts giving rise to fines, initiate judicial proceedings or propose a settlement to the society. Every year the "Service de Controle" 
publishes an activity report on CMOs. 

Accounting  and  audit  requirements  aim  to  supplement  the  rules  applicable  under  company  and  other  general  laws.  Societies  must  have  an  adequate  accounting  structure. 
Detailed rules on accounting are to be set out by royal decree, after consulting auditors, accountants and collecting societies.  
The  financial  and  accounting  situation  of  collecting  societies  is  controlled  by  an  independent  external  auditor.  The  auditor  must  ensure  that  the  society  has  adequate 
administrative and accounting structures, and internal controls. The auditor may of his own initiative flag certain problems to the society, copying the 3Service de Controle3. 
Management must account for its policy in the annual management report as required by company law, supplemented by: 
- For each income line: (i) the amounts collected; (ii) direct costs attributed to collection, and indirect costs attributed to collection; (iii) the amounts attributed (reparties) to 
rightholders, the amounts distributed to rightholders, the amounts remaining to be distributed 
- Supporting financial data, 
- The amounts due by rightholders for management services, supported by the financial data. 
- The entire resources of the collecting society, the rights collected, and the correspondence with their usage. 

Relations 
members 

with 

CMOs have an obligation to manage right of rightholders in a fair and non-discriminatory , and to accept them as members (which participate in the decision-making process) 
on the basis of objective criteria. 
Rightholders can choose the territories and categories of rights they grant to a CMO, and may withdraw their rights at 6 months' notice.  
Distribution of royalties within 24 month (if longer justification is required), money collected must be placed on a separate account, and special rules apply to the allocation of 
non-distributable income. 
Obligation to provide rightholders at their request information including annual accounts as approved by the general assembly, the list of administrators, the reports to the 
general assembly of the board and of the auditor, the overall amount, certified by the auditor, of the remuneration, expenses and advantages to administrators, the up to date 
tariffs of the company, the use of culture funds or non-distributable income. 

Relations with users 

CMO must have rules on the adoption of tariffs and publish updated tariffs on its website  
Users may consult at the premises or in writing the entire repertoire of CMO, or have their questions answered within 3 weeks time. 

Dispute Settlement 

There are no specific rules on disputes between societies and users. In some specific areas, specific procedures may apply (e.g. cable retransmission). 

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Law 

Supervision 

Transparency 
accounts 
Relations 
members 

of 

with 

Relations with users 

Dispute Settlement 

Law on Copyright and Related Rights (the latest amendment: SG No. 25/25.03.2011, effective 25.03.2011)  

3. BG 

The Minister of Culture supervises and controls the activities of collecting societies; maintains register of such organisations; approves the amount of remuneration collected 
by the  societies;  the  Minister  can  request  information  on  activities  related  to  management  of  rights.  The Minister  can  issue  recommendations;  mandatory instructions  and 
remove the collecting society from the register. 
CMO must submit to the Minister of Culture a certified copy of its annual financial statements and a report on its activity during the past year. 

CMO may not deny membership to any person who is an owner of rights that the society administers. 
Distribution rules must be proposed by an elected governing body of the society and adopted by the general assembly of members; distribution of income to rightholders 
(notwithstanding  whether  they  are  members  of  the  organization  or  not)  after  deduction  of  the  administrative  costs  and/or  social  and  cultural  deductions  must  be  done  in 
accordance with the bylaws on distribution. 

Tariffs are approved by the Minister of Culture. Tariffs must take into account the manner of use of the works and their importance in view of the income from the respective 
uses; users from a same category must be treated equally, except in cases where it may be proved that an exception is required. The representative organisations of users 
should be involved in tariff setting, when this is practically possible (where not possible, the Minister organises a public consultation). If there is no agreement on tariffs, the 
Minister  appoints  a  five-member  expert  commission  for  each  specific  case.  The  approved  amounts  of  remuneration  shall  be  published  on  the  website  of  the  respective 
organisation.  Until  the  amounts  of  remuneration  are  approved,  negotiation  and  payment  of  the  remuneration  shall  be  made  according  to  the  effective  amounts  of  the 
remuneration. In the absence of such an effective amount, the remuneration shall be paid upon a mutual agreement of the parties and shall be transferred to an escrow account. 
Mediation: In case of a dispute between CMO and users in relation to the conclusion or implementation of a contract, each of the parties may propose to resolve the dispute 
through mediation. The mediator shall assist in the negotiations and may make proposals to the parties. If in resolving a dispute related to collective management the mediator 
made a proposal in writing to the parties and within a period of one month of receiving it neither of them made a written objection, the proposal is considered accepted. The 
agreement reached in the course of mediation shall bind the parties to the dispute. The start of a mediation procedure shall not restrict the right of each of the parties to refer 
the dispute to court. The start of a mediation procedure shall suspend pending court proceedings until its termination. 
. 

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Law 
Supervision 

Copyright law 59/1976 (amended in 2002) 
Not mentioned in the law. 

4. CY  

Transparency 
accounts 
Relations 
members 
Relations with users 

with 

of 

Not mentioned in the law. 

Not mentioned in the law. 

Not mentioned in the law. 

Dispute Settlement 

For any rights: Mediation procedure before the "Competent Authority" appointed by the Minister of Commerce and Industry. 

Law 

Supervision 

Transparency 
accounts 

Relations 
members 

of 

with 

Relations with users 

Dispute Settlement 

5. CZ 
Act No. 121/2000 Coll., on Copyright and Rights Related to Copyright and on Amendment to Certain Acts (the latest amendment: 168/2008: ZÁKON 
ze dne 22. dubna 2008, kterým se mění zákon č. 121/2000 Sb., o právu autorském, o právech souvisejících s právem autorským a o změně některých zákonů 
(autorský zákon), ve znění pozdějších předpisů)  
The Ministry of Culture is also a supervisory authority, with generally defined powers: the Ministry is entitled to require all the relevant documents and information necessary 
for  its  supervision,  to  investigate  the  breaches  of  legal  obligations  and  to  impose  the  duty  to  remedy  the  existing  defects.  It  may  impose  fines.  It  grants  and  revokes  the 
authorisation for collecting societies. 
CMO obligation to submit annual report and audited accounts.  
CMO has an obligation to perform double-entry accounting, have annual closing accounts audited, and submit the closing accounts together with the auditor’s report to the 
Ministry. An annual report on activities and economic management, comprising also the annual profit and loss account and auditor’s report is also required; it shall contain a 
full and fair description of all decisive facts and shall be made available to the represented rightholders. 
CMOs must draft allocation schedule, including the way of distribution and rules for the payment of the collected remuneration, and excluding any arbitrary action during the 
distribution, and respecting the principle of support of culturally significant works and performances. 
CMO obligation to represent rightholders on equal terms. 

Conclude contracts on reasonable and equal terms with users - contracts must ensure, among others, that the amount and way of payment of remuneration is set pursuant to 
law on the basis of the number of persons to whom the work is communicated. 
Information on repertoire on request 
Make public the proposed amount of tariffs or the way of calculating tariffs for the respective ways of exploitation of the work. 
Consult relevant users, on their request, while proposing tariffs or methods for calculation of tariffs. 
The mediator may intervene upon request in the context of negotiations of collective or cumulative agreements. 

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Law 

Consolidated Act on Copyright (No. 202 of February 27th, 2010 ) 

6. DK 

The Minister of Culture Minister may demand to be supplied with all information about collection, administration and distribution of the remuneration for private copying.  
Not mentioned in the law. 

of 

Supervision 
Transparency 
accounts 
Relations 
members 
Relations with users 

with 

Not mentioned in the law. 

Not mentioned in the law. 

Dispute Settlement 

In certain cases, the Copyright Licensing Tribunal has jurisdiction: 
Extended collective licensing: the Tribunal may lay down all the terms of the said license agreement, including terms relating to remuneration;  
Compulsory licences: the Tribunal may lay down the remuneration due to rightholders;  
Cable retransmission: the Tribunal can grant the necessary permission and lay down its conditions ;  
Public  performance  of  musical  works:  if  an  organisation  approved  to  licence  public  performances  of  musical  works  proposes  unreasonable  terms,  the  Copyright  License 
Tribunal may, at request of the user, lay down the conditions for the performance; 

Law 
Supervision 

Transparency 
accounts 

Republic of Estonia Copyright Act of 11 November 1992 (latest amendment: 31.05.2006 entered into force 30.06.2006 - RT I 2006, 28, 210) 
No specific provisions in the law. 

7. EE 

of 

No specific provisions in the law. 

Relations 
members 

with 

Relations with users 

Exclusivity of CMO representation 
General Assembly adopts decisions on: collection, distribution and payment of fees and other issues relating to the common interests of members; proportionate distribution 
of collected remuneration subject to the actual use of the works after deducting from the fees the percentage jointly determined by the members of the organisation to cover 
administrative expenses. 
Members shall have access to regular and complete information concerning all activities of the organisation and the use of their works and the remuneration to be obtained by 
them. 
The same rules apply to foreign authors and holders of related rights as to Estonian authors and holders of related rights. 
CMO has the right to obtain necessary information concerning the use of works and objects of related rights from all persons in public law and private law. 

Dispute Settlement 

For any rights: Mediation procedure before the Copyright Committee (Ministry of Culture) 

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Law 
Supervision 

Transparency 
accounts 

Relations 
members 

Copyright legislation 2010: Copyright Act No. 404, of July 8, 1961 (Amendments up to 31.10.2008/663 included) Copyright Decree (Decree No. 574, of April 21, 1995) 
Minister of Education (supervision limited to administration of resale right and private copying) 

8. FI 

of 

No specific provisions in the law. 

with 

No specific provisions in the law. 

Relations with users 

Tariffs are set by law for resale right and private copying. 

Dispute Settlement 

Arbitration  for  certain  rights  only:  Remuneration  for  broadcasting  and  public  performance  of  phonograms,  remuneration  for  cable  retransmission,  remuneration  for  the 
application of copyright exceptions and public lending of works (section 54) 

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Law 
Supervision 

Transparency 
accounts 

Relations 
members 

of 

with 

9. FR 

Code de la proriété intellectuelle (version consolidée au 1 janvier 2012) 
The minister of culture: a new CMO must submit its planned statutes and bylaws to the Ministry of Culture. The Minister of Culture may bring an action before the courts if 
he believes the proposed CMO would be adequate. The court must assess the professional abilities of the founders, the material and human resources they intend to devote to 
the collection of rights and the exploitation of their repertoire, and the conformity of their statutes to applicable regulation. An established CMO must communicate its annual 
accounts and any changes to its statutes or distribution rules to the Minister. The minister may also request any document relating to the management of rights and contracts 
of  the  society  with  third  parties.  In  case  of  breach  of  the  applicable  regulatory  framework,  the  minister  may  bring  an  action  before  the  courts  for  the  dissolution  of  the 
collecting society. 

Special Commission for the Control of collecting societies: located in the Cour de Comptes (an administrative jurisdiction independent from government), its mission is to 
verify the accounts and the management of collecting societies and their subsidiaries. It has wide powers to gather information (L. 321-13 II) but no powers to adopt sanctions 
or remedies. The Commission present an annual report to the government, the Parliament and the General Assemblies of the collecting societies (L. 321-13 III).. 
The CMO must appoint an independent statutory auditor. Detailed accounting standards are laid down under decree. 

The partners or associates (i.e. members) in a collecting society must be rightholders or their successors in title.  
A group of partners representing at least a tenth of the members of the collecting society may require the appointment of an expert to investigate and report on some 
management activities (L. 326-6)(the general under company law requires members controlling 10% of the capital). 
Societies must operate a fund for cultural purposes, funded by non-distributable income (and by 25% of sums collected from remuneration from private copying). The 
attribution of these sums is decided by a two-thirds majority of the general assembly and is subject to a special report of the society concerned and of its statutory auditor to 
the Ministry for Culture (L. 321-9).  
Information of rightholders: with the caveat that a member may not receive information on the amounts received by another rightholder (L. 321-5), rightholders are entitled to 
information as provided under applicable civil law (1855 C.Civ.): the right to receive at least once a year the books and documents of the society, and to ask written questions 
to the society which must be answered within a month. Any members may at any time request (i) a list of the representatives of the society, (ii) an account, for the previous 
five years, of amounts collected and distributed, with deductions such as administrative fees, and (iii) the amounts accruing to him over the past 12 months, resulting from 
contracts with users, and how this amount is determined (R. 312-2). 
Any member may, in the two months leading up to the General assembly approving the annual accounts, request information: annual accounts, reports of bodies of the 
societies and of auditors, proposed resolutions to be put to the vote, the overall amount of remuneration paid to most paid executives (i.e. the top ten, or the top five for 
societies with less than 100 employees), a list of placements and their average interest rate, a table of bodies in which the society owns shares, information on the main 
categories of users, their numbers and the amounts paid during the year.. 

Relations with users 

CMOs shall hold available for potential users the complete repertoire of the French and foreign rightholders they represent. 

Dispute Settlement 

No  general  dispute  settlement  body.  Ad  hoc  rules  for  certain  areas,  e.g.  cable  retransmission  disputes;  a  special  committee  can  propose  tariffs  remuneration  for  the 
broadcasting and public performance of phonograms. 

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Law 

Supervision 

Gesetz über die Wahrnehmung von Urheberrechten und verwandten Schutzrechten (Urheberrechtswahrnehmungsgesetz) vom 9. September 1965 (Last amended by Article 2 
of the Law of 26 October 2007, I 2513) 
Patentamt.  
Permanent supervision. Right to revoke authorisation.  

10. DE 

Transparency 
accounts 

of 

An annual financial statement, an annual statement of profit and loss and an annual report. The financial statement and the annual report are examined by an independent 
auditor and have to be published within eight months after the end of the accounting year (plus the result of the audit). 

Relations 
members 

with 

CMOs are obliged to conclude a contract with rightholders at their request. 
CMOs' distribution keys must be settled, non-arbitrary and included in their statutes. Works and performances of greater cultural significance have a higher weighting than 
those with lower cultural significance. 

Relations with users 

Dispute Settlement 

CMOs must grant licences on reasonable terms. 
Tariffs and tariff amendments must be published 
In case of a disagreement on the tariff, the licence is deemed to be granted when the user pays the undisputed part of the tariff and deposits the rest. 
Users may ask CMOs whether they are authorised to license the envisaged use of a specific work or other subject matter.  
CMOs are obliged to set up framework contracts with users' organisations that have a significant number of members.  

For any rights: 
Mediation procedure before the Arbitration Board at the Patents and Trademarks Office. The Members of the Arbitration Board have to be qualified to exercise the functions 
of  a  judge.  The  Arbitrations  Board  has  to  make  a  settlement  offer  within  a  year.  If  the  dispute  concerns  the  conclusion  or  the  amendment  of  a  framework  contract,  the 
settlement offer has to contain its content. 
In most cases, disputes involving collecting societies may only be taken to court after a mediation procedure. 

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11. EL 

Law 

Supervision 

Transparency 
accounts 

Relations 
members 

of 

with 

Relations with users 

Dispute Settlement 

Law 2121/1993 Copyright, Related rights and Cultural Matters, as amended by law no. 2121/1993 as last amended by Law no. 3057/2002 (article 81) and by Law 3207/2003 
(article 10 par. 33) and by Law 3524/2007 

The Ministry of Culture approves the establishment of CMO; it supervises the operations of collecting societies to ensure that they comply with the provisions of the law.  
It has powers to impose fines if CMO which fails to comply with its duties (those set in the law and in bylaws). 
Each collecting society shall, when requested, submit its accounts to the Ministry of Culture for inspection, as well as any other information that is necessary for the effective 
monitoring of its operations. Except when a collecting society is a non profit organisation, its accounts shall be subjected to inspection by statutory auditors . 

Obligation to represent rightholders.  
Transfer of rights/power of attorney for maximum three years, in writing. Possibility to abrogate the agreement with 3 month notice and good grounds. 
The principles governing the distribution of remuneration to rightholders and the proposed dates and manner of distribution are submitted for the approval to the Ministry of 
Culture. 
Provide rightholders/members with all relevant information concerning the activities of CMO. 
Obligation  to  consult  annually  with  the  rights  holders  concerning  rules  used  to  determine  levels  of  remuneration,  the  methods  used  for  the  collection  and  distribution  of 
remuneration and any other matter pertinent to the administration and/or protection of their rights.  
Distribution shall be effected at least once annually and shall to the highest possible extent be proportionate to the actual use of the works.  
Fix a percentage of the remunerations collected to cover expenditures of the CMO and inform members.  
A collecting society may not refuse to conclude a contract with a user without good reason 
Users have to make available to the collecting society the list of used works and the frequency of use. 
User organisations and collecting societies or the Minister of Culture (subject to agreement by the parties) may choose an arbiter to determine the amount of remuneration to 
be paid. Before finally deciding on the remuneration due the arbiter may order the user to make a down payment. An arbiter thus appointed shall have exclusive competence 
to settle the disagreements. The decisions of the arbiter shall be equitable. 
Any  dispute  between  the  collecting  societies  and  the  users  regarding  the  remuneration  payable  by  the  user  to  the  collecting  society  may  be  referred  to  arbitration.  The 
arbitrators are appointed from the list drafted every two years by the Copyright Organization. It is compulsory to take into account the opinion of the collecting societies and 
the users when drafting the said list.  

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Law 
Supervision 

Transparency 
accounts 

of 

Relations 
members 

with 

Relations with users 

Dispute Settlement 

12. HU 

Act No. LXXVI of 1999 (Copyright Act), last amended 5th December 2011. 
 Permanent supervision by the Hungarian Intellectual Property Office. It verifies whether the conditions of registration (there is an obligatory registration of CMOs) are still 
met and whether the provisions of the statutes, distribution rules and other internal regulations are not contrary to the provisions of the copyright legal regulations in force. For 
supervision purposes, the CMO shall make the following documents available to the Office: its statutes, its organisational and operational rules, its membership rules, a list of 
the members of its administrative and representative bodies, its distribution rules, its annual report, and its representation contracts concluded with foreign CMOs.  
The Office has power to impose sanctions in case the conditions of registration are not met or the copyright laws and regulations are infringed. 
A government decree establishes the detailed rules applying to the supervision of collective management societies. 
CMOs are required to perform double bookkeeping and to prepare a non-simplified annual report in accordance with the Act on Accounting; an auditor shall review its annual 
report. CMOs are required to indicate, among others, the following in the given business year besides the data provided for in specific other legislation:  
- the the distributable and non-distributable royalties for each type of work or subject matter and economic right;  
- the amount of deducted administration fee for each type of work or subject matter, economic right and title;  
- the amount of royalties to be distributed to another CMO for each type of work or subject matter, economic right;  
- collected membership fees; and  
- the support received. 
 Obligation to accept members who prove eligible for admission according to the criteria laid down in the statutes. 
CMO shall publish the following information on its website:  
(a) its statutes,  
(b) its organisational and operational rules,  
(c) its regulations on membership,  
(d) the tariffs it applies,  
(e) its distribution rules,  
(f) its annual report,  
(g) the list of its members and rightholders represented thereby, and the organisations with which it has concluded a contract on representation 
CMO shall, regardless of whether the rightholders are members of the organisation or not, allocate its revenues achieved by the management of rights and mitigated by the 
justified  handling  fee  among  the  rightholders  concerned  according  to  its  distribution  rules.  No  deduction  shall  be  made  from  the  royalties  to  be  allocated  among  the 
rightholders, with the exception set out in the payment obligations ordered by legislation or court or official decision. The handling fee may be justified, if it is necessary for 
performing the collective management of rights, is beneficial for the rightholders affected and is incurred in the course of normal and reasonable management.. 
Obligation  to  establish  annually  tariffs  and  other  terms  and  conditions  of  use,  which  apply  equally  to  all  users  without  unjustified  distinction,  subject  to  approval  of  the 
Minister responsible for justice. Prior to its approval, the Minister must consult with major users and their representative organisations.  
Obligation to publish tariffs and other conditions of use in the HU Official Gazette (until the approval of new tariffs old tariffs are in force).  
Mediation Board (certain provisions of Act on Arbitration apply) in cases relating to, among others, disputes concerning cable retransmission, the remuneration to be paid and 
the conditions of the use between the user and the rightholder or between the users and their representative organizations (by common agreement of the parties); application of 
technical  protection  measures.  The  objective  of  the  procedure  before  the  Mediation  Board  is  the  facilitation  of  an  agreement  between  the  parties.  Possibility  of  tacit 
agreement. The decision of the Mediation Board is appealable to the relevant courts. 

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Law 
Supervision 

Transparency 
accounts 
Relations 
members 
Relations with users 
Dispute Settlement 

with 

Copyright and Related Rights Act 2000, Copyright and Related Rights (Register of Copyright Licensing Bodies) Regulations, 2002 (S.I. No. 463 of 2002)  
A licensing body must be registered with the Controller of Patents, providing the following information: the name and address of the entity, the names of the chairperson and 
other  members  of  the  board  or  officers,  the  memorandum  and  articles  of  association,  details  of  the  nature  and  of  the  licensing schemes  managed,  details  of  the  scales  of 
charges or proposed charges to be levied and the class or classes of rightholders represented. 
Users may refer proposed or operational licences or licensing schemes to the Controller of Patents. 

of 

13. IE 

In relation to certain uses of phonograms, a user may refer to the Controller for the determination of the remuneration to be paid. The user must pay to the CMO an amount he 
considers reasonable. 
Where parties cannot agree on the terms of a licence, they may request the Controller to decide the terms and conditions of a licence or licensing scheme. 
Licensing schemes proposed by a CMO may be referred to the Controller by an organisation representing users.  
Refusals to licence may be referred to the Controller 
In determining reasonable terms for a licence or licensing scheme, the Controller shall have regard to the availability and the terms of other schemes, or the granting of other 
licences, to other persons in similar circumstances, and the controller shall ensure that there is no unreasonable discrimination between licensees, or prospective licensees. 

EN 

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Law 

Supervision 

of 

Transparency 
accounts 
Relations 
members 
Relations with users 
Dispute Settlement 

with 

Law No. 633 of April 22, 1941 on the Protection of Copyright and Rights Related to its Exercise Law, Law of 9 January 2008, n.2 "Provisions concerning the Italian Society 
of Authors and Publishers", Decree of the President of the Council of Ministers, countersigned by the Minister of Culture and the Minister of Economy and Finance, dated 
December 11, 2008 (GU n. 65 19th march 2009) 
CMO are supervised by the Presidency of the Council of Ministers, the Ministry of Culture, and the Ministry of Economy and Finance. 
The supervision shall be carried out after hearing the Minister of Economy and Finance on issues under his competence. 
Obligation to approve annual budget submitted to the supervising Authority. 

14. IT  

The exclusive powers of SIAE shall not prejudice the right of the author or his successors in title to exercise directly the rights afforded them by the Law. 
The limits and the methods of distribution shall be determined by the regulations. 

In some cases, a join committee (Commissioni paritarie) representing SIAE and users may act in relation to certain licence or authorisation agreements. 

Law 

Copyright Law of April 6, 2000 (consolidated version with the latest amendment of 6 December 2007) 

15. LV 

Supervision 

Ministry of Culture – powers not specified apart from granting and revocation of authorisation.  

Transparency 
accounts 

Relations 
members 

of 

CMO publish their annual reports in the Official Gazette of the Government of Latvia  

with 

CMOs have an obligation to: 
- provide a report on the use of a work, performance, and other activities when paying out remuneration to holders of copyright and of related rights;  
- royalty payments in proportion to the use of works; regularity of payments, after deduction of the administrative fees. 

Relations with users 

CMOs should agree with the users of works regarding the amount of remuneration, procedures for payment and other provisions with which licences are issued. 

Dispute Settlement 

Arbitration procedure exclusively for solving conflicts concerning remuneration for cable retransmission. 

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Law 
Supervision 

Law on Copyright and Related Rights 18 May 1999 No VIII-1185 Vilnius (the latest amendment of 19 January 2010 – No XI-656)  
An "institution authorised by the government" (Ministry of Culture) supervises CMOs. 
This institution must supervise that CMOs perform adequately the functions and duties set to them by the law.  
The Ministry may obtain any information necessary to determine whether CMOs are compliant with the law and their own statutes.  

16. LT 

Transparency 
accounts 

of 

Financial  statements  and  an  audit  report  of  the  CMO  for  the  previous  financial  year,  approved  by  the  general  meeting  (conference)  must  be  furnished  to  the  supervisory 
authority on request. 

Relations 
members 

with 

Relations with users 

Dispute Settlement 

CMOs may not discriminate between foreign rights owners and LT citizens or residents 
Decisions concerning the methods and rules for the collection and distribution of the remuneration, the amount of deductions , as well as other important aspects of collective 
administration of rights are taken by the general meeting of the members of a CMO (the conference).  
Distribution of royalties in the most proportionate manner possible to actual use of works 
Members have the right to receive "regular exhaustive information" on all the activities of the CMO, exploitation of their works, remuneration collected and remuneration due 
Users have right to receive information on authors or owners of related rights represented; and on agreements concluded with foreign organisations 

If CMO and user cannot agree on royalty rates, either party may request mediation.  
Mediation is provided by the Council of Copyright and Related Rights which is appointed by the Ministry, composed of representatives of rights holders, users, CMOs and 
independent experts. 
The Council may also be called upon by the common request of CMOs and users to settle disputes concerning exploitation of works or objects of related rights as well as 
infringement of copyright and related rights . 

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17. LU 

Law 

Supervision 

Loi modifiée du 18 avril 2001 sur les droits d’auteur, les droits voisins et les bases de données  
Règlement grand-ducal du 30 juin 2004 concernant les organismes de gestion et de répartition des droits d'auteur et des droits voisins 

Copyright Commissioner, designated by the Minister of Economy, enforces the provisions of the law. He has access to books and records of the CMO. The Commissioner 
may attend meetings of CMOs. 
The CMO must provide any document or information useful to the mission of the Commissioner. 
CMOs provide to the Commissioner their annual accounts and shall inform him of any proposed changes to statutes or rules governing the distribution. 
CMOs are supervised by one or more auditors, who have the status of Public Accountant, member of the Association of Accountants, or auditor, member of the Institute 
of Auditors. 

Transparency 
accounts 

of 

CMO obligation to submit accurate and complete information about the income received on the national territory and on the distribution of amounts collected between the 
different categories of right holders.  

Relations 
members 

with 

Relations with users 

Obligation to manage rights recognized by law at the request of the holders of these rights, to the extent that it complies with its statutes. 
With the exceptions provided by law, CMO can not prevent right holders to entrust management of one or more modes of exploitation of their rights to another CMO of their 
choice or to ensure the individual management. 
CMO adopt objective and non-discriminatory distribution rules. Distribution of royalties no later than twelve months after the year of collection.  
Members have right to obtain, within one month from the date of their request a copy of (among others) the following information: 
1 ° the annual accounts approved by the General Assembly, 
2 ° the updated list of persons exercising the functions of director, manager or any other function conferring the power to bind the CMO, 
3 reports made at the general meeting by the board of directors or the management or the statutory auditors, 
4 ° the resolutions proposed at the general meeting and all information on candidates for the Board administration or management, 
5 ° updated tariffs, 
6 ° the overall amount, certified by the auditors, of the flat fees or management fees for the previous year, 
7 ° the amounts collected on the national territory for the previous year. 
CMOs have to maintain an updated list of represented authors and their rights. This list can be consulted by users. 
Tariffs - CMOs negotiate rates for the use of works of rights holders represented by them with users or entities representing the interests of users. 
Failing agreement on tariffs within a reasonable time limit not exceeding four months from the beginning of negotiations, CMOs establish general regulation of tariffs based 
on objective and non-discriminatory criteria. 

Dispute Settlement 

Possibility to have recourse to mediation in case of disagreement concerning the transfer of rights or a licence. Mediator can make proposals which are deemed to be accepted 
if there is no opposition within three month.  

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Law 

Supervision 

Transparency 
accounts 

of 

Relations 
members 

with 

Relations with users 

Dispute Settlement 

Copyright Act XIII of 2000 (as amended by Acts VI of 2001 and IX of 2003) 
Subsidiary Legislation 415.01 on the Control of the Establishment and Operation of Societies for the Collective Administration of Copyright Regulations.  
A Copyright Board (consisting of a chairman and two other members appointed by the Minister responsible for copyright issues). 
CMO must furnish any information that is necessary to determine whether or not the operation of the collecting society conforms to the statutes of the organisation and to the 
provisions of the law and whether or not the appropriate fulfilment of the functions of the collecting society is ensured 
Submission of the yearly balance sheet, annual report and auditor’s report concerning the operation of the collecting society to the Board. 

18. MT 

Decisions about the methods and rules of collection and distribution of royalties and about other aspects of collective administration shall be taken by the rightholders or by 
the bodies representing them. 
Distribution should be done, as much as is possible and practicable, in proportion to the actual use of works. 
Members have the right to obtain full and detailed information about all the activities of the collecting society that concern the exercise of their rights 
Foreign rightholders should enjoy the same treatment as members 
Proposed tariff for all royalties to be collected; refusal to approve the collecting society by the Board if it it considers that the proposed tariffs are unacceptable.  
The basis for calculating the tariffs shall normally be the monetary advantages obtained from exploitation of the protected work, as well as the proportion of the utilisation of 
the work in the total exploitation.; the category and nature of the user involved, including the type of business in the case of a commercial venture, as well as any religious, 
cultural and social elements involved. Tariffs are published in the official Gazette. An approved tariff shall be effective until a new tariff is approved (every two years). 
Obligation to provide information on: 
- repertoire represented; 
- system of collection and distribution of fees and equitable remuneration; and 
- tariff of all royalties to be collected by the collecting society that are in current use. 
The Copyright Board, staffed by ex-members of the judiciary, has jurisdiction only to hear complaints regarding the cable retransmission and rebroadcasting (refusal to deal 
or unreasonableness of terms). 

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Law 

Act of 4th February 1994 on copyright and related rights (the latest amendment of 8 July 2010, OJ 2010, Nr 152, item 1016) 

19. PL 

Supervision 

Transparency 
accounts 

of 

Relations 
members 
Relations with users 

with 

Dispute Settlement 

Minister competent for culture (no detail specification what such a supervision entails in practise) 
Minister has the power to grant and to revoke authorisation 
Obligation  to  prepare  an  annual  report  on  the  activities  and  annual  accounts  together  with  the  opinion  of  the  external  auditor.  All  documents  are  send  to  the  minister 
competent for culture and published on the collecting society website. 

Obligation to provide equal treatment of members; CMO may not, without important reasons, refuse to undertake the management of copyright or related rights; management 
exercised in accordance with statute. No rules on royalty distribution. 
Tariffs: fixed tariffs in certain cases; procedure before the Copyright Law Commission; publication of tariffs (by the Commission not collecting society). 
Any party may appeal the decision of the Commission to the court within a 14 days deadline. The appeal blocks the application of the tariffs.  
If  there  is  an  important  change  of  facts  which  form  the  basis  to  agreeing  tariffs,  each  party  to  the  proceedings  can  apply  to  the  Commission  for  a  change  of  tariffs. 
Transparency of repertoire: no provisions in the law 
Voluntary mediation 
Disputes concerning already approved tariffs and disputes concerning contracts between collecting societies and cable operators can be decided in mediation proceedings. 
Mediation  is  voluntary.  The  President  of  the  Copyright  Law  Commission  selects  the  mediator  from  the  list  of  Commission's  arbitrators  (Copyright  Law  Commission  is 
composed of thirty arbitrators representing different stakeholders: collecting societies, societies of creators, performers and producers, users' trade organisations); parties can 
however choose another person from the list. The mediator can present the solution to be agreed by the parties. They have three month to refuse the proposed solution – if 
they don’t, the solution is deemed accepted. Provisions of the Code on civil proceedings on mediation apply accordingly. 

Law 
Supervision 

of 

Transparency 
accounts 
Relations 
members 
Relations with users 

with 

20. PT 

Lei n.° 83/2001 de 3 de Agosto (Entidades de gestão colectiva do Direito de Autor e dos Direitos Conexos)  
Permanent supervision: Minister of Culture, through the IGAC. 
IGAC has power to revoke registration.  
CMOs are obliged to prepare and approve an annual financial report and the annual planned budget. 
Statutes shall comprise the principles and rules of the distribution system and the way to control economic and financial management. 
Obligation to accept all rightholders. The maximum duration of the contracts is 5 years (automatically renewable). The representation of rights holders results from the simple 
registration as a beneficiary of the services. The contract cannot oblige to entrust the management of all forms of exploitation of existing and future works. 
CMOs must inform interested parties about the represented works as well as about the conditions and prices for the use of any work, service or product they are responsible 
for. Respect of transparency and non-discrimination principle. 

Dispute Settlement 

The  conflicts  between  CMOs  and  their  members  or  collaborators  and  third  parties  can  be  submitted  for  arbitration  to  the  Mediation  and  Arbitration  Commission  (whose 
members are designated by the Ministry of Culture). 
The Commission may intervene under certain conditions over disputes in relation to tariffs and acts and contracts of CMOs. Its decisions can be appealed to the competent 
Court. 

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Law 
Supervision 

Transparency 
accounts 

of 

Relations 
members 

with 

Relations with users 

21. RO 

Law on Copyright and Neighbouring Rights (No. 8 of March 14, 1996) (consolidated version with the latest amendments of 03.08.2006) 
Permanent supervision of the Romanian Copyright Office - RCO (which is coordinated by the minister of culture and religious affairs) 
RCO has various functions - among others: 
- endorses the establishment and supervises the operation of the CMOs  
- controls the operation of the CMOs and establishes the measures of abiding by the law or applies sanctions,  
CMOs must publish annual statement of balance covering: 
- amounts not distributed 
- amounts collected by categories of users 
- withheld amounts 
- management costs 
- amounts distributed by categories of owners 
CMO present to the General Assembly and RCO annual report of the auditing commission. 
Any member may request access to detailed information on amounts distributed to him; and in the 30 days before the General Assembly detailed audit information including 
individual employees' salaries, bank accounts, and balance sheets 
The mandate of collective management of the economic copyrights or neighbouring rights shall be given by written contract, by the owners of rights.  
Each owner of rights that has entrusted a mandate to the CMO is entitled to own vote within the general meeting.  
CMOs have an obligation to manage rights on request, within the limit of its object of activity.  
Decisions on methods and rules for collection and distribution are to be made by members within the general assembly. 
Administration costs may not exceed 15% of annual collections. 
Members have right to access information on any aspect of collection and distribution. 
Remuneration must be distributed to members within 6 months of collection. 
Proceeds from investments of non-claimed and non-distributed remunerations shall be distributed to members and shall not become income proper to the CMO; 

CMO's communicate to the public information on:  
a) categories of owners of rights that they represent;  
b) economic rights that they manage;  
c)  categories  of  users  and  other  categories  of  natural  and  legal  persons  that  have  payment  obligations  of  compensatory  remuneration  for  private  copy  towards  owners  of 
rights;  
d) normative acts on the grounds of which they operate and collect the remunerations due to owners of rights;  
e) modalities of collection and persons responsible for this activity, on local and central level;  
f) working hours.  
CMO publish on their website: 
a) the statute;  
b) the list of the members of the central and local management bodies, composition of the internal commissions and the list of the local managers;  
c)  the  annual  statement  regarding  the  balance  of  the  non-distributed  amounts,  the  amounts  collected  by  categories  of  users  or  payers,  the  withheld  amounts,  the  cost  of 
management and the amounts distributed by categories of owners; 
d) the annual report; 
e) information on general meeting, for example: date and place of the convening, agenda, drafts of the decision and the adopted decisions;  
f) other data necessary to the members for information purposes.  
To start negotiating standard agreements and tariffs, CMO must get agreement from the Romanian Copyright Office on "methodologies". These methodologies are negotiated 

EN 

136 

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Dispute Settlement 

within a commission established by the Copyright Office, and constitute of representatives of CMOs and user associations. Negotiations should be completed within 45 days 
from the date of establishment of the commission. The parties’ agreement regarding the negotiated methodologies is published in the Official Gazette. 
Arbitration procedure 
The initiation of the arbitration procedure can be requested from the Romanian Copyright Office when: 
- a party could not agree common views to present to the other party  
- both parties could not agree on methodologies  
- CMOs could not agree upon the conclusion of a protocol for the distribution of the remunerations and for the establishment of the fee due to the sole collector.  
The parties may appeal the arbitration decision to the Bucharest Court of Appeal that shall pronounce itself on the case, in civil panel. The solution of the Court of Appeal is 
final and binding, is submitted to the Romanian Copyright Office and published in the Official Gazette of Romania. 

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22. SK 

Law 

Supervision 

Transparency 
accounts 

Relations 
members 

Copyright Act No. 618/2003 of 4th December 2003 

Permanent  supervision  by  the  Ministry  of  Culture.  CMO  must  inform  the  Ministry  of  any  changes  to  its  practices  (as  submitted  in  the  authorisation  application); and  the 
Ministry may request information at any time. 
Ministry has the power to impose fines if CMO fails to comply with duties; and powers to revoke authorisation 

of 

CMO obligation to submit by 30 June annual report and audited accounts - annual report shall be "exhaustive and true description of all decisive facts and (…) be made 
available to all rights holders" 

with 

Requirement to represent Slovak nationals and residents. 
Obligation to represent rightholders on equal terms. 

Relations with users 

Dispute Settlement 

CMO must conclude agreements on equitable and equal terms. 
CMO must publish tariffs. 
CMO has right to supervise implementation of contracts. 
CMO  or  user  may  refer  disputes  on  the  remuneration  to  the  courts.  When  determining  the  remuneration,  the  courts  shall  have  regard  to  the  type  of  rights  administered; 
manner and extent of use thereof; duration of protection; and the requirement that licensing shall be done on equitable and equal terms. 

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Law 

Supervision 

Transparency 
accounts 

of 

Relations 
members 

with 

Relations with users 

Dispute Settlement 

Copyright and related rights Act of 30 March 1995 (as last amended on 15 December 2006) 

23. SI 

Minister of Economy ("competent authority" in law). 
Permanent supervision – authority may at any time request reports on business matters and inspection CMOs books. 
CMOs must submit all changes to statutes and tariffs , copies of licensing agreements, agreements with foreign CMOs, resolutions and annual reports. 
The authority may revoke authorisation in event of non-compliance. 
Within six months following the end of each accounting year, the CMO shall adopt or acquire annual reports and audits, detailing remuneration collected, and distributions; 
operation of the CMO; and implementation of agreements with foreign CMOs. 

Obligation on CMO to contract with EU citizens. 
Maximum term of contract = 5 years. 
Legal provision for exclusive mandate (author may not individually manage his rights). 
Distribution may not be arbitrary. 
Members may receive annual financial report and report of supervisory board. 
1/10 members may demand inspection.  
Supervision by members. 
Obligation of repertoire transparency. 
Tariff agreed commercially between CMO and user or – if this is not possible – by Copyright Board. 
Law provides elements to be taken into account in determining tariff. 
CMO/user agreements must be published. 
Within 4 months of beginning of negotiations either CMO or user may refer tariff dispute to the Copyright Board. 
The Board may fix provisional tariff for duration of proceedings. 
Decisions may be appealed to Supreme Court. 
Mediation may be requested by CMOs and users for disputes concerning cable retransmission.  

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139 

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Law 
Supervision 

Transparency 
accounts 
Relations 
members 

of 

with 

Relations with users 

Dispute Settlement 

24. ES 

Law on Intellectual Property of 12 April 1996 (as amended by Law 25/2009 of 22 December and Law 2/2011 of 4 March, amongst others).  
Ministry of Culture (responsible for ensuring compliance with the obligations and requirements laid down in the Law). 
Power to grant and revoke authorisation. 
CMO obligation to submit annual report and audited accounts.  
Within  the  6  months  following  the  close  of  each  financial  year,  the  CMO  draws  up  a  balance  sheet  and  an  account  of  activities  which  are  audited  by  legally  competent 
accountants. 
CMO  statute  specify,  where  appropriate,  the  various  categories  of  owners  of  rights  for  the  purposes  of  their  participation  in  the  management  of  the  entity;  membership 
contract might not exceed five years but may be renewed indefinitely; neither the administration of all forms of exploitation nor the global administration of all future works 
or productions may be imposed as obligations 
CMOs are obliged to: 
-  contract  with  any  person  who  so  requests,  unless  there  is  justification  for  not  doing  so,  to  grant  non-exclusive  authorizations,  on  reasonable  terms  and  subject  to 
remuneration 
- lay down general tariffs to determine the remuneration payable for the use of its repertoire  
If parties fail to reach agreement, the corresponding authorization shall be considered granted if the applicant pays subject to reservations, or lodges with a judicial officer, the 
amount charged by the administration entity in conformity with the general tariffs. 
An Intellectual Property Mediation and Arbitration Commission at the Ministry of Culture exercises the mediation and arbitration regarding disputes related to the collective 
management of intellectual property rights.  
As  a  mediator,  it  offers  mediation  in  the  negotiation  of  contracts  as  regards  the  collective  rights  management.  Also,  regarding  authorisations  for  cable  distribution  of 
broadcasting emissions, the Commission may mediate in case that the parties fail to reach an agreement. 
As  arbitrator,  it  solves  conflicts  between  collecting  societies,  between  collecting  societies  and  rightholders,  and  between  collecting  societies  and  user  associations, 
broadcasters or cable distributors and may fix fees replacing the general tariffs. 

Law 

Act on Copyright in Literary and Artistic Works (Act 1960:729 of 30 December 1960 as amended up to April 1, 2009 ) 
Act on Mediation in Certain Copyright Disputes (Act 1980:612, as amended by Act 2005:361) 

25. SE 

of 

No specific provisions in the law. 
No specific provisions in the law. 

Supervision 
Transparency 
accounts 
Relations 
members 
Relations with users  No specific provisions in the law. 
Dispute Settlement 

No specific provisions in the law. 

with 

A mediation (requested through petition to the Government) concerning: 
- agreements to be concluded under extended collective licensing 
- cable retransmission rights 
- disputes concerning the making of copies 

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140 

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Law 

Supervision 

Transparency 
accounts 

of 

26. NL 

Wet van 6 maart 2003, houdende bepalingen met betrekking tot het toezicht op collectieve beheersorganisaties voor auteurs- en naburige rechten (Wet toezicht collectieve 
beheersorganisaties auteurs- en naburige rechten) 

Only  certain  type  of  societies  are  authorised,  i.e.  those  mentioned  in  the  law  or  licensed  to  perform  a  public  task  (but  there  is  no  limitation  on  the  number  of  collecting 
societies).  
Collecting societies which manage rights by law are subject to supervision, as well as a number of other large societies. The supervising authority for collecting societies 
(CvtA), founded in 2003, is composed of three members appointed by the Ministry of Justice, in consultation with the Minister for Education, Cultural Affairs and Science 
and the Minister for Economic Affairs. Its attributions are mainly to ensure that all the requirements imposed on collecting societies by the Act are observed. The CvtA's 
powers include the power to attend board meetings, inspect the society, give advice, and may impose fines or issue a cease and desist order (Art. 18-19). 
The Supervisory College must ensure that CMOs: 
- provide sufficient transparency to right holders and commercial users 
- are competent to exercise their duties 
- distribute royalties collected fairly and in conformity with the relevant rules 
- take sufficient account of the needs of commercial users  
- provide right holders with an adequate dispute resolution system  
- act in a non-discriminatory manner 
The written agreement of the Supervisory College is needed for any amendment to CMOs' statutes; for the dissolution of a CRMO; for the appointment of an accountant; for 
the establishment or adaptation of model contracts with rightholders for the management of their rights, or any other model contracts relevant to the exercise of CRMOs' 
functions. 
The members of the Supervisory College may access to CMOs' offices and may participate in the AGMs, and meetings of the members and of the Boards of CRMOs. They 
also have access to all books and data records of CMOs and any other information necessary to the exercise of their supervisory duties 
The society must grant rightholders and parties liable for payment a sufficient insight into its general and financial policy, under the control of the supervisory authority.  
The supervisory authority may appoint and auditor at the cost of the CMO.  

Relations 
members 
Relations with users 

with 

The CMO must have proper arbitration procedures in place for rightholders. 
It must lawfully distributes the fees collected, in accordance with its distribution rules. 
The CMO must take full account of the interests of users; it must treat like cases in the same way. 

Dispute Settlement 

The supervisory authority, at least once a year, gives user representatives the opportunity to be heard.  
Users may apply to the Supervision Board where the relevant arbitration procedures have been exhausted. The Board may give non-binding advice to the parties in order to 
settle the dispute. 

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Law 

Copyright, Designs and Patents Act 1988 

27. UK 

Supervision 

Users may refer proposed or operational licences or licensing schemes to the Copyright Tribunal. 

of 

Transparency 
accounts 
Relations 
members 
Relations with users 

with 

Users may refer proposed or operational licences or licensing schemes to the Copyright Tribunal 

Dispute Settlement 

In determining what is reasonable on a reference or application under this Chapter relating to a licensing scheme or licence, the Copyright Tribunal shall have regard to:  
(a) the availability of other schemes, or the granting of other licences, to 
other persons in similar circumstances, and 
(b) the terms of those schemes or licences, 
and  shall  exercise  its  powers  so  as  to  secure  that  there  is  no  unreasonable  discrimination  between  licensees,  or  prospective  licensees,  under  the  scheme  or  licence  to  which  the 
reference or application relates and licensees under other schemes operated by, or other licences granted by, the same person. 

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22. 

ANNEX M: OVERVIEW OF LICENSING IN THE US  

22.1.  Copyright licensing 

In the US, mechanical/reproduction rights are subject to a statutory licence. This means that 
any  person  can  serve  a  notice  of  intention  on  the  copyright  owner  and  use  the  work  a  rate 
fixed  by  the  Copyright  Royalty  Board  (e.g.  $  0.0175  per  minute  to  make  and  distribute  a 
record of a song). 

Mechanical  rights  are  in  practice  often  licensed  by  the  "Harry  Fox  Agency"  on  behalf  of 
publishers  (this  allows  improved  collections,  auditing  of  record  companies,  as  well  as 
different  deals  including  payment  schedules  and  "rate"  deals  with  record  companies,  at  a 
lower  rate  than  the  statutory  rate,  for  instance  for  mid-price  records,  budget  records  or 
compilation records). Publishers are usually paid quarterly. 

The statutory licensing scheme for reproduction rights was extended by Congress in 1995261 
to cover the reproduction rights involved in the digital distribution of a song (referred to as 
"Digital Phonorecords Deliveries" or DPD). The provision allows record producers to obtain a 
compulsory licence for acts of digital distribution and sub-licence the online service provider. 
In practice, this means that a record producer can grant an  all-inclusive  licence to a service 
such as iTunes (the licence will include the rights in the musical work, in the performance and 
in  the  record).  The  record  producer  is  then  responsible  for  paying  the  amounts  due  to  the 
owner of the copyright in the musical work. 

Performing rights are generally licensed through collecting societies, known as "performing 
rights  organisations".  Such  PROs  include  ASCAP,  BMI  and  SESAC.  ASCAP  and  BMI 
operate under so-called anti-trust "consent decrees". These decrees, regularly updated, impose 
conditions  for  the  activities  of  ASCAP  and  BMI.  In  particular,  BMI  and  ASCAP  may  not 
require an exclusive mandate from their members in the US. 

Online  rights  for  the  digital  distribution  of  musical  works  involve  the  reproduction  right 
and/or the performing right to varying degrees: 

Downloads: it is now established that in the US a download involves the reproduction right 
only.262 This means that download service providers such as iTunes or AmazonMP3 do not 
require a licence from ASCAP or BMI. They only have to clear the mechanical rights. 

Webcasting:  i.e.  non-interactive  streaming.  In  the  US,  the  ephemeral  reproductions  carried 
out  by  broadcasters  are  subject  to  an  exception  (section  112).  This  means  that  traditional 
broadcasting  does  not  require  a  licence  of  the  reproduction  right.  All  that  is  needed  is  a 
licence covering the performing rights. Webcasters also make similar "ephemeral recordings" 
on  the  servers  from  which  they  are  streaming  music.  They  argue  that  this  should  also  be 
considered an ephemeral recording. In practice, it seems that webcasters are not required to 
obtain a licence for the reproduction right, a licence covering the performing rights licence is 
accordingly sufficient. 

261 
262 

Digital Performance Right in Sound Recordings Act of 1995. 
U.S. v ASCAP (in re Realnetworks), 485 F. Supp. 2d 438, 443 (S.D.N.Y. 2007): "in order for a song to 
be performed, it must be transmitted in a manner designed for contemporaneous perception". The US 
Supreme Court declined to hear the case in July 2011 (no. 10-1337). 

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Interactive streaming: publishers argue they are entitled to a share of revenue (mechanical 
rights) but have not reached an agreement. The rates for various interacting streaming services 
(Rhapsody,  Yahoo!,  MySpace  etc.)  have  been  set  by  the  Copyright  Royalty  Board,  a  rate 
setting body. That rate is an overall rate which includes: mechanical (subject to compulsory 
licensing) and performing rights. The mechanical rate is what is left after other rightholders 
have taken their shares. 

Tethered  downloads:  the  PROs  argue  that  performing  rights  are  due,  a  claim  which  is 
resisted.  

22.2. 

Performing rights organisations 

22.2.1.  Membership provisions under the consent decrees 

The non-exclusivity of mandates from rightholders to PROs are an essential feature of the 
consent decrees. Rights cannot be entrusted to a PRO (BMI or ASCAP) on an exclusive basis. 

The  decrees  also  aim  to  govern  the  relationship  between  a  PRO  and  its  members.  For 
instance, the ASCAP consent decree governs rules governing distribution of revenues, voting 
rights,  surveys  of  performances,  and  dispute  resolution  mechanisms  for  members.  It  was, 
however,  amended  in  2001,  because  the  rules  were  considered  too  detailed,  costly  and 
ineffective in preventing ASCAP from exercising market power. The current provisions are as 
follows: 

–  ASCAP  is  required  to  admit  to  membership  any  writer  or  publisher  who  meets  certain 

minimal criteria; 

–  In relation to distribution of revenues to its members: ASCAP is required to conduct an 
objective  survey  or  census  of  performances  of  its  members'  works,  and  to  distribute  its 
revenues  based  primarily  on  performances  of  its  members'  works.  ASCAP  is  under 
obligation  to  disclose  to  a  member  information  sufficient  for  that  member  to  understand 
how its payment was calculated. ASCAP is not required to use any particular formula or 
rules in distributing its revenues. Nor is ASCAP to provide notice to or obtain the consent 
of the Department or the Court before making changes to its distribution formula and rules; 

–  ASCAP may not restrict the ability of a member to withdraw from ASCAP at the end of 
any  calendar  year.  In  particular,  ASCAP  must  distribute  revenues  to  a  withdrawing 
member for performances occurring through the last day of the member's membership in 
ASCAP, may not reduce the value it attributes to departing members' works, and may not 
prohibit  the  member  from  transferring  compositions  to  another  PRO  because  of  pending 
license  agreements  between  ASCAP  and  any  users.  This  provision  is  intended  to  ensure 
that members can switch to a competing PRO without suffering financial penalties.  

22.2.2.  User's rights under the consent decrees 

–  Non-discrimination between (typical) users; 

–  Offering users a choice between several licences, in particular between blanket licences263, 

per-programme264 and per-segment265 licences; 

263 

Non-exclusive licence that authorises a music user to perform ASCAP music, the fee for which does not 
vary depending on the extent to which the music user in fact performs ASCAP music. 

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–  ASCAP is required to maintain an up-to-date system for tracking music use related to per-

program and per-segment licences; 

–  Streamlined determination of reasonable fee between ASCAP and users, including Court's 

intervention in a fee dispute; 

–  ASCAP has to make available to the public information about the compositions contained 
in  its  repertoire,  so  that  music  users  can  more  easily  determine  which  PRO  administers 
which  rights  and  is  under  obligation  to  respond  to  users'  requests  for  information  about 
whether a particular work is in ASCAP repertoire. 

22.2.3.  Impact on licensing 

The consent decrees, and in particular the obligation imposed on ASCAP and BMI to manage 
rights on a non-exclusive basis, have helped the emergence of alternative forms of licensing to 
exist  alongside  collective  management.  Two  such  alternative  forms  of  licensing  have 
emerged: 

Source  licensing  occurs  when  a  producer  effectively  obtains  all  requisite  rights  from 
rightholders.  

This has been the case for mechanical rights which are not collectively managed in the US. 
The  record  companies  often  control  rights  of  singer/songwriters  or  obtain  a  significant 
discount on the rate. They can then licence the product for other uses – they have often done 
so for use of the recorded music in videos (for mechanical rights) and now do so for digital 
downloads.  

Source  licensing  also  applies  to  right  to  perform  in  theatres  music  used  in  films.  The  film 
producer can obtain a licence from the authors or publishers of the music and distribute the 
film  in  theatres  without  the  need  for  the  film  theatre  to  obtain  an  additional  licence  from  a 
PRO266.  

Direct licensing is when the author or the publisher grants a licence directly to the user. Some 
authors  who  have  retained  control  over  their  rights  may  licence  directly.  Publishers  may 
licence if their contracts with authors allow them to do so. They rely on contractual clauses 
assigning  rights  to  them  or  allowing  them  to  grant  licences  on  behalf  of  the  author.  These 
arrangements also aim to ensure that once the direct licence is granted, the work can no longer 
be licensed to the same user by the collecting society.  

264 

265 

266 

Non-exclusive licence that authorises a broadcaster to perform ASCAP music in all of the broadcaster's 
programs,  the  fee  for  which  varies  depending  upon  which  programs  contain  ASCAP  music  not 
otherwise licensed for public performance. 
Non-exclusive licence that authorises a music user to perform any or all works in the ASCAP repertory 
in  all  segments  of  the  music  user's  activities  in  a  single  industry,  the  fee  for  which  varies  depending 
upon which segments contain ASCAP music not otherwise licensed for public performance. 
Alden-Rochelle, Inc. v. ASCAP, 80 F. Supp. 888 (S.D.N.Y. 1948): ASCAP was preventing its members 
from  licensing  performing  rights  to  film  producers.  Film  producers  would  obtain  a  "synchronisation 
licence"  and  film  theatres  would  be  obliged  to  obtain  an  additional  licence  from  ASCAP  for  the 
performance  of  the  music  in  public.  The  court  found  that  no  efficiency  justification  for  separate 
licensing  of  the  synchronisation  and  performing  rights  and  issued  an  injunction  prohibiting  ASCAP 
from licensing movie theatres.  

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In  BMI  v  DMX267,  a  commercial  user,  DMX,  obtained  approximately  550  licences  from 
publishers,  covering  approximately  40%  of  the  repertoire  of  BMI.  In  such  cases,  the  PRO 
must grant users "carve out blanket licences" (Adjustable Blanket Fee Licence or ABFL). The 
ABFL must be adjusted to take into account the rights which have been licensed directly from 
the rightholder, and the rate reduced accordingly. 

267 

BMI v DMX, No. 08 Civ. 216 (S.D.N.Y. July 14, 2010). 

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23. 

ANNEX  N:  SUMMARY  AND  ANALYSIS  OF  IMPACTS  OF  OPTIONS  ON  TRANSPARENCY 
AND CONTROL IN COLLECTING SOCIETIES 

23.1. 

Summary of impacts of Option A1* - Status quo: 

Impact on IM 

Impact 
rightholders 

on 

Impact on CS 

Impact on users 

Cultural 
diversity 
Compliance 
costs 
Effectiveness  

(-) MS could introduce rules on G&T but the approach and standards would vary. 
(-) CS could agree on common codes of conduct to cover issues such as participation in the decision-
making  process,  financial  reporting  standards,  rules  on  handling  of  funds,  etc.  Any  improvement  in 
G&T standards would depend on the willingness of CS to abide by these standards. 
(-) As a result, different operating conditions for CS would persist.  

(-) Rightholders would continue to have limited influence on the decision-making process of CS. 
(-) Rightholders would lack sufficient information on financial management and cross-border royalty 
flows  and  would  not  be  in  a  position  to  exercise  the  necessary  control  over  CS  (including  over  the 
handling of rightholders income).  
(-) Inefficiencies in royalty payments (including cross-border) would persist. 
(-) CS would continue to operate under very divergent standards. 
(-) Lack of trust in the cooperation between CS would continue. 
(-) No incentives for CS to raise their standards or to increase the efficiency of their operations. 
(-)  Users  would  continue  to  have  to  cope  with  different  applicable  transparency  and  accountability 
standards in MS causing problems in the licensing process. 
(-)  Existing  inefficiencies  of  CS  combined  with  rightholders'  lack  of  confidence  would  continue  to 
negatively impact on the licensing of rights, on rightholders income and thus on cultural diversity. 
(~) This option is neutral as it does not impose any requirements. 

This option is ineffective in fulfilling the objectives. 

* The (+) and (-) signs in this table do not express comparison to the baseline scenario but reflect the absolute value of the 
impact. 

23.2.  Option A1 – Status quo 

23.2.1.  Impact on the Internal Market 

Retaining the status quo would not solve the problems as described in Section 3.1. Significant 
divergences  in  Member  States'  approaches  to  collective  rights  management  would  persist, 
having  a  negative  impact  on  the  licensing  process  and  availability  of  cultural  goods  and 
services.  Rightholders  would  still  lack  sufficient  information  on  cross-border  royalty  flows 
and would not be in a position to exercise the necessary control over collecting societies.  

Under  this  option  it  would  be  for  the  Member  States  or  collecting  societies  themselves  to 
come up with solutions to these problems. As seen recently in the case of Belgium, France, 
and Poland268, Member States could introduce various rules on governance and transparency 
but the approach and standards would vary from Member State to Member State. 

Collecting  societies  could  also  try  to  agree  on  common  codes  of  conduct  which  would  be 
applicable to all collecting societies or to certain categories of collecting societies and which 
would go beyond the existing codes of conduct269 to cover issues such as: participation in the 
decision-making  process,  financial  reporting  standards,  rules  on  handling  of  funds,  etc. 
However, the adoption of new codes of conduct by collecting societies would not necessarily 
lead to the improvement in governance and transparency standards. This improvement would 
depend on the willingness of collecting societies to abide by these standards.  

268 

269 

In Belgium, Law of 10 December 2009, amending, to the extent the status and the control of collecting 
societies is concerned, Law of 30 June 1994 (MB 23/12/09); in France, Law n°2006-961 of 1 August 
2006;  in  Poland,  Law  of  8  July  2010,  Amending  Law  on  copyright  and  related  rights  OJ  152  (2010) 
item 1016. 
See Section 3.1. 

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23.2.2.  Impact on rightholders  

Existing inefficiencies of collecting societies such as limited influence on the decision-making 
process, insufficient access to information on financial management and little oversight over 
collected  royalties  would  continue.  If  nothing  were  done  to  improve  the  observance  of 
essential  governance  and  transparency  standards,  rightholders  would  not  be  in  a  position  to 
exercise necessary control over CS and their mistrust and lack of confidence would continue. 
The inefficiencies in royalty payments (including cross-border) would persist to the detriment 
of rightholders.  

23.2.3.  Impact on collecting societies 

Some  societies  would  continue  to  operate  under  significantly  lower  transparency  and 
governance standards than others. This would not create the trust needed in the cooperation 
between societies. There would be no incentives for societies to improve/raise their standards 
or to increase the efficiency of their operations.  

23.2.4.  Impact on commercial users  

Users  would  continue  to  have  to  put  up  with  differing  operating  conditions  and  different 
applicable  transparency  standards  in  the  EU  Member  States.  Nothing  would  be  done  to 
improve insufficient transparency and accountability standards and the related problems in the 
licensing process.  

23.2.5.  Impact on cultural diversity  

Existing inefficiencies of collecting societies combined with rightholders mistrust and lack of 
confidence  would  continue  to  have  a  negative impact  on  the  licensing  of  rights,  rightholder 
income and therefore on cultural diversity in Europe. 

23.2.6.  Compliance cost 

This option would not entail any additional compliance cost for Member States or collecting 
societies. 

23.2.7.  Effectiveness 

This  option  does  not  impose  any  new  requirements  and  consequently  is  ineffective  in 
fulfilling the objectives (see the baseline scenario). 

23.3. 

Summary of impacts of Option A2* - Better enforcement:  

Impact on IM  

Impact 
rightholders 

on 

Impact on CS 

Impact 
commercial 

on 

(+) Regulatory oversight of the existing principles based on the Treaty would improve. 
(-) Differences in operating conditions for CS would persist. 
(+)  Rightholders  would  be  better  informed  as  regards  the  fundamental  rules  stemming  from  existing 
principles.  
(-) Rightholders would continue to have limited influence on the decision-making process of CS. 
(-)  Rightholders  would  lack  sufficient  information  on  financial  management  and  cross-border  royalty 
flows  and  would  not  be  in  a  position  to  exercise  the  necessary  control  over  CS  (including  over  the 
handling of rightholder income).  
(-) Inefficiencies in royalty payments (including cross-border) would persist. 
(+) Standards of operation of CS would improve but only to a limited extent. 
(-) Lack of trust in the cooperation between CS would continue. 
(-) No incentives for CS to raise their standards (beyond the limited catalogue of rules) and to increase 
the efficiency of their operations. 
(+) Users would be better informed as to their rights in relations with CS. 
(-)  Transparency  and  accountability  standards  would  be  better  observed  but  would  remain  limited  in 

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on 

users 
Impact 
cultural 
diversity 
Compliance 
cost 
Effectiveness 

scope and thus the related problems in the licensing process would persist. 
(-) Existing inefficiencies of CS combined with rightholders lack of confidence would continue to have 
a negative impact on the licensing of rights, on rightholder income and thus on cultural diversity. 

(-) There would be costs arising from awareness raising meetings (EC and relevant national authorities) 
on specificities concerning the operations of CS as well as from their closer monitoring. 
This option could potentially improve the conditions (for rightholders to exercise oversight over the CS 
and its financial management), depending on the extent and uniformity of enforcement in the MS. The 
limited personal and material scope of these principles would reduce the effectiveness of this option. 

* The (+) and (-) signs in this table do not express comparison to the baseline scenario but reflect the absolute value of the 
impact. 

23.4.  Option A2 – Better enforcement 

23.4.1.  Impact on the Internal Market 

This  option  would  improve  the  regulatory  oversight  of  the  existing  principles  based  on  the 
Treaty. As the enforcement action could not be based on all principles resulting from the 2005 
Recommendation, its impact would be limited. Similarly to the 'status quo' option, significant 
divergences  in  Member  States'  approaches  to  collective  rights  management  would  persist, 
having a negative impact on the level of trust that rightholders have in collecting societies, the 
licensing  process  and  hence  the  availability  of  cultural  goods  and  services.  Rightholders 
would  still  lack  influence  on  the  decision-making  process  and  sufficient  information  on 
financial  management  and  consequently  could  not  exercise  the  necessary  control  over 
collecting  societies.  As  with  the  previous  option,  it  would  be  for  the  Member  States  or 
collecting societies themselves to come up with solutions to the identified problems.  

23.4.2.  Impact on rightholders  

The  fundamental  rules  concerning  the  non-discrimination  of  members  on  the  basis  of  their 
nationality,  place  of  residence  or  establishment,  and  prohibiting  collecting  societies  from 
imposing on their members obligations which are not absolutely necessary for the exploitation 
of  copyright,  would  be  subject  to  improved  regulatory  oversight.  This  would  create  legal 
certainty  for  rightholders.  However,  similarly  to  the  situation  under  the  'status  quo'  option, 
existing inefficiencies of collecting societies such as limited influence on the decision-making 
process, insufficient access to information on financial management and little oversight over 
collected  royalties  would  continue.  Problems  with  royalty  payments  would  persist  to  the 
detriment of rightholders (as rightholders would not be able to exercise effective control over 
the functioning of societies). 

23.4.3.  Impact on collecting societies 

Due  to  the  limited  impact  of  the  enforcement  action  standards  of  operation  of  collecting 
societies would improve but only to a limited extent – the rules of operation, governance and 
transparency  requirements would  still  significantly differ. There  would be more  pressure  on 
collecting  societies  to  comply  with  the  limited  catalogue  of  rules  but  there  would  be  no 
incentives  for  them  to  raise  their  standards  beyond  this  limited  catalogue,  and  limited 
incentives to increase the efficiency of their operations.  

23.4.4.  Impact on commercial users  

Users  would  be  better  informed  of  the  principles  governing  their  relations  with  collecting 
societies  due  to  regulatory  oversight  and  continuing  enforcement  of  these  principles. 
Transparency and accountability standards would be better observed but would remain limited 
in scope and thus the related problems in the licensing process would persist. 

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23.4.5.  Impact on cultural diversity  

Similarly  to  the  'status  quo'  option,  existing  inefficiencies  of  collecting  societies  combined 
with rightholders mistrust and lack of confidence would continue to have a negative impact 
on the licensing of rights, rightholder income and therefore on cultural diversity in Europe. 

23.4.6.  Compliance cost 

The Commission and relevant national authorities would have to hold a series of 'awareness 
raising'  meetings  during  which  specificities  concerning  the  operation  of  collecting  societies 
would  be  discussed.  Relevant  national  authorities  would  have  to  more  closely  monitor  the 
operation of collecting societies. 

23.4.7.  Effectiveness 

This option has the potential to improve the conditions for rightholders to exercise oversight 
over  the  collecting  societies  and  their  financial  management.  The  effectiveness  however 
depends on the extent and uniformity of enforcement in the MS, in particular with respect to 
regulatory  oversight.  The  limited  personal  and  material  scope  of  these  principles  would 
reduce  the  overall  effectiveness  of  this  option  (e.g.  the  2005  Recommendation  is  only 
applicable to cross-border collective rights management in relation to online music services). 

23.5. 

Summary of impacts of Option A3* - Codification of existing principles:  

Impact on IM 

Impact 
rightholders 

on 

Impact on CS 

Impact 
users 

on 

Cultural 
diversity 

Compliance 
cost 

Effectiveness  

(+) Minimum common G&T framework would be established in all MS.  
(-)  Insufficient  control  over  the  functioning  of  CS  and  little  oversight  over  financial  management 
(collection and distribution of royalties) could continue. 
(+) More legal certainty and visibility of rules would strengthen the position of rightholders. 
(+) Rightholders would have more information allowing them to choose CS based on their efficiency and 
the level of observance of the codified rules. 
(+) Better enforceability of the rules would be achieved, inter alia, via dispute resolution mechanism. 
(-)  General  level  of  principles  on  membership  and  representation  would  not  empower  rightholders  to 
influence the decision-making process in CS (including in order exercising control over the handling of 
rightholders income). 
(-)  Rightholders  would  lack  sufficient  information  on  financial  management  and  cross-border  royalty 
flows and would not be in a position to exercise the necessary control over CS.  
(-) Inefficiencies in royalty payments (including cross-border) would persist. 
(+) Codified rules would result in an incentive for CS to act more efficiently to make their offer attractive 
to rightholders which would also improve the level of trust between CS but due to the limited scope of 
the existing principles: 
(-) the incentive to act more efficiently would be limited, 
(+) The establishment of a dispute resolution mechanism would raise standards of services but would also 
(-) add costs, limited in the long run.  
(+) More legal certainty and visibility of rules would strengthen the position of users. 
(+)  Users  would  gain  access  to  information  on  CS'  repertoire,  existing  reciprocal  representation 
agreements,  the  territorial  scope  of  CS  mandates  for  that  repertoire  and  the  applicable  tariffs  (if  set  in 
advance) which would bring more predictability into the licensing process. 
(+) Better functioning of CS could result in better services and better dispute resolution to users but due 
to the limited scope of the existing principles efficiency gains could be limited.  
(+) CS which are more efficient in terms of maximising the exploitation of rights, maximising revenue 
collection  and  minimising  the  costs  associated with  rights  management  would  positively  impact  on  the 
revenues of artists and thus cultural diversity. 
(-) MS would have to bear costs of transposition and enforcement of the codified principles and 
(-)  additional  costs  related  to  the  setting  up  of  the  dispute  resolution  mechanism  for  commercial  users 
unless MS already have dispute resolution mechanisms for commercial users in place. 
(-)  CS  would  have  to  bear  costs  related  to  the  setting  up  of  the  dispute  resolution  mechanism  for 
rightholders.  
This  option  would  ensure  effective  enforcement  (e.g.  dispute  resolution,  administrative  or  judicial 
enforcement) of the existing principles and would respond to some of the problems identified in section 
3.1.  General  principles  of  membership  and  representation  however  may  not  be  able  to  guarantee  that 

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rightholders can effectively exercise their rights and control the royalty flows. The lack of transparency 
would not improve the situation of domestic and foreign rightholders. The limited material scope of these 
principles also restricts the effectiveness of this approach.  

* The (+) and (-) signs in this table do not express comparison to the baseline scenario but reflect the absolute value of the 
impact. 

23.6.  Option A3 – Codification of existing principles 

23.6.1.  Impact on the Internal Market  

The  codification  of  the  principles  set  out  in  the  2005  Recommendation,  the  principles  that 
have  emerged  from  the  case  law  of  the  Court  and  from  the  Commission's  decisions  would 
ensure  the  introduction  of  a  basic  governance  and  transparency  framework  in  all  Member 
States.  A  certain  degree  of  harmonisation  would  be  achieved  although  insufficient  control 
over  the  functioning  of  collecting  societies  and  little  oversight  over  financial  management 
(collection and distribution of royalties) could continue.  

23.6.2.  Impact on rightholders  

Codification  of  the  existing  principles  would  strengthen  the  position  of  rightholders  by 
confirming the existing principles and introducing a legal obligation as to the set of currently 
non-binding principles included in the 2005 Recommendation. The fact that the rules would 
be codified would make them more visible and understandable for rightholders which in turn 
would raise awareness among rightholders as to the application of these principles.  

Rules  on  membership  and  representation  would  stay  general,  confirming  the  non-
discriminatory  treatment  of  rightholders  and  their  fair  and  balanced  representation  in  the 
internal  decision-making  bodies.  There  would  be  no  detailed  rules  on  such  matters  like 
participation in the decision-making process, representation of rightholders in the governing 
bodies, accountability of rights managers. The general level of codified principles would not 
empower rightholders to exercise effective control over the functioning of societies. 

The  principle  of  'rightholder  choice'  and  the  right  to  withdraw  rights  would  be  reaffirmed 
which  would  give  rightholders  the  required  flexibility  to  give  their  rights  to  the  society  of 
their choice and the possibility to change the society.  

As far as the distribution of revenues and the handling of rightholders' income are concerned, 
the general nature of codification would not allow members to have sufficient information and 
control over the financial operations of the society (especially with regard to investments and 
the handling of income). 

Rightholders would have access to basic information such as applicable tariffs and royalties 
collected  and  distributed.  They  would  not,  however,  have  access  to  the  detailed  financial 
accounts  of  collecting  societies  and  would  not  be  able  to  assess  the  financial  soundness  of 
societies and their diligence in handling royalties. Rightholders would not be in a position to 
exercise  the  necessary  control  over  collecting  societies.  Inefficiencies  in  royalty  payments 
(including cross-border) would persist. 

The  combined  effect  of  the  above  described  rules  (and  in  particular  of  those  regarding 
transparency, rightholder choice and the right to withdraw rights) would be that rightholders 
would  have  more  information  allowing  them  to  choose  collecting  societies  based  on  their 
efficiency and the level of observance of the codified rules.  

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The  dispute  resolution  mechanism  would  provide  a  tool  for  rightholders  to  ensure 
enforceability of these rules. Such a mechanism would offer rightholders the opportunity for 
an early, informal resolution of disputes.  

23.6.3.  Impact on collecting societies 

Collecting societies would have to adapt their articles, membership terms, internal procedures 
and the licensing process to the codified principles. 

Due to raised standards of transparency, better control of rightholders over collecting societies 
and codified rights of rightholders to choose collecting societies and to withdraw their rights, 
collecting  societies  would  have  an  incentive  to  act  more  efficiently  to  make  their  offer 
attractive  to  rightholders.  This  would  improve  competition  between  collecting  societies  and 
could  have  a  substantial  impact  on  the  management  of  rights  which  do  not  require  local 
presence, such as online rights. At the same time, it should be noted that the incentive to act 
more efficiently would be limited due to the limited scope of the existing principles and lack 
of rules on rightholders' rights with regard to financial operations of collecting societies. 

The establishment of dispute resolution mechanisms both for rightholders and for commercial 
users would also raise standards of services offered by collecting societies. The establishment 
of a dispute resolution mechanism for rightholder members would mean additional costs on 
the part of collecting societies. However, as alternative dispute resolution mechanisms tend to 
be cheaper than administrative or judicial proceedings, in the long term the cost of setting up 
such a mechanism could be offset by savings made due to a lower number of administrative 
or court cases. 

23.6.4.  Impact on commercial users 

More  legal  certainty  and  visibility  of  rules  would  strengthen  the  position  of  users. 
Codification  of  the  general  principles  applicable  to  the  relationship  between  collecting 
societies and users as regards issues such as fair treatment in the licensing process, and right 
to  access  information  on  repertoire  and  applicable  tariffs,  together  with  the  setting  up  of  a 
dispute  resolution  mechanism,  would  be  beneficial  to  users  as  it  would  bring  more 
predictability into the licensing process. The overall impact of the codification of transparency 
and  governance  rules  should  be  the  improvement  of  the  functioning  of  collecting  societies 
(although, as mentioned above, to a limited extent) which could have an indirect impact also 
on users as the more efficient a society the better service it should provide to users.  

23.6.5.  Impact on cultural diversity  

The codified governance and transparency standards would encourage collecting societies to 
be more efficient in their management of rights. The more efficient collecting societies are in 
terms of maximising the exploitation of rights, maximising revenue collection and minimising 
the costs associated with rights management, the more money goes to rightholders allowing 
them to continue work on their contributions to European cultural diversity.  

23.6.6.  Compliance cost 

Member States would have to bear costs related to the transposition of the codified principles 
as well as the cost of ensuring their enforcement - including the costs related to the setting up 
of  a  dispute  resolution  mechanism  for  commercial  users.  These  costs  would  depend  on  the 
system of dispute resolution chosen by a Member State: 

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   EN 

 
- mediation (this system would entail remuneration for mediator’s work);  

-  arbitration  (under  this  system  the  cost  would  probably  be  higher  as  it  would 
normally involve more than one arbiter); or  

-  tribunal  (if  this  system  were  chosen,  the  cost  would  involve  salaries  for  qualified 
judges and a secretariat, fees for premises and operating expenses). 

For cost reduction purposes but also in order to ensure consistency of the decisions, it would 
seem reasonable to have one such mechanism per Member State. It has to be noted that the 
majority of Member States already have dispute resolution mechanisms for commercial users 
in place and could therefore build on the existing structures. In addition, the compliance costs 
must be seen in relation to efficiency gains which would be achieved through this option. 

23.6.7.  Effectiveness 

This  option  would  ensure  effective  enforcement  (dispute  resolution  and  judicial)  of  the 
existing  principles  and  would  respond  to  some  of  the  problems  identified  in  the  problem 
definition. General principles of membership and representation however may not be able to 
guarantee that rightholders can effectively exercise their rights and control the royalty flows. 
The  lack  of  transparency  would  not  improve  the  situation  of  domestic  and  foreign 
rightholders. The limited material scope of these principles also restricts the effectiveness of 
this approach. 

23.7. 

Summary  of  impacts  of  Option  A4*  -  Beyond  codification:  a  governance  and 
transparency framework for collecting societies 

Impact on IM  

Impact 
rightholders 

on 

Impact on CS 

on 

Impact 
users 
Cultural 
diversity 

(+)  Rules  on  governance  and  transparency  (including  financial  reporting  obligation  and  rules  on  the 
handling of funds) would be established for all CS.  
(+) Comparable rules would improve the cooperation between CS. 
Positive impacts of Option A3 plus: 
(+) Rightholders would gain access to annual accounts and other reports of CS and hence 
(+)  would  gain  detailed  oversight  over  collection,  distribution  and  application  of  any  deductions  from 
rightholders' income and other financial operations of CS as well as 
(+) access to a wider scope of information for the benchmarking of the performance of CS 
(+) that would enable them to control the financial management (incl. trace the cross-border royalty flows 
between the various societies) and assess the impact of operating costs and deductions on their royalties. 
(+) Higher level of rightholders' trust would be created thanks to the obligatory audit of the annual accounts. 
(+) Rightholders would have a say on key decisions of CS (incl. handling of rightholders income) through 
participation in the decision-making process. 
(+) Accountability of right-managers to members of CS would oblige the managers to operate transparently 
and efficiently. 
(+) Rules on the handling of funds including the separation of societies' and rightholders' assets, accounting 
revenues and costs per revenue stream and the minimum prudential standards with respect to the activities 
and conditions of operation of CS would increase the confidence of rightholders. 
Positive impacts of Option A3 plus: 
(+) In the long term new governance and transparency rules would incentivise CS to become more efficient 
as rightholders would have access to a wider scope of benchmarking information.  
(+)  Better  control  for  CS  cooperating  with  other  CS  on  the  basis  of  reciprocal  agreements  (tracing  cross-
border royalty flows, deductions applied to these flows, etc.).  
(-)  CS  would  have  to  bear  short  term  costs  of  adapting  accounting  methods,  financial  reporting,  auditing 
policy, internal structures, information policy and investment policy to comply with the new rules. 
(+) Coherent governance and transparency framework would improve the functioning of CS which would 
have an impact on users as the more efficient a society the better service it should provide to users. 
Positive impacts of Option A3 plus: 
(+)  Small  rightholders  and  individual  creators  would  not  only  have  the  option  to  choose  to  entrust  their 
rights  to  another  CS,  but  would  also  be  able  to  have  a  clear  view  on  the  functioning  of  their  CS  and  the 
means  of  participating  in  its  governance  in  an  informed  manner.  This  is  an  important  aspect  for  those 
individual creators which value the proximity of their "local" society and which are attached to their local 
creative sector. 

EN 

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Compliance 
cost 

Effectiveness 

(-) Apart from the costs described under Option A3, MS would have to bear the cost of transposition of the 
additional G&T standards as well as the cost of ensuring their effective enforcement. 
(-)  CS  would  have  to  bear  the  cost  of  applying  new  rules  for  handling  of  funds  (no  data  is  available  for 
estimation of these costs), financial reporting and audit (the overall cost is estimated at approximately €4.1 
million on average for all EU CS per year and at, depending on the size of CSs, on average €5,300 per small, 
€14,100  per  medium-sized  and €46,700  per  large  and  the setting  up  of  dispute resolution  mechanisms  for 
rightholders and users (as in Option A3). 
Compliance costs are analysed in more detail in Annex P. 
This option is very effective as it provides rightholders with the means to control the management of their 
royalties by the CS and improve the conditions of exercising membership rights in the CS.  
Sub-option  A4a  would  be  less  effective  as  some  of  the  practical  requirements  that  allow  the  exercise  of 
rights and the accountability of managers would be left to self-regulation. 
Sub-option A4b implies a "one-size-fits-all" approach that would not allow MS and CS to implement the EU 
requirements in a way that is the most practical in the relevant society. 

* The (+) and (-) signs in this table do not express comparison to the baseline scenario but reflect the absolute value of the 
impact. 

23.8.  Option  A4  –  Beyond  codification:  a  governance  and  transparency  framework 

for collecting societies 

23.8.1.  Impact on the Internal Market 

This  option  would  create  a  governance  and  transparency  framework  (including  financial 
reporting obligation and rules on the handling of funds) applied by Member States to the local 
collecting  societies.  It  would  therefore  introduce  the  same  basic  conditions  for  all  EU 
collecting societies as their activities would be regulated in a similar manner in all Member 
States. It is expected that comparable rules would improve the cooperation between collecting 
societies.  Under  sub-option  A4a  the  final  outcome  would  depend  on  the  content  of  the 
European  code  of  conduct  and  the  number  of  societies  that  would  adhere  to  it.  Sub-option 
A4b  would  have  the  same  positive  impact  on  the  internal  market  as  the  main  option  as  it 
would lay down a detailed set of rules regulating G&T in collecting societies. 

23.8.2.  Impact on rightholders 

In addition to the impacts of codification of general principles as described under Option 3, 
rightholders  (including  rightholders  who  are  not  members  of  collecting  societies  but  are 
represented on the basis of reciprocal agreements concluded by various collecting societies) 
would benefit from greater transparency as they would have access to the annual accounts of 
collecting  societies  and  other  reports  prepared  in  a  uniform  format  adapted  to  the  nature  of 
collective rights management. Rightholders would obtain a detailed oversight over collection, 
distribution and other financial operations of collecting societies. They would gain access to a 
wider  scope  of  information  for  the  benchmarking  of  the  performance  of  collecting  societies 
such as cost-income ratios, the level of deductions, the proportion of royalties which remain 
undistributed  after  a  number  of  years,  the  time  taken  to  distribute  royalties.  Hence,  the 
rightholders would obtain a tool to verify whether their rights are managed in an efficient and 
responsible manner. 

For  rightholders  whose  rights  are  being  managed  on  the  basis  of  reciprocal  agreements  by 
collecting  societies  established  in  various  Member  States,  the  comparability  of  financial 
information that would be achieved by introducing the uniform reporting format would be of 
crucial  importance.  They  would  be  able  to  trace  the  cross-border  royalty  flows  between  the 
various societies and assess the impact of operating costs and deductions on their royalties.  

EN 

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The obligatory audit of the annual accounts would provide rightholders with confidence that 
the  annual  accounts  drawn  up  by  collecting  societies  reflect  a  true  and  fair  view  of  the 
societies'  assets,  liabilities  and  financial  position.  This  would  create  a  higher  level  of  trust 
among rightholders.  

The rules on the participation of rightholders in the decision-making process would mean that 
rightholders would have a say on matters such as the distribution rules, the application of any 
deductions  from  their  income  and  the  investment  policy  (such  as  use  of  proceeds  from 
investments  and  use  of  non-distributable  income).  Introducing  accountability  of  right-
managers  to  their  members  would  oblige  the  managers  to  operate  transparently  and 
efficiently. 

The introduction of rules on the handling of funds including the separation of societies' and 
rightholders'  assets,  the  obligation  to  account  for  revenues  and  costs  separately  for  various 
revenue  streams  and  the  minimum  prudential  standards  with  respect  to  the  activities  and 
conditions of operation of collecting societies would increase the confidence of rightholders 
as to the fact that their assets are managed in a responsible manner providing for the security 
of their income. 

In short, this option would ensure transparency, accountability and protection for individual 
rightholders  which  should  substantially  raise  their  level  of  trust  in  collecting  societies.  The 
overall  impact  of  the  comprehensive  transparency  and  governance  rules  should  be  the 
improvement of the functioning of collecting societies which would have an impact also on 
rightholders as, the more efficient the society, the better service it provides to rightholders and 
the better chance of obtaining timely and appropriate revenue. 

Under  the  sub-option  A4a  the  area  of  rightholders’  participation  in  the  decision-making 
process, rules on accountability of managers, complaints handling, etc. would be elaborated in 
the stakeholder-driven process and their impact on rightholders would depend on the level of 
ambition and compliance with the potential code of conduct. Sub-option A4b would have the 
same positive impact on rightholders as the main option as it would lay down a detailed set of 
rules as regards their rights in relation to the collecting societies. 

23.8.3.  Impact on collecting societies 

Apart  from  the  impacts  of  codification  of  general  principles  and  the  setting  up  of  a  dispute 
resolution  mechanism  as  described  under  Option  A3,  in  the  short  term  collecting  societies 
would be faced with costs concerning the implementation and compliance with the new rules. 
They would have to adapt their financial reporting to comply with the requirements on annual 
accounts  and  other  reports,  would  have  to  draft  such  accounts  and  reports  every  year  and 
would have to appoint an auditor to review the accounts. They would also have publish (e.g. 
by making available on their website) their articles, membership terms, their annual accounts 
and  reports,  the  auditor’s  opinion.  They  would  also  have  to  make  a  broader  range  of 
information  available  to  their  members.  In  addition,  they  would  have  to  adapt  their  internal 
structure  to  comply  with  the  new  governance  rules  and  adapt  their  investment  policy  to 
comply with the requirement to separate their own assets from rightholders' assets and with 
minimum prudential standards.  

In  the  long  term  it  is  expected  that  the  new  governance  and  transparency  rules  would 
incentivise collecting societies to become more efficient as rightholders would have access to 
a  wider  scope  of  benchmarking  information  such  as  cost-income  ratios,  the  level  of 

EN 

155 

   EN 

 
deductions, the distribution ratio and the time of the distribution. This, in turn, would enhance 
competition between collecting societies (at least as far as the management of rights that does 
not  entail  a  local  presence  is  concerned)  which  could  have  an  impact  on  the  reduction  in 
administrative costs.  

The  new  transparency  rules  would  also  benefit  those  collecting  societies  cooperating  with 
other societies on the basis of reciprocal agreements as they could trace cross-border royalty 
flows, deductions applied to these flows, etc. and therefore better control the interest of their 
members. 

Under sub-option A4a, collecting societies would be invited to participate (either directly or 
via their umbrella organisations) in the stakeholder dialogue and to draft the code of conduct. 
Further needs of adjustment could result from adherence to such codes of conduct (the need to 
adjust  articles,  membership  terms,  internal  decision-making  process,  etc.).  Additional  costs 
would result from the obligation to appoint and reimburse an independent third party to carry 
out  monitoring/reporting  on  the  code  as  well  as  from  the  periodical  review  process.  Sub-
option  A4b  would  require  the  most  investment  from  collecting  societies  as  they  would  be 
required to abide to a detailed set on organisational and transparency requirements. 

23.8.4.  Impact on commercial users  

Even  though  option  A4  does  not  entail  additional  specific  rights  for  users  in  comparison  to 
Option 3, the overall impact of the coherent governance and transparency framework should 
be  the  improvement  of  the  functioning  of  collecting  societies  which  could  have  an  indirect 
impact  also  on  users  as  the  more  efficient  a  society  the  better  service  it  should  provide  to 
users. 

23.8.5.  Impact on cultural diversity  

This  option  is  the  most  conducive  to  benefiting  all  rightholders.  Small  rightholders  and 
individual creators would not only have the option to choose to entrust their rights to another 
collecting  society,  but  would  also  be  able  to  have  a  clear  view  on  the  functioning  of  their 
collecting  society  and  the  means  of  participating  in  its  governance  in  an  informed  manner. 
This  is  an  important  aspect  for  those  individual  creators  which  value  the  proximity  of  their 
"local" society and which are attached to their local creative sector.  

23.8.6.  Compliance cost 

Apart from the costs described under Option A3, related to the implementation of the codified 
principles and the setting up of a dispute resolution mechanism, Member States would have to 
bear the cost of transposition of the additional governance and transparency standards as well 
as the cost of ensuring their effective enforcement.  

Detailed information on the compliance cost of Option A4 is presented in Annex P. 

Under sub-option A4a the Commission would have to set out core issues and requirements to 
be discussed by collecting societies in the stakeholder dialogue. In case of the adoption of the 
code of conduct, the Commission would have to review its compliance with these core issues 
and  requirements.  Sub-option  A4b  would  bring  about  the  highest  compliance  costs  for 
collecting  societies  as  they  would  be  required to  implement  a  detailed  set  on  organisational 
and transparency requirements. 

EN 

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23.8.7.  Effectiveness 

This  option  is  very  effective  as  it  provides  rightholders  with  the  means  to  control  the 
management  of  their  royalties  by  the  collective  society  and  improve  the  conditions  of 
exercising membership rights in the societies.  

Sub-option A4a would be less effective as some of the practical requirements that allow the 
exercise  of  rights  and  the  accountability  of  managers  would  be  left  to  self-regulation.  Sub-
option  A4b  implies  a  "one-size-fits-all"  approach  that  would  not  allow  Member  States  and 
collecting societies to implement the EU requirements in a way that is the most practical in 
the relevant society. 

EN 

157 

   EN 

 
24. 

ANNEX  O:  SUMMARY  AND  ANALYSIS  OF  IMPACTS  OF  OPTIONS  MULTI-TERRITORY 
LICENCES FOR ONLINE USE OF MUSICAL WORKS 

24.1. 

Summary of impacts of Option B1*: 

Impact on the 
IM  
Impact on 
users (online 
services) 

Impact on 
consumers 
Impact on 
rightholders 
Impact on CS  
(incl. 
reciprocal 
agreements) 
Cultural 
diversity  
Compliance 
costs 
Effectiveness 

(-) Fragmented licensing practices across the single market. 

(-)  Complex  articulation  of  various  multi-territory  and  territorial  licences.  Some  licences 
would lack flexibility.  
(-) Lack of clarity as to who owns repertoire and risk of double invoices for the same works 
from different licensors. 
(-) Patchy and uneven access to services across the EU. 

(-) Loss of potential revenue from multi-territory exploitation. 
(-) Inaccurate or slow distributions, or costs of IT investments deducted from their income. 
(-)  Investments  in  new  infrastructures  for  multi-territory  online  licences  which  may  not  be 
sustainable, or licensing without adequate infrastructure.  
(-) No impact on existing reciprocal representation agreements and the current situation (lack 
of transparency, asymmetry) 
(-) No access to multi-territory licensing (or access under less favourable conditions) for less 
commercially attractive repertoire. 
 This option would not lay down any requirements. 

This option is ineffective in fulfilling the objectives. 

* The (+) and (-) signs in this table do not express comparison to the baseline scenario but reflect the absolute value of the 
impact. 

24.2.  Option B1 - Status Quo 

24.2.1.  Impact on the Internal Market 

If  nothing  were  done,  the  Internal  Market  would  remain  fragmented:  rights  licensing  for 
online  services  would  remain  complex  and  the  roll  out  of  online  services  across  Member 
States would remain patchy. New emerging online services would continue to struggle with 
multiple  licensing  practices,  operating  at  a  different  geographic  scope  (national  or  multi-
territory) and at a different level of aggregation (repertoire specific or multi-repertoire).  

24.2.2.  Impact on online services  

Commercial  users  wanting  to  launch  multi-territorial  and  multi-repertoire  services  will 
continue to face unnecessary levels of complexity and costs when clearing rights.270 If nothing 
were  done,  the  emergence  of  new  services  or  the  expansion  of  existing  online  commercial 
music  services  would  continue  to  be  hampered  by  the  lack  of  responsiveness  of  collecting 
societies in certain jurisdictions. Users would continue to receive overlapping invoices from 
the  various  licensors,  some  data271  suggests  that  this  concerns  between  10%  and  30%  of 
royalties invoiced to users. 

270 

271 

It is estimated that around 30 licences are needed to clear the authors' rights required to launch a service 
across the EU.  
Data submitted in confidence to the European Commission. 

EN 

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   EN 

 
                                                 
24.2.3.  Impact on consumers  

Consumer  access  to  online  music  services  will  continue  to  be  patchy  and  unevenly  spread. 
Many  users  will  only  provide  commercial  services  where  they  have  a  clear  business  case, 
sometimes  avoiding  smaller  markets  where  the  incremental  cost  of  obtaining  additional 
licences outweighs expected income. 

Based on current trends, consumers in Bulgaria, Cyprus, Estonia, Hungary, Lithuania, Latvia, 
Romania,  Greece,  Luxembourg  Malta  and  Slovenia  would  have  access  to  few  online 
services.272 

24.2.4.  Impact on rightholders  

A reticence, or technical inability, to monetise music online, and a concomitant lack of new 
service launches and of music services in certain Member States would deprive rightholders 
from revenue they could otherwise earn, while revenue from "physical" sales will continue to 
decline (see Annex E, table E 1.4). 

Societies  would,  in  some  cases,  continue  to  lack  the  technical  ability  to  process  multi-
territory,  multi-repertoire  licences.  Their  repertoire  would  be  cut-off  from  the  market  for 
multi-territory  services,  or  would  be  licensed  without  adequate  technical  support.  In  both 
cases,  this  would  lead  to  lost  revenues  for  rightholders  (lost  opportunity,  or  inaccurate  and 
delayed payments). Other societies would invest heavily in "upgrading" their systems273 even 
though  the  value  of  their  repertoire  makes  such  an  investment  unsustainable.274  Such 
investments are possible because other income streams cross-subsidise online activities, and 
varying levels of governance and transparency means that rightholders cannot always know or 
control such investments. As a result, significant costs will be passed on to rightholders. 

24.2.5.  Impact on collecting societies (incl. reciprocal agreements) 

Small and medium sized societies would continue to experience difficulties in licensing their 
rights on a multi-territory basis. To some extent, they would continue to grant multi-repertoire 
licences limited to their domestic territories, on the basis of remaining reciprocal agreements 
with  other  societies.  Larger  collecting  societies  would  continue  their  efforts  to  licence  their 
rights directly on a multi-territory basis. All collecting societies would continue to be active in 
the  administration  of  rights  other  than  online  rights  (e.g.  licensing  broadcasts,  public 
performances, etc.). 

As regards reciprocal representation agreements, following the CISAC decision, they should 
not be agreed in a systematic and coordinated manner between each collecting societies. This 
means that societies have tended to renegotiate their bilateral agreements on a bilateral (and 
confidential) basis, and that it is difficult to get a clear picture of what form such renegotiated 
agreements  take.  However,  is  seems  that  some  societies  have  renegotiate  reciprocal 

272 

273 

274 

Out  of  a  sample  of  17  mainstream  services  at  the  end  of  2011,  three  or  less  are  available  in  those 
Member States: see Annex D. 
The  2010  consultation  attempted  to  analyse  the  state  of  all  the  existing  databases  and  the  financial 
requirements  for  their  updating  and  modernisation.  The  information  received was  minimal.  However, 
according to a session at the 2011 World Copyright Summit, SACEM (FR) indicated that it had already 
invested €71 million in IT systems over eight years to ensure that it could deliver pan-EU licensing. 
In  2009,  the  total  collections  for  EU  societies  for  online  uses  amounted  to  approximately  80  million 
Euros - see Annex F, table F.1.5. (questionnaire responses, 81.8€m). The vast majority of societies in 
the EU collected less than €10m in 2009 from online uses of musical works. 

EN 

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agreements  in  an  attempt  to  gain  greater  accountability  and  transparency  from  the  society 
licensing  their  rights.  Some  societies  are  thus  increasingly  challenging  the  previously 
“systematic”  approach  to  reciprocal  agreements;  on  the  other  hand,  other  societies  consider 
that reciprocal agreements remain the most effective means of organising licensing activities 
and  are  keen  to  maintain  traditional  reciprocal  agreements.  It  is  also  clear  that  part  of  the 
repertoire of major publishers is no longer injected into collecting societies through reciprocal 
agreements.  Publishers  inject  their  catalogue  directly  with  a  licensing entity,  and  also  allow 
smaller societies to licence their catalogue to local users, for example by allowing the chosen 
licensing entity to conclude sub-agency agreements with local collecting societies.  

If nothing were done, it is unclear in whether the conclusion of reciprocal agreements would 
remain.  The  catalogues  of  publishers  (at  least  online  mechanical  rights)  would  continue  to 
remain  outside  of  the  scope  of  reciprocal  agreements.  In  the  relationship  between  societies, 
those  societies  that  grant  multi-territory  licences  would,  if  their  multi-territory  licensing 
practices  are  commercially  successful,  continue  to  attempt  to  renegotiate  more  demanding 
reciprocal  agreements;  while  other  societies  would  resist  this  approach  and  attempt  to 
minimise the licensing of rights outside of reciprocal agreements. 

However, reciprocal agreements concerning “off line” rights would remain unaffected.  

24.2.6.  Impact on cultural diversity 

Smaller  collecting  societies  might  not  succeed  in  cross-border  licensing  as  their  own 
repertoire – while culturally significant – has a lower commercial value than repertoire that is 
popular across cultural boundaries. With multi-territorial licensing being extremely costly and 
complicated,  large  commercial  users  may  prefer  to  do  licensing  deals  only  with  larger 
collecting societies and the mainstream repertoire. This will have a direct negative impact on 
the availability of culturally diverse repertoire outside national borders.  

24.2.7.  Compliance costs 

The administrative  burden placed  on  collecting societies in relation to their online activities 
would  not  significantly  change  and  would  result  mainly  from  their  obligations  under  the 
current national legal framework in relation to governance and transparency.  

24.2.8.  Effectiveness 

As  described  in  the  baseline  scenario,  the  lack  of  policy  intervention  would  mean  that  the 
existing problems in the online licensing market would persist. 

24.3. 

Summary of impacts of Option B2:  

A reasonable number of "passport-entities"  would be  expected to emerge without, however, 
leading to a single monopoly.275 "Passport entities" would be expected to be able to attract a 
broad share of European repertoire. This aggregation would be driven by market forces, that 
is, the choice of rightholders of a particular "passport entity". It would build upon the current 
level  of  aggregation  and  market  trends276.  The  number  of  licensing  entities  which  would 

275 

276 

Agreements  between  CS  remain  subject  to  competition  law;  thus  if  they  lead  to  the  emergence  of  a 
monopoly, they would be considered anti-competitive.  
Some CS already entrust their rights to other CS for the purpose of MT licensing of online services: this 
is currently the case for the Irish society IMRO (whose rights are licensed by the UK society PRS) and 

EN 

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emerge  as  a  result  of  this  option  cannot  be  predicted  with  certainty  but  –  in  view  of  the 
high(er) standards required to engage in MT licensing and the possibility for societies to tag 
along repertoire - it should be substantially lower than today.  

CS would have a strong incentive to entrust their rights to a "passport entity" and members of 
CS would be in a position to take this strategic decision and it is in their best interest that MT 
licensing opportunities are explored, in order to maximise their revenues. Some CS may not 
wish to sustain the investments required to license on a MT basis and to aggregate repertoire. 
This may depend, inter alia, on the size and the position of the CS in the market. It is a choice 
that may change over time. In any event the right to "tag on" their repertoire to the repertoire 
of  a  "passport  entity"  and  to  have  it  licensed  on  the  same  terms  as  the  repertoire  of  the 
"passport entity" should guarantee both access to the market and adequate licensing terms for 
all  CS  repertoires.  This  approach  would  also  facilitate  the  emergence  of  players  ("passport 
entities") that are able to respond to the high(er) demands of MT licensing and which will be 
competing for rightholders and ready to conclude licences, including with innovative services, 
in  order  to  maximise  their  revenues.  CS  already  aggregating  repertoires  will  have  to  accept 
the  authorisation  by  other  CS  under  reasonable  terms.  Rightholders'  representatives  also 
expect increased transparency. Finally, this option would simplify transactions (lower number 
of  licences  will  have  to  be  negotiated  and  concluded)  and  improve  the  quality  of  licensing 
services (e.g. better identification should solve problems such as double invoices), as well as 
improve legal certainty. All of these are key demands by commercial users. Mono-territorial 
licensing of online music rights will remain unaffected. 

The main impacts of this option*: 

Impact on the 
IM  
Impact on 
users (online 
services) 

Impact on 
consumers 
Impact on 
rightholders 

Impact on CS 
(incl. 
reciprocal 
agreements) 

Cultural 
diversity  
Compliance 
costs 

(+) Legal certainty and common rules for this specific type of licensing across the EU. 
(+) "Passport entities" aggregate repertoire for multi-territory licensing.  
(+) Better licencing services from "passport entities", especially for new, innovative services. 
(+) Aggregated repertoire would be more easily available. 
(+) Right to "tag on" repertoire (including less "mainstream") likely to lead to its availability 
in licences from "passport entities". 
(+) Local users would still be licensed by a local society. 
(+) More services (including more innovative services) launching in more EU MS. 
(+) Larger breadth of repertoire (including less "mainstream" ones) available in more MS.  
(+)  Rightholders  benefiting  from  best  performing  "passport  entities"  (yielding  faster 
payments and lower administration costs). 
(+) Less "main stream" repertoires are given access to the services of the "passport entity" of 
their choice. 
(+) Choice and legal certainty as to whether to comply with rules or to use the services of a 
"passport entity". 
(+)  Clear  requirements  would  enhance  trust  and  confidence  between  CS  and  promote  the 
voluntary aggregation of rights for MT licensing. 
(-) Compliance costs for CS which want to become "passport entities". 
(-) This method of granting MT licenses does not require reciprocal agreements. They would 
continue  to  exist  as  CS  could  continue  to  grant  mono  or  multi-repertoire  licences  in  their 
domestic market. 
(+) Less "mainstream" repertoires would become available on a multi-territory basis. 

(-) MS need to implement rules and provide for sanctions and remedies. 
(-) CS need to comply with rules or can choose the less costly option of using the services of 
a "passport entity". 

for  the  Portuguese  society  PTA  (whose  rights  are  licensed  by  the  Spanish  society  SGAE).  Similar 
trends can be seen in the Nordic countries. 

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Effectiveness 

This  option  would  be  effective  achieving  the  objectives  both  in  terms  of  facilitating  the 
aggregation of repertoire and licensing on a MT basis as well as of increasing legal certainty. 

* The (+) and (-) signs in this table do not express comparison to the baseline scenario but reflect the absolute value of the 
impact. 

24.4.  Option B2 – European Licensing Passport 

24.4.1.  Impact on the Internal Market 

The  establishment  of  requirements  governing  multi-territory  licensing  would  enhance  trust 
and  confidence  between  collecting  societies  and  promote  voluntary  cooperation  for  the 
delivery of multi-territorial licences. The rules would, for the activities covered, alleviate legal 
uncertainty and ensure common rules for all collective licensors across the EU. 

24.4.2.  Impact on online services (commercial users) 

The  requirements  would  aim  to  stimulate  the  voluntary  aggregation  of  repertoire,  combined 
with a level of service in line with the demands of commercial users. 

A reasonable number of passport holding licensors would thus facilitate the task of users in 
securing  licenses,  and  reduce  their  transaction costs,  without,  however,  them  having  to  deal 
with a single monopoly. Entities bearing the passport would be expected to be able to attract a 
broad share of European repertoire. This aggregation would be driven by market forces, that 
is,  the  choice  of  rightholders  (individual  rightholders,  publishers,  societies)  of  a  particular 
passport  holder.  The  passport  would  thus  encourage  and  build  upon  the  current  level  of 
aggregation  and  market  trends.  For  instance,  some  collecting  societies  already  entrust  their 
rights  to  other  collecting  societies  for  the  purpose  of  multi-territory  licensing  of  online 
services: this is currently the case for the Irish society IMRO (whose rights are licensed e.g. 
by the UK society PRS) and for the Portuguese society PTA (whose rights are licensed e.g. by 
the  Spanish  society  SGAE).  These  collecting  societies  in  order  to  continue  multi-territory 
licensing in aggregated repertoire would have to comply with the passport requirements. Also, 
as aggregators they would be subject to the tag-on obligation. Other existing licensing agents 
that license on a multi-territorial basis and fall within the definition of collecting societies or 
their  subsidiaries  would  also  have  to  comply  with  the  requirements  for  multi-territorial 
licensing. Those that would be outside the scope of the proposal could be in competition for 
attracting  repertoire  with  the  licensing  entities  operating  under  passport  requirements. 
Whether they would be in competition as regards users would depend on whether there would 
be  any  overlaps  in  the  repertoire  offered  by  passport  entities  and  these  agents.  Some 
rightholders  (i.e.  publishers)  which  have  withdrawn  some  of  their  rights  from  collecting 
societies suggest they are considering re-entrusting part of their rights to collecting societies 
that comply with passport requirements and fulfil certain conditions of good governance.277  

Further, while the number of licensing entities which would emerge as a result of this option 
cannot  be  predicted  with  certainty,  societies  would  have  a  strong  incentive  to  entrust  their 
rights  to  a  passport  entity.  First,  it  is  in  the  interests  of  their  rightholder  members  that  all 
licensing  opportunities,  including  for  multi-territory  services,  are  explored,  in  order  to 
maximise  their  revenues.  Second,  the  market  value  of  their  repertoire  abroad  may  be 

277 

This is to some extent already the case for some rightholders and societies: e.g. CELAS has concluded 
sub-agency agreements with collecting societies such as KODA (DK), STIM (SE) and TEOSTO (FI), 
see KODA, Annual Report 2010, p. 7. 

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comparatively  small.  As  a  consequence,  they  may  not  be  able  to  sustain  the  investments 
required to license on a multi-repertoire basis or even to attract potential licensees. The right 
to "tag on" their repertoire to the repertoire of a passport entity and to be licensed on the same 
terms  as  the  repertoire  of  the  passport  entity  also  guarantees  both  access  to  the  market  and 
adequate licensing terms.278 This approach would facilitate the emergence of licensing "hubs". 
The coexistence of licensing hubs and their competition for rightholders would put pressure 
on all of them to conclude licences, including with innovative services, in order to maximise 
their  revenues.  The  emergence  of  such  hubs  aggregating  the  repertoire  and  providing  high 
level  services  would  substantially  simplify  the  current  situation  characterised  by  a  high 
number of  licensors, limited access  to  multi-territorial licences, high transaction costs and a 
low level of legal certainty. 

Commercial users would have some certainty as to the licensing standards they can expect at 
European  level.  In  this  respect,  there  will  be  greater  legal  certainty,  and  possibly  trust  and 
confidence in the operational capacities of licensing entities, than a model that relies simply 
on  the  competitive  pressures  exerted  by  non-exclusive  mandates.  In  particular,  the 
requirement  that  those  involved  in  multi-territorial  licensing  identify  accurately  their 
repertoire  and  invoice  users  rapidly  and  accurately  would  increase  transparency  in  the 
licensing process. It would also contribute to eliminating double invoices. Innovative services 
could  be  launched  more  easily  due  to  the  flexibility  of  licensing  terms  as  CS  would  not  be 
obliged to follow the terms of prior licences. 

Local services will continue to be licensed by a local collecting society. 

Finally, the exemption from the passport requirements for services ancillary to radio and TV 
programmes (e.g. catch-up TV, simultaneous retransmission) provided by broadcasters would 
mean  that  this  option  would  have  no  impact  on  these  services.  Without  the  exemption, 
broadcasters  would  have  to  acquire  licences  necessary  for  these  services  from  several 
"passport entities" which would make the provision of these services more cumbersome. 

24.4.3.  Impact on consumers  

The market-based emergence of passport holders is expected to result in a reasonable number 
of  flexible  and  responsive  licensing  entities  well  equipped  to  deal  with  online  services, 
including  new  innovative  online  services.  This  would  facilitate  the  scaling  up  of  existing 
services  to  a  multi-territory  level,  as  well  as  the  launching  of  new  services,  offering  more 
choice of services to consumers. In addition, because all rightholders would have the right to 
tag  on  their  repertoire  to  a  passport  entity,  the  breadth  of  repertoire  available  would  be 
comprehensive. This would give consumers access to a broader choice of music. 

24.4.4.  Impact on rightholders  

This  option  would  give  rightholders  more  choice  as  to  how  their  rights  are  licensed. 
Publishers  (directly  or  through  their  society)  and  authors  (through  their  society)  would  be 
likely, on a voluntary basis, to aggregate their rights in the best performing passport entities. 
Rightholders would benefit from the licensing and distributive efficiencies that are generated 
in  well-managed  passport  entities.  In  particular,  payments  would  occur  rapidly,  more 
accurately and more regularly. Improvements in the licensing and rights management process 

278 

Some societies whose repertoire represents a very small share of the world repertoire fear that it will 
become increasingly possible to launch services without their repertoire. 

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would also be driven by competition between passport holders to attract the repertoire of other 
societies and of publishers. Overall, royalty returns to authors are likely to increase. 

The obligation to accept other societies' repertoires – if required to do so - would avoid the 
risk  of  a  two-tier  licensing  infrastructure  emerging  (i.e.  commercially  attractive  repertoire 
being  served  by  a  better  licensing  infrastructure  and  obtaining  more  favourable  licensing 
terms than small, local or niche repertoire). Smaller societies would be entitled to entrust their 
rights to a passport entity, thereby yielding benefits for authors which are members of smaller 
collecting  societies.  First,  their  works  would  be  licensed  for  multi-territory  online  uses, 
increasing  their  revenues.  Second,  in  doing  so,  they  would  rely  on  the  infrastructure  of 
passport holders: their society would not have to undergo the significant investments required 
to operate a multi-territory licensing service.  

24.4.5.  Impact on collecting societies (incl. reciprocal agreements) 

On the one hand, collecting societies would have to comply with additional rules (compliance 
costs). On the other hand, those that choose to comply with the rules would be able to attract 
the repertoire of other societies and will gain in terms of legal certainty. Societies which do 
not  comply  with  the  rules  required  for  the  multi-territorial  licensing  could  entrust  their 
repertoire  to  a  passport  entity,  within  a  clear  legal  framework  and  with  confidence  that  it 
would be licensed on non-discriminatory terms. Local services will continue to be licensed by 
local collecting societies. The ability to share some of the back-office tasks (data processing) 
between collecting societies is important to ensure the cost-effective management of the less 
"mainstream"  niche  and  local  repertoires.  Due to  the  exemption  related  to  broadcasting,  CS 
would  continue  to  license  online  rights  in  musical  works  to  broadcasters  directly  and  not 
through "passport entities". 

As  regards  reciprocal  agreements,  under  this  option,  passport  collecting  societies  would  be 
granting  multi-territory  licences  in  their  own  repertoire  and  in  the  repertoire  which  other 
collecting  societies  have  entrusted  to  them.  The  granting  of  licences  in  this  way  does  not 
require reciprocal agreements: a society granting licences in its own repertoire does not need 
any agreement from other societies; and an agreement whereby a passport society licences the 
repertoire of another is not a reciprocal agreement. Indeed, such an agreement does not aim to 
put both societies in a position to grant licences in their combined repertoire; it aims to set the 
terms  under  which  the  best  placed  society  (passport  society)  can  licence  the  repertoire  of 
another society. 

However,  reciprocal  agreements  would  still  be  concluded,  albeit  slightly  modified.  This  is 
because some users, such as local or small scale users, would still require licences. For such 
users, the local collecting society is usually best placed to grant licences, as it knows the local 
market,  and  as  a  passport  society  will  not  necessarily  have  an  interest  in  granting  direct 
licences to such users. In order to cater for this scenario, it is likely that collecting societies 
will  still  conclude  reciprocal  agreements,  but  more  limited  in  scope.  I.e.  such  agreements 
would cover the right to licence small and local users, and put each local society in a position 
to  licence  these  users.  Reciprocal  agreements  would  also  still  cover  representation  of 
repertoire of other collecting societies for offline uses. This part of the cooperation between 
collecting societies is not affected by the passport requirements. 

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24.4.6.  Impact on cultural diversity  

Small  and  medium  sized  societies  –  some  of  which  have  made  it  clear  that  they  have  no 
interest in providing multi-territory licences –  would be guaranteed access  to multi-territory 
licensing  through  a  passport  holder.  They  would  be  able  to  entrust  their  repertoire  to  a 
passport holder of their choice, with the confidence that their rights are properly administered 
on  non-discriminatory  terms.  This  way  online  services  would  all  be  able  to  offer  a  large 
repertoire, including local or niche repertoire. 

Further, smaller or local users could still be licensed by a local collecting society.  

24.4.7.  Compliance cost 

Member States would need to implement the new rules in their legislation and to provide for 
appropriate  sanctions  and  remedies  against  entities  which  infringe  those  rules.  They  would 
also need to ensure that interested parties have the right to initiate proceedings against such 
entities. 

There would be compliance costs for collecting societies, i.e. the costs of complying with the 
rules applicable to multi-territorial licensing. These costs might be expected to be important, 
in so far as entities would be required to invest in IT infrastructure. The added value of these 
rules is that they will improve the licensing process and encourage societies to entrust their 
rights to passport entities instead of each investing separately. The total costs for all collecting 
societies would be reduced as a result.  

Detailed information on the compliance cost of Option B2 is presented in Annex Q. 

24.4.8.  Effectiveness 

Option B2 is able to achieve the desired objectives, it is both able to enhance the capabilities 
of licensors granting licenses for the online use of musical works and create legal certainty. It 
would therefore improve the market situation and even ensure a vibrant internal market that 
respects  cultural  diversity.  Moreover,  it  builds  on  the  existing  business  model  in  which  CS 
have  an  important  role  to  play,  hence  it  would  not  create  additional  legal  uncertainly. 
Therefore this option is effective. 

24.5. 

Summary of impacts of Option B3: 

This option could improve the ability of publishers279 to aggregate all the rights needed for the 
exploitation of musical works on line (i.e. the mechanical and the performing rights) directly 
across the entire EU both as regards the Anglo-American and the continental repertoire. As 
explained in Section 2.2, these rights are currently often held in part by the publishers or their 
agents  in  part  by  CS.  However,  this  process  would  be  expected  to  take  some  time  as 
publishers  would  need  to  obtain  the  consent  of  thousands  of  authors  to  licence  the  rights 
currently exclusively controlled by CS.280 While this processing is taking place, it is likely to 
be difficult to identify which licensors are entitled to licence what rights and this would create 
legal  uncertainly.  This  is  likely  to  be  worsened  by  the  current  shortcoming  in  the  tools  for 
identification of the repertoire represented by CS.  

279 
280 

Direct licences with individual authors are unlikely to be a viable economic proposition. 
Moreover, all existing mandates to CS will have to be changed 

EN 

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It is not clear whether this option would reduce the number of licences required for launching 
a MT online service. It is expected that the user would be able to obtain direct licences from 
the  major  publishers281  and  the  bigger  independent  publishers  in  the  first  instance  but  users 
would still have to acquire licences from CS of the remaining rights (those that the publishers 
would not have wanted or manage to acquire). The CS licences are likely to be territorially-
limited multi-repertoire licences for the "remaining" of the repertoire (the value and viability 
of  mono-repertoire  MT  licences  would  had  been  significantly  diminished  by  the  grant  of 
parallel direct licences by major rightholders).  

Parallel licensing would have a negative impact on cultural diversity. Creators would be in a 
weaker  bargaining  position  vis-à-vis  major  publishers  trying  to  aggregate  the  rights.  Most 
creators,  i.e.  smaller  rightholders,  would  receive  lower  royalties.  Moreover,  collecting 
societies'  licensing  would  likely  to  be  limited  to  mono-territorial  licences  for  the  local 
repertoire whose value would most likely diminish as it would be licensed separately from the 
more  commercially  attractive  repertoire.  In  consequence,  local,  niche  and  less  mainstream 
repertoires would suffer.  

The advantage of parallel direct licences is that they would likely accommodate a variety of 
online  providers'  needs  (some  support  this  option),  as  negotiations  take  place  with  the 
repertoire  owner  directly.  Further,  this  option  makes  it  possible  to  launch  a  pan-European 
service  with  only  the  most  commercially  attractive  portions  of  repertoire,  licensed  directly. 
On the other hand, a large number of users seem to base their business models on the offer of 
a large and varied repertoire which includes not only the international catalogue but also local 
catalogues.  These  users  would  have  to  take  out  direct  licences  and  territorially  limited 
licences for the remaining of the repertoire in all MS where their service is available. 

As  a  result  of  the  possibility  of  direct  parallel  licensing,  CS  would  be  competing  with 
rightholders  granting  direct  licences  (if  rightholders  are  not  satisfied  with  the  services  of  a 
society, they can grant a direct licence). CS would have an interest in reducing the incentives 
for  rightholders  to  grant  direct  licences.  Such  competitive  pressures,  in  the  medium  term, 
would be expected to lead CS to develop more efficient licensing practices. 

The main impacts of this option: 

Impact on the 
IM  
Impact on 
users (online 
services) 

Impact on 
consumers 

Impact on 
rightholders 

Impact on CS 
(incl. 

(+) Multi-territory licensing of major repertoire for use throughout the IM. 

(+) More flexible, multi-territory parallel direct licences, especially for new services. 
(+) Multi-territory parallel direct licences available for major repertoire. 
(-)  Licences  for  less  attractive  repertoire  likely  to  be  available  on  a  territorial  basis  from  a 
local CS. 
(+) Multi-repertoire territorial licences would likely be available for smaller online services. 
(+) More innovative services launching in more EU MS. 
(-) Only major repertoire likely to be available from services operating on the basis of parallel 
direct licences. 
(++) For major rightholders, more control over the licensing process, faster royalty payments 
and lower administration costs. 
(-) However, the position of most rightholders (smaller rightholders) would deteriorate. 
(-)  Risk  of  a  two-tier  licensing  infrastructure,  with  less  commercially  attractive  repertoire 
(niche or local repertoire) becoming less valuable and more costly to manage. 
(-) Activities reduced to less attractive repertoire and/or licensing of small services. 
(+) Incentive for CS to compete with direct licensing by rightholders, i.e. to provide a level of 

281 

For  the  4  major  publishers,  this  would  allow  the  licensing  of  almost  70%  of  the  rights  (in  value)  in 
musical compositions (in 4 transactions). 

EN 

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reciprocal 
agreements) 

Cultural 
diversity  
Compliance 
costs 

Effectiveness 

service which reduces the incentives for rightholders to grant direct licences. 
(-)  Current  practice  of  reciprocal  agreements  allowing  CS  to  grant  (now  more  limited/less 
attractive) multi-repertoire licenses to their own territory would continue. 
(-) Risk of marginalisation of less commercially attractive repertoire. 
(-) Less revenues for creators. 
(-) MS need to oblige CS to adopt non-exclusive mandates. 
(-) CS need to adapt their mandates to allow non-exclusivity, and publishers need to review 
their publishing agreements with authors. 

This option would be effective in ensuring efficient MT licensing for major rightholders and 
more  commercially  attractive  repertoires  but  could  have  a  detrimental  effect  on  less 
commercially  attractive  repertoire  and  therefore  the  vast  majority  of  creators.  The  two-tier 
licensing  infrastructure  could  lead  to  a  complex  situation  in  the  markets  that  is  unlikely  to 
provide a high level of legal certainty, 

* The (+) and (-) signs in this table do not express comparison to the baseline scenario but reflect the absolute value of the 
impact. 

24.6.  Option B3 –Parallel direct licensing  

24.6.1.  Impact on the Internal Market 

This option would likely improve the ability of publishers to be able to licence all the required 
rights directly across the entire EU. Currently, most publishers licence the rights they control 
on  a  multi-territory  basis.  They  would  continue  to  do  so,  but  in  the  medium  term,  they  are 
likely  to  be  able  to  licence  the  mechanical  reproduction  rights  together  with  the  right  of 
communication  to  public  -  rights  which  are  currently  often  held  and  licensed  by  different 
entities.282  

As a result of this option, collecting societies would be competing with rightholders granting 
direct licences – i.e. if rightholders are not satisfied with the services of a society, they can 
grant  a  direct  licence.  Societies  would  have  an  interest  in  reducing  the  incentives  for 
rightholders to grant direct licences. Such competitive pressures, in the medium term, would 
be expected to lead collecting societies to develop more efficient licensing practices. 

24.6.2.  Impact on online services (commercial users) 

For multi-territory commercial users licences would be available:  

(1) 

Directly  from  the  owner  of  the  relevant  copyright  or  its  licensing  agent  ("parallel 
direct  licensing"):  such  repertoire  specific  licences  would  be  offered  by  major 
rightholders  (e.g.  publishers)  in  the  first  instance,  as  direct  licences  with  individual 
authors  are  unlikely  to  be  a  viable  economic  proposition.  For  the  major  publishers 
alone,  this  would  allow  the  licensing  of  almost  70%  of  the  rights  (in  value)  in 
musical compositions in four transactions.283 In the longer run, it may be feasible for 
many more publishers to licence their rights directly.284 However, it would take some 
time  for  parallel  direct  licensing  to  emerge,  because  in  order  to  be  in  a  position  to 

282 

283 
284 

This  is  because  publishers  historically  control  the  mechanical  reproduction  rights  in  the  Anglo-
American repertoire, while all EU performing rights and mechanical rights in the continental repertoire 
(aka BIEM repertoire) are entrusted exclusively to a collecting society by authors. Thus they can only 
be licensed by, or with the consent of, the requisite collecting society.  
I.e. the equivalent of the market share of major publishers, see Annex J, table J.1. 
In the U.S., one user has obtained as many as 500 direct licences for a background music service.  

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licence their entire catalogue, publishers would need to obtain the consent of authors 
to licence the rights currently exclusively controlled by societies, 285 and 

(2) 

From  individual  collecting  societies.  The  licences  from  societies  would  be  either  a 
territorially  limited  multi-repertoire  licence  (in  their  own  repertoire  and  in  the 
repertoire  of  sister  societies  that  they  are  allowed  to  licence  under  reciprocal 
agreements, but excluding directly licensed repertoire); or a multi-territory licence in 
the  society's  own  repertoire  (excluding  directly  licensed  repertoire).  However,  the 
value  and  viability  of  the  latter  mono-repertoire  licences  would  be  significantly 
diminished  by  the  grant  of  parallel  direct  licences  by  major  rightholders,  to  the 
detriment  of  cultural  diversity.  It  is  therefore  likely  that  territorial  blanket  licences 
will be the norm. 

The advantage of parallel direct licences is that they would likely accommodate a variety of 
online providers' needs (some support this option). Licences negotiated directly between users 
and  rightholders  would  be  expected  to  feature  adaptable  licensing  terms  and  tariff  grids,  as 
negotiations  take  place  with  the  repertoire  owner  or  his  appointed  licensing  agent  directly. 
Further,  this  option  may  have  the  benefit  of  making  it  possible  to  launch  a  pan-European 
service with only the most commercially attractive portions of repertoire licensed directly. On 
the other hand, a large number of users seem to base their business models on the offer of a 
large and varied repertoire which includes not only the international catalogue but also local 
catalogues.  It  is  also  less  suitable  for  those  service  providers  who  emphasise  the  "long  tail" 
character  (less  hits,  but  depth  of  catalogue)  of  their  online  services.  These  users  would  in 
effect have to take out direct licences and territorially limited blanket licences in all Member 
States where their service is available. 

For small local users, it is worth noting that a territorial licence covering the entire repertoire 
will likely be available from their local society. Publishers are likely to leave their rights in 
societies  for  such  licences.  The  reasons  are  twofold.  First,  their  rights  would  not  be  locked 
into  a  collecting  society,  as  they  are  under  the  status  quo,  as  they  could  continue  to  license 
directly in parallel. Second, publishers are not expected to have an interest in licensing small 
scale  or  local  services  directly,  because  the  costs  of  dealing  directly  in  such  licences  would 
exceed their expected returns. These services would accordingly be licensed by societies. 

24.6.3.  Impact on consumers  

The  impact  on  consumers  would  be  potentially  positive,  if  direct  licences  resulted  in  more 
repertoire being made available across the EU. The consumer would have a greater choice of 
innovative  services  that  rely  on  specific  repertoire  for  their  success.  There  would  be  a 
significant  potential  for  more  (directly  licensed)  internet  offerings.  On  the  other  hand,  the 
repertoire-specific nature of certain licensing platforms  might  lead to a reduction in breadth 
and scope of repertoire that is available from pan-European services. It could be more difficult 
for consumers to have access to small and niche repertoire, notably cross-border. 

24.6.4.  Impact on rightholders  

Many societies argue that the approach would result in the creation of a "two tier" licensing 
infrastructure  whereby  popular  repertoire  is  licensed  to  online  music  services  directly  while 

285 

Making the mandates non-exclusive is not the same as granting the publishers the right to licence the 
rights of authors.  

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the  less  popular  repertoire  is  licensed  by  collecting  societies.286  First,  it  is  argued  that  the 
administration costs of collecting societies would remain the same, but would be shared by a 
smaller  number  of  rightholders  with  less  valuable  repertoire.  Less  popular  repertoire  would 
become more costly to manage. Further, the value of that less popular repertoire would most 
likely  diminish,  as  it  would  be  licensed  separately  from  commercially  attractive  repertoire. 
Some  of  the  main  organisations  representing  authors287  thus  argue  against  non-exclusive 
licences, claiming that they would lead to lower royalty payments and that authors would be 
'compelled'  to  assign  their  rights  to  publishers  or  to  record  producers.288  They  prefer  their 
rights to be entrusted to a collecting society over which they can exercise control including on 
the management of rights. 

On  the  other  hand,  for  repertoire  that  is  licensed  directly,  some  rightholders  (several 
publishers support this option) would be in a position to negotiate deals faster and to choose 
the  best  solution  for  the  technical  administration  of  their  rights  (invoicing,  data  processing, 
payments). They could choose to entrust these tasks to a collecting society (which would then 
act  as  a  technical  service  provider)  or  indeed  to  third  party  services  emerging  on  the 
marketplace, as is the case in the U.S. The advantage of this approach would be to improve 
competition  in the  provision  of  such services, giving societies an incentive to improve their 
services. Moreover, payments are usually made within a month in the case of direct licensing, 
compared to longer periods otherwise. 

24.6.5.  Impact on collecting societies (incl. reciprocal agreements) 

Collecting societies argue that this option would be detrimental to them. There is a risk that 
the most valuable repertoire and the online music services which generate the most revenue 
will  be  licensed  directly  and  without  using  the  services  of  collecting  societies.  This  would 
immediately  diminish  their  turnover  and  proportionally  increase  their  costs.  However,  some 
societies  might  also  be  expected  to  respond  by  providing  more  competitive  services  to 
rightholders, with the aim of minimising the need or the incentives for parallel direct licences. 

Under  this  option,  collecting  societies  would  be  granting  online  licences  either  (i)  to  users 
which are not commercially significant enough to warrant direct licensing by rightholders or 
(ii)  on  behalf  of  rightholders  whose  works  are  not  sufficiently  commercially  attractive  to 
warrant  direct  licensing.  The  share  of  collecting  societies  in  multi-territory  licensing  would 
thus  significantly  decrease,  i.e.  they  would  collect  only  a  small  share  of  royalties  due  for 
online exploitations of musical works. 

In  such  circumstances,  the  ability  of  collecting  societies  to  grant  multi-territory  licences 
limited to their own repertoire is likely to be undermined. Indeed, the value of such licences 
will be directly reduced by the direct licences granted by rightholders. It is not clear whether it 
would be economically viable for societies to grant multi-territory licences in this manner. In 
the  medium  run,  it  is  more  likely  that  collecting  society  will  instead  conclude  reciprocal 
agreements allowing each one to licence the repertoire of the other. This would ultimately put 
the  societies  in  a  position  to  grant  blanket  licences,  minus  the  rights  directly  licenced. 
However,  there  is  no  reason  to  believe  that  these  reciprocal  agreements  would  otherwise 
differ from “traditional” reciprocal agreements. Collecting societies have, so far not agreed to 

286 

287 
288 

In  collecting  societies,  on  average,  80%  of  royalties  collected  are  distributed  to  the  top  20%  of  high 
earning rightholders. 
GESAC and. the European Composer and Songwriter Alliance, see Annex B. 
Emulating  the  situation  in  the  U.S.  where  performer-songwriters  often  licence  their  compositions  to 
their record company, see Annex M. 

EN 

169 

   EN 

 
                                                 
conclude  agreements  allowing  each  other  to  licence  the  repertoire  of  others  on  a  multi-
territory basis, without recourse to a customer allocation clause. Agreements are accordingly 
likely to remain territorially limited, allowing each society to grant only licences limited to its 
own territory.  

24.6.6.  Impact on cultural diversity 

Parallel  licensing  would  have  a  negative  impact  on  cultural  diversity.  Most  creators  (i.e. 
smaller rightholders) would receive lower royalties. Moreover, the direct licensing of popular 
repertoire  risks  undermining  the  solidarity  function  hitherto  played  by  aggregating  popular 
and  less  popular  repertoire  into  one  'blanket'  licence.  The  commercial  opportunities  for  the 
repertoire held by smaller collecting societies might be undermined. The disappearance of this 
less “main stream” repertoire (e.g. niche or local repertoire) would be detrimental to cultural 
diversity in Europe. 

24.6.7.  Compliance costs 

Some  users  and  publishers  argue  that  the  introduction  of  "parallel  direct  licensing"  would 
provide  a  strong  incentive  for  collecting  societies  to  offer  a  high  level  of  service  to 
rightholders and users, thus mitigating the need for burdensome and detailed regulation. The 
main burden  for  collecting societies would be to adapt their licences and tariff structures to 
reflect  rights  which  have  been  directly  licensed  (adjustable  fee).  Collecting  societies  would 
also  have  to  adapt  their  existing  mandates  from  rightholders  to  strike  out  the  exclusivity 
clause. 

Member States would need to adjust their legislation to oblige societies to manage rights on a 
non-exclusive basis. Publishers would also be expected to adapt their contracts with authors in 
order to obtain the right to licence their rights directly.  

24.6.8.  Effectiveness 

This  option  would  be  effective  in  ensuring  efficient  multi-territory  licensing  for  major 
rightholders and more commercially attractive repertoires. At the same time it would have a 
detrimental  effect  on  less  commercially  attractive  repertoire.  The  two-tier  licensing 
infrastructure  could  lead  to  a  complex  situation  in  the  markets.  This  option  is  unlikely  to 
provide a high level of legal certainty. 

24.7. 

Summary of impacts of Option B4 

At first sight, this option provides a degree of legal certainty in the IM by ensuring that the 
local CS in the country of origin of the service grants a licence covering the whole of the EU 
repertoire  (thanks  to  the  extended  effect  under  the  local  law).  Besides  the  difficulties 
associated with the identification of the country of origin, the main risk associated with this 
option is that it will lead to publishers and some CS to opt out from the extended licences in 
all  MS.  The  result  is  likely  to  be  the  "pulling  out"  of  all  commercially  valuable  repertoire 
from many of the CS in the EU. Accordingly, in some MS it would be more difficult to obtain 
a licence from a local CS (which has seen many opt-outs and/or has limited technical abilities 
to administer MT licences) than in others. 

The  high  likelihood  that  the  aggregation  would  not  materialise  because  of  large  scale  "opt-
outs"  will  mean  that  commercial  users  would  still  need  to  get  a  number  of  licences  from 

EN 

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rightholders and CS (as under the baseline scenario) as well as an extended licence from the 
society in their country of origin. 

Furthermore, significant discrepancies in the efficiency of CS would persist across the EU, in 
particular  as  there  will  not  be  a  need  to  precisely  identify  repertoire  to  grant  a  license  (all 
repertoire  will  be  presumed  as  covered).  There  will  be  no  incentive  to  address  the  current 
inefficiencies  related  to  identification  of  repertoire,  invoice  of  uses  and  distribution  of 
royalties.  The  burden  of  such  inefficiencies  will  be  held  by  rightholders,  notably  foreign 
rightholders. 

Extended  licensing  is  also  likely  to  lack  the  flexibility  of  other  licensing  processes.  Firstly, 
service providers would have no choice but to obtain the extended licence from a single CS in 
the country of origin of the service. Second, to avoid "opt outs" the local CS are likely to have 
a very conservative licensing policy to the detriment of innovative services.  

The main impacts of this option*:  

Impact on the 
IM  

Impact on 
users (online 
services) 

Impact on 
consumers 
Impact on 
rightholders 

Impact on CS 
(incl. 
reciprocal 
agreements) 

Cultural 
diversity  

Compliance 
costs 

Effectiveness 

(+) Country of origin licence deemed to cover the entire EU. 
(-)  Societies/rightholders  with  commercially  attractive  repertoire  likely  to  opt  out  of  each 
local ECL. 
(-) Risk of large scale opt-outs, thus increasing the number of licences needed. 
(+)  Even  after  opt-outs,  services  will  have  legal  certainty  that  the  ECL  in  the  country  of 
origin covers all residual repertoire for all EU territories. 
(-) Risk of lesser flexibility in the licensing process, e.g. for new or innovative services. 
(-) Fewer innovative services available. 
(+) If opt outs are limited, access to larger breadth of repertoire.  
(-) Rightholders/CS with commercially valuable repertoire (making it worth direct licensing 
on a MT basis outside of local societies), need to opt out of ECLs in all MS. 
(-)  Risk  of  a  two-tier  licensing  infrastructure,  with  less  commercially  attractive  repertoire 
being managed less efficiently and transparently by a local society (in particular, risk of less 
accuracy in the distribution of income, including cross-border distributions). 
(+)  Local  societies  presumed  to  be  in  a  position  to  administer  licences  with  an  effect 
equivalent to a MT licence from their domestic market. 
(-) CS with commercially valuable repertoire (making it worth direct licensing on a MT basis 
outside of local societies), need to opt out of ECLs in all MS.  
(-)  Limited  incentives  for  CS  to  improve  their  services,  as  they  would  benefit  from  a 
presumption that they represent the repertoire.  
(~) Reciprocal agreements would remain necessary as CS granting ECL need to represent a 
significant number of rightholders either directly or indirectly. 
(+) Less commercially attractive repertoire available on a MT basis. 
(-) Risk that less commercially attractive (niche or local) repertoire is not licensed effectively 
and that proceeds are not distributed accurately. 
(-)  MS  need  additional  supervision  over  the  grant  of  ECLs  (e.g.  the  CS  must  be 
representative). 
(-) Societies need to satisfy the conditions for the granting of ECLs. 
(-) Rightholders would need to opt out of all local societies if they licence directly. 
In theory ECL could be an effective solution but in practice it is likely that major righholders 
and  CS  with  commercially  valuable  repertoire  would  opt  out  to  keep  control  over  their 
repertoire. Blanket licensing would not improve the administration within CS and due to the 
opt-outs legal certainly would not improve sufficiently.  

* The (+) and (-) signs in this table do not express comparison to the baseline scenario but reflect the absolute value of the 
impact. 

EN 

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   EN 

 
24.8.  Option  B4  –  Extended  collective  licensing  combined  with  a  country  of  origin 

principle 

24.8.1.  Impact on the Internal Market 

At  first  sight,  this  option  provides  a  degree  of  legal  certainty  in  the  internal  market  by 
ensuring  that  the  local  collecting  society  in  the  country  of  origin  of  the  service  grants  a 
"blanket" licence with extended effect under the law of the country of origin of the service. 

Besides the difficulties associated with the identification of the country of origin in a certain 
and predictable manner for online services operating in the EU, the main risk associated with 
this option for the functioning of the Internal Market is that it will make it more difficult for 
publishers or societies which currently grant EU-wide licences to do so. In order to continue 
doing so, they would have to opt-out from the extended licences in all Member States. 

Further,  significant  discrepancies  in  the  efficiency  of  local  collecting  societies  will  persist 
across the EU. This means that in some Member States it will be more difficult to obtain a 
licence  from  a  local  collecting  society  (which  has  seen  many  opt-outs  and/or  which  has 
limited technical abilities to administer multi-territory licences) than in others (which manage 
a  broader  repertoire  and/or  have  the  ability  to  administer  multi-territory  licences).  Thus  the 
value of licences granted by collecting societies would vary significantly from one Member 
State to the next, causing distortions in downstream markets (commercial users). 

24.8.2.  Impact on online services 

Under this option, a commercial user would need: 

(1) 

(2) 

A  number  of  mono-repertoire  licences  from  rightholders  and  societies  which  have 
opted out. Rightholders and societies are likely to voluntarily grant such licences on 
a multi-territory basis. 

An  extended  license  from  the  collecting  society  in  the  country  of  origin  of  the 
service, which would have an equivalent effect to a multi-territory licence. 

The  breadth  or  repertoire  available  under  the  extended  licence  from  the  local  society  in  the 
country  of  origin  of  the  service  would  depend  to  a  significant  degree  on  the  opt-outs  of 
rightholders:  aggregation  is  prima  facie  achieved  by  means  of  a  wide  ranging  statutory 
presumption  that  a  representative  collecting  society  in  the  country  of  a  users'  establishment 
represents  the  aggregate  EU  repertoire.  However,  there  is  a  high  likelihood  that  this 
aggregation will not materialise because of large scale "opt-outs". A number of rightholders 
with  commercially  valuable  rights  would  be  expected  to  opt-out  from  all  or  most  local 
collecting societies, as there would be no incentives for them to keep their rights within the 
local  extended  licences.  A  number  of  societies  themselves  (e.g.  those  currently  keen  on 
licensing  their  repertoire  directly  for  multi-territory  uses  and  those  holding  the  most 
commercially valuable repertoire) would also be likely to opt out. 

Consequently,  commercial  users  would  still  need  to  get  a  number  of  licences  from 
rightholders and societies (as under the baseline scenario) as well as an extended licence from 
the  society  granting  an  extended  licence  in  their  country  of  origin.  The  local  society  will 
licence local and EU repertoire which is not opted out. This is likely to include rights from 
societies  which  hold  less  commercially  attractive  repertoire  (especially  in  non-domestic 
markets)  and  rights  which  are  difficult  to  attribute  to  rightholders  with  certainty.  For  users 

EN 

172 

   EN 

 
who need a comprehensive coverage of works to choose from, this additional coverage will 
nevertheless have the added value of providing additional legal certainty that all claims from 
rightholders are covered by the extended licence.  

Extended licensing is likely to lack the flexibility of other licensing processes. First, service 
providers  would  have  no  choice  but  to  obtain  the  extended  licence  from  a  single  collecting 
society  in  the  country  of  origin  of  the  service.  This  may  lead  to  potential  abuses  from  the 
competition  law  perspective.  Second,  the  system  would  partly  rely  on  other  societies  and 
rightholders not opting out. Societies, motivated by the desire to ensure that the interests of 
their  partners  are  protected,  would  limit  the  scope  of  the  agreement  to  less  "risky"  or 
innovative  services.  Serving  the  more  innovative  services  would  require  ad  hoc  discussions 
between the collecting societies concerned. It is therefore difficult to envisage that this option 
would foster the emergence of timely and "bespoke" licences for online services.  

24.8.3.  Impact on rightholders 

The individual exercise of their rights by rightholders would be subject to the formal need to 
opt out from a collecting society. In practice, should a rightholder wish to exercise his rights 
directly, he would have to notify collecting societies in 27 Member States of his intention to 
"opt out" of the extension agreement. In this process, they would have to identify their rights 
and  their  works  precisely.  This  would  be  extremely  cumbersome  for  individual  creators,  as 
well as for major publishers whose catalogues are continuously augmented with new works. 

Some rightholders which have not opted out of a society would see their rights licensed for 
use  across  the  EU  without  their  express  consent  and  without  being  members  of  the  local 
licensing society. They would accordingly not be represented in that society, and would have 
to  rely  on  such  societies  identifying  them  and  paying  them  the  remuneration  collected  for 
their works in the local market and in the rest of the EU. In such circumstances, there is a risk 
that some rightholders find it difficult to track their income. 

Further, there would be no improvement of the data-processing ability of collecting societies. 
All local collecting societies would be granting what the facto would be equivalent to multi-
territory  licences  (covering  a  varying  breadth  of  repertoire),  regardless  of  their  ability  to 
identify repertoire and deal with usage reports. This is likely to lead to inaccurate and slow 
payments to rightholders. Non-domestic rightholders are the most likely to be affected, as it 
would be difficult for them to exercise control over each and every local society (other than 
option  their  rights  out  altogether).  While  major  rightholders  will  respond  by  opting  out, 
smaller  rightholders  or  individual  creators  are  likely  to  keep  their  rights  within  the  local 
society. A two-tier licensing infrastructure might, as result, also follow from this option, with 
major rightholders licensing outside of the local collecting societies and smaller rightholders 
bearing with local societies. 

24.8.4.  Impact on collecting societies (incl. reciprocal agreements) 

For collecting societies, this option provides reassurances that they will have a role to play in 
their  domestic  market,  where  they  are  the  most  likely  to  be  permitted  to  grant  extended 
licences  for  services  established  there.  Small  or  medium  sized  societies  might  see  this  as  a 
short term advantage, although in the long run they will either have to improve their services 
or  suffer  opt-outs  of  most  rightholders.  For  larger  societies  which  are  competing  to  licence 
their  rights  directly  to  all  major  commercial  users  across  Europe,  this  option  makes  things 

EN 

173 

   EN 

 
more difficult (they would have to opt out). This option does not provide any incentive for the 
societies to improve their capability to deal with online service providers  

As  regards  reciprocal  agreements,  under  this  option,  each  local  collecting  society  would  be 
presumed  to  represent  the  rights  of  all  rightholders  which  have  not  opted  out,  EU  wide. 
However, in order to benefit from such a presumption, a local collecting society would have 
to  first  establish  that  it  is  “representative”,  i.e.  that  it  is  expressly  mandated  by  a  sufficient 
number  of  rightholders  to  manage  their  rights.  A  collecting  society  which  would  represent 
only a small fraction of rightholders could not be expected to benefit from an extension effect. 
Thus  in  order  to  qualify,  a  collecting  society  would  need  to  represent  a  large  number  of 
rightholders,  via  direct  mandate,  but  also  through  agreements  allowing  it  to  represent  the 
repertoire of other  societies.  This means that this option does not do away  with  the need to 
conclude reciprocal agreements. 

In addition, this option can mean that a local society is in a position to grant EU wide licences 
to  major  multi-territory  users  established  in  their  domestic  territory,  or  to  new  innovative 
services.  In  both  cases,  it  is  likely  that  some  societies,  if  they  do  not  opt-out  entirely,  will 
conclude  more  limited  reciprocal  agreements,  in  order  to  avoid  losing  control  over  the 
licensing of such major services or new services.  

24.8.5.  Impact on cultural diversity  

This option would prima facie be beneficial to repertoire solidarity and to cultural diversity, 
as  in  principle  the  entire  European  repertoire  would  a  priori  be  included  in  each  licence. 
Niche and local repertoire would be guaranteed access to multi-territory licensing, by virtue 
of  the  extension  effect  of  the  licence.  Local  societies  would  also  be  guaranteed  a  role  in 
licensing online services originating in their territories.  

However, there is a risk of a two-tier licensing infrastructure emerging (see above), with the 
result that local and niche repertoire might be licensed and administered in conditions which 
are less favourable. 

24.8.6.  Impact on consumers  

Impact  on  consumers  would  be  mixed.  On  the  one  hand,  consumers  would  be  unlikely  to 
benefit from the launch of more innovative services, as the licensing process will be slow to 
adapt to the flexibility required for new and innovative services and the likely opt outs would 
not necessarily lead to a reduction of the number of transactions that need to be undertaken to 
launch  new  services.  On  the  other  hand,  if  the  number  of  "opt-outs"  is  limited,  existing 
services  or  services  which  rely  on  a  less  innovative  or  risky  business  model  would  be 
accessible to consumers across the EU. 

24.8.7.  Compliance costs 

This option would involve compliance costs for Member States, collecting societies and users. 

Member  States  would  have  to  amend  their  legislative  framework  to  ensure  that  a  collecting 
society can grant ECLs. Generally, for a collecting society to be permitted to grant an ECL, a 
Member  State  would  first  need  to  ensure  that  the  collecting  society  is  representative.  This 
would  require  an  assessment  of  whether,  on  the  basis  of  a  society's  direct  mandates  from 
rightholders and agreements with other societies, that society is mandated to licence the rights 
of a significant portion of the musical works used in the EU. Secondly, Member States would 

EN 

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need to satisfy themselves that the collecting society wishing to grant an ECL satisfies certain 
conditions, beyond the observance of governance and transparency principles applicable to all 
collecting  societies.  This  is  because  an  ECL  allows  a  collecting  society  to  grant  licences 
covering the works of rightholders which have not mandated it (whether directly or indirectly, 
via an agreement with their own collecting society). Accordingly, certain safeguards need to 
be provided for the interests of these "non-represented" rightholders, such as the setting-up of 
an  "opt  out"  mechanism,  the  right  to  equal  treatment  with  members  of  the  society  and  the 
right to collect individual remuneration. 

As a result, it is likely that the setting up of ECLs will lead to additional costs in supervising 
collecting  societies.289  The  additional  costs  will  be  greater  in  MS  which  currently  neither 
supervise  collecting  societies  nor  have  an  ECL  regime  in  place.  They  would  be  lower  in 
Member  States  where  ECLs  are  already  granted,  although  the  degree  of  supervision  would 
still need to be higher as these ECLs would be deemed to have an effect equivalent to a multi-
territory licence under the country of origin principle. 

Collecting societies seeking to grant ECLs would need to change their statutes of association 
and  their  distribution  rules  in  order  to  provide  the  safeguards  referred  above.  This  would 
likely involve legal costs (drafting of new provisions), and the costs of obtaining the approval 
of members of the society.290 In addition, the option would entail an administrative burden for 
such  societies.  They  would  have  to  provide  the  relevant  authorities  in  their  Member  States 
with information as to how they are representative and as to how they safeguard the interests 
of non-represented rightholders, and possibly pay a registration few to such authorities. 

There  would  be  compliance  costs  for  rightholders  opting-out  from  each  local  collecting 
society (see impact on rightholders). This would ultimately depend on how many collecting 
societies  opt  to  provide  ECLs,  and  on  how  burdensome  the  procedure  for  opting-out  would 
be.  

24.8.8.  Effectiveness 

In theory extended collective licensing could be an effective solution to reach the objectives. 
In  practice  however  it  is  likely  that  major  rightholders  and  CS  with  commercially  valuable 
repertoire would opt out to keep control over their repertoire. Some service providers would 
be in a better position than today to obtain licences but others would not. Blanket licensing 
would not bring about any improvement in the administration within CS and due to the opt-
outs legal certainly would not improve sufficiently. 

289 

290 

EN 

two 

require 

For instance, the UK Intellectual Property Office estimates that the introduction of extended licensing in 
the  UK  would 
licensing 
http://www.ipo.gov.uk/consult-ia-bis1054.pdf.  
This  may  take  the  form  of  a  general  assembly  of  the  members  of  the  society.  Anecdotal  evidence 
suggests  that  the  cost  of  a  general  assembly  ranges  from  15000€  (for  a  medium  sized  society)  to 
300000€ (for a large collecting society). However, these general assembly meeting usually take place 
regularly regardless of the introduction of major developments such as granting ECLs. 

extended 

full-time 

oversee 

staff 

the 

to 

175 

   EN 

 
                                                 
25. 

ANNEX  P:  COMPLIANCE  COST  OF  OPTION  A4  –  BEYOND  CODIFICATION:  A 
GOVERNANCE AND TRANSPARENCY FRAMEWORK IN COLLECTING SOCIETIES 

25.1.  Codification of the existing principles 

The codification of the existing principles would require amendments to Member States' laws. 
In  turn,  collecting  societies  would  have  to  amend  (to  different  degrees)  their  statutes, 
membership  terms,  distribution  rules  and  other  internal  documents.  This  would  typically 
require  preparation  of  amendments  to  the  existing  documents  and  holding  meetings  of 
relevant governance bodies to adopt the amendments (this could be done in the normal course 
of  business  as  these  bodies  meet  on  a  regular  basis).  Costs  of  preparing  amendments  to 
internal documents would depend on the nature of the principle, the level of adherence to this 
principle  by  a  society,  the  size  of  a  society  and  on  whether  the  amendments  would  be 
prepared  by  in-house  lawyers  or  commissioned  externally.  It  is  expected  that  these  costs 
would not significantly exceed the costs already borne by collecting societies with regard to 
their internal documentation and meetings of their governing bodies.  

25.2.  Dispute resolution mechanism (for rightholders and commercial users) 

The  cost  of  providing  such  a  mechanism  for  disputes  between  collecting  societies  and  their 
members  would  be  borne  by  collecting  societies  as  they  would  be  obliged  to  set  it  up  and 
maintain  it.  Member  States  would  decide  on  the  type  of  dispute  resolution  mechanism  for 
users  (e.g.  mediation,  arbitration,  tribunal)  and  on  its  financing.  Currently,  most  of  the 
Member  States  provide  for  some  form  of  dispute  resolution  mechanism  for  users  and 
therefore could use the existing structures as a basis for the future mechanism. 

The costs of a dispute resolution mechanism would vary according to the precise nature of the 
dispute  resolution  mechanism  chosen.  On  a  low  end  estimate,  some  societies  use  existing 
expert  dispute  resolution  bodies,  such  as  the  World  Intellectual  Property  Organisation 
(WIPO)'  arbitration  centre.  For  instance,  AGICOA  and  EGEDA  use  the  WIPO  centre  for 
certain disputes with their members. Set up costs are not publicly known, but are likely to be 
relatively  low,  as  this  dispute  resolution  process  draws  on  an  existing  arbitration  centre. 
Operating  costs  only  occur  when  a  dispute  arises,  and  in  such  cases  the  fees  charged  are 
capped at 5000 USD (AGICOA) or € 4000 (EGEDA).291 Other societies that already operate 
alternative  dispute  resolution  (excluding  royalty  disputes)  report  that  the  costs  of  setting  up 
such a mechanism would be in the range of €35 000, and the operating costs in the range of 
€11  000  per  year.  At  the  other  end  of  the  scale,  operating  a  full  blown  copyright  tribunal 
would cost approximately €86 000 per year.  

25.3.  Governance rules 

Collecting  societies  would  have  to  bear  the  costs  of  implementing  rules  pertaining  to  the 
decision-making  process  (including  representation  of  rightholders  in  the  internal  bodies, 
participation  of  rightholders  in  taking  key  decisions),  accountability  of  managers  (e.g. 
procedures  on  acknowledgement  of  duties,  declaration  of  interests  in  the  society),  right  of 
members  to  make  inquiries  to  collecting  societies  and  other  control  measures,  etc.  These 

291 

See http://www.wipo.int/amc/en/arbitration/egeda/fees/ and 
http://www.wipo.int/amc/en/arbitration/agicoa/fees/  

EN 

176 

   EN 

 
                                                 
would typically require preparation of amendments to the statutes and their adoption by the 
general assembly. 

25.4.  Handling rightholders' income 

Collecting  societies  would  have to  also  bear  costs  of  adapting  to  the  new  rules  on  handling 
rightholders'  income.  These  include  the  separation  of  rightholders'  and  societies'  assets,  the 
obligation to account for revenues and costs separately for various revenue streams, rules on 
prudential  investment,  etc.  Collecting  societies  were  consulted  on  the  costs  of  adapting  to 
these rules. They indicated that they do not generally break down their costs specifically for 
different  revenue  streams;  some  of  them  already  adhere  to  rules  on  the  separation  of  assets 
and  on  prudential  investment  but  the  details  of  the  applicable  rules  vary.  The  cost  of 
adaptation to the new rules would depend primarily on the level of adherence to similar rules 
by  a  given  collecting  society.  In  some  instances  it  is  expected  that  substantial  changes  will 
have to be made while in others only marginal changes would be required to comply with the 
new  rules.  Information  on  the  specific  cost  of  adapting  to  such  changes  is  generally  not 
available. It is accordingly not possible at this stage to estimate those costs. 

25.5.  Administrative burden  

25.5.1.  Introduction  

The  main  information  obligations  resulting  from  the  proposed  governance  and  transparency 
framework  include:  providing  public  access  to  certain  information  and  documents  (statutes, 
directors/managers  names,  membership  terms,  annual  accounts,  annual  report,  auditor's 
report, repertoire, the territorial scope of mandates for this repertoire, reciprocal agreements, 
the  applicable  tariffs,  etc.),  providing  rightholders  with  access  to  additional  information 
(distribution rules, rules on deductions, directors/managers remuneration, etc.).  

The less significant part of the costs related to compliance with information obligations will 
be  that  related  to  the  preparation  and  publication  of  information  and  documents  such  as 
statutes,  directors/managers  names,  membership  terms,  repertoire,  the  territorial  scope  of 
mandates  for  this  repertoire,  reciprocal  agreements,  the  applicable  tariffs,  distribution  rules, 
rules on deductions,  directors/managers remuneration, etc. Information on the cost elements 
of  producing  such  documents  and  information  is  generally  not  available.  The  information 
received  from  collecting  societies  was  not  complete  enough  to  be  used  in  meaningful 
calculations.  However,  as  these  documents  typically  already  exist  (independently  from  the 
proposal)  it  can  be  assumed  that  costs  related  to  them  would  not  exceed  the  costs  already 
borne by collecting societies (business as usual). The cost of providing access (e.g. by making 
information  and  documents  available  on  the  web)  is  expected  to  be  marginal  (see  below  in 
Table P5.2 the cost of publication of reports on the web). 

The  most  significant  costs  will  be  those  related  to  the  preparation  of  the  annual  accounts, 
annual  report  and  audit  of  the  accounts.  The  calculation  of  the  administrative  burden  will 
therefore  focus  on  these  costs.  This  means  that  the  costs  given  below  may  be  slightly 
underestimated. To accommodate for this underestimation the costs of publication on the web 
of  annual  accounts  were  calculated  and  the  actual  calculations  were  based  on  assumptions 
which rather overstate the actual costs in order to obtain more realistic results.  

EN 

177 

   EN 

 
25.5.2.  Cost calculation 

The  calculation  of  costs  of  preparing  the  annual  accounts,  annual  report  and  audit  of  the 
accounts involved the following steps: 

Step 1 - Estimating the number of collecting societies (CS) in Europe by size category (small, 
medium sized and large). 

This was done based on the available data from the collecting societies’ websites, supervisory 
authorities,  etc.  as  well  as  on  data  on  the  turnover  and  employment  of  the  largest  of  these 
societies (see: Annex H). 

The following assumptions have been made: 

Collecting  societies  are  deemed  small,  medium-sized  or  large  when  they  meet  one  of  the 
turnover  or  employment  thresholds  as  defined  in  Directive  78/660/EEC292  (Articles  11  and 
27) for limited liability companies: 

• 

• 

• 

small societies: employment below 50, turnover below €8 800 000; 

medium-sized  societies: employment below 250, turnover between  €8  800 000  and 
€35 000 000 and 

large societies: those not meeting the criteria of small and medium-sized societies. 

Unless  available  data  proves  otherwise,  the  assumption  is  that  there  is  one  large  collecting 
society in every Member State and that the remaining collecting societies are medium-sized 
(exceptions: it is assumed on the basis of markets size that BG, CZ, EL, SI have only medium 
collecting societies while CY, EE, LT, LV, SK have only small ones). 

Table P.5.1: Estimated number of EU collecting societies and their estimated size 

Member State 

AT 
BE 
BG 
CY 
CZ 
DE 
DK 
EE 
EL 
ES 
FI 
FR 
HU 
IE 
IT 
LT 
LU 
LV 
MT 

Estimated size of Collecting Societies 
Medium-sized 
Large 
7 
1 
25 
1 
6 
0 
0 
0 
6 
0 
11 
1 
8 
1 
0 
0 
17 
0 
7 
1 
5 
1 
24 
1 
5 
1 
7 
1 
3 
1 
0 
0 
2 
1 
0 
0 
n/a 
n/a 

Small 
0 
0 
0 
1 
0 
0 
0 
10 
0 
0 
0 
2 
0 
0 
0 
5 
0 
2 
n/a 

Total 

8 
26 
6 
1 
6 
12 
9 
10 
17 
8 
6 
27 
6 
8 
4 
5 
3 
2 
n/a 

292 

Fourth  Council  Directive  78/660/EEC  of  25  July  1978  based  on  Article  54(3)  of  the  Treaty  on  the 
annual accounts of certain types of companies, OJ L 222, 14.8.1978. 

EN 

178 

   EN 

 
 
 
 
                                                 
NL 
PL 
PT 
RO 
SE 
SI 
SK 
UK 

1 
1 
1 
1 
1 
0 
0 
1 

21 
14 
3 
11 
5 
5 
0 
19 

1 
0 
0 
0 
0 
0 
6 
0 

23 
15 
4 
12 
6 
5 
6 
20 

Note: non-shaded areas are estimates subject to assumptions described above. 

Source:  European  Commission  desk  research  on:  umbrella  organisations  of  collecting  societies,  websites  of 
national supervisory authorities, authorisation decisions, contacts with Member States authorities, screening of 
legislation.  

Step 2 - Taking account of the current reporting practices in the Member States. 

Based  on  the  information  at  the  disposal  of  the  European  Commission  (stemming  from  the 
screening  of  national  copyright  laws)  on  the  existing  information  obligations  in  the  EU 
Member  States  covering  annual  accounts,  annual  reports  and  auditors  reports,  it  can  be 
assumed that minimum 40% of collecting societies are already under an obligation to produce 
and make public the three above mentioned documents. It is to be noted though that in reality, 
taking  into  account  the  number  of  collecting  societies  per  country  (i.e.  making  a  weighted 
average across the EU MS), 70% and 50% of colleting societies in the EU are already under 
an  obligation  to  produce,  respectively,  annual  accounts/annual  reports  and  auditor  reports. 
Given the lack of real data across the EU and the need to use proxies for collecting societies, 
the  initial  cost  calculations  are  based  on  a  lower  business-as-usual  share  of  the  new  cost 
(40%) in order not to underestimate the real costs to be borne and the sensitivity analysis is 
conducted to allow for different assumptions to make the analysis more complete.  

Step  3  -  Taking  account  of  the  cost  of  reporting  and  administrative  burden  per  reporting 
obligation. 

These were taken from the "Report on measurement of administrative burden in the area of 
accounting and company law"293 which focused on the limited liability companies in the EU 
and could be seen as a good proxy for the collecting societies. The study did not assess the 
cost of day-to-day bookkeeping but just the cost/burden of the reporting itself. The following 
average rates for cost were obtained (after correcting for extreme figures): 

Table P.5.2: EU average annual cost of certain reporting obligations per company (for limited 
liability companies) in Euros 

Information obligation 
1. Obligation to draw up annual account and disclosure of account 

2. Annual reports 

Small 

Medium-
sized 

Large 

1 976

238

2 313 

1 120 

10 627

2 870

Disclaimer and data limitations: 

293 
http://ec.europa.eu/enterprise/policies/smart-regulation/documents/ab_studies_2009_en.htm 
Study: 
http://ec.europa.eu/enterprise/policies/better-regulation/files/abst09_companylaw_en.pdf 
Data Annex: 
http://ec.europa.eu/enterprise/policies/better-regulation/files/abst09_cl_data_annex_en.pdf 

EN 

179 

   EN 

 
 
                                                 
3. Auditing of annual accounts 

4. Publication of reports on web 

3 855

16 873 

53 154

34

34* 

34*

Note: extreme values excluded; EU averages modified taking into account data received from 2 large collecting 
societies and one medium-sized  

* due to lack of data, cost for small companies was used 

Source: Consortium 2009 Administrative burden study, own calculations. 

For the purpose of calculating the administrative burden, individual country costs (which can 
be found in the "Report on measurement of administrative burden in the area of accounting 
and company law" mentioned above) were used. 

These figures were assumed to comprise business as usual costs and administrative burden in 
the following proportions:294 

Table P.5.3: Administrative burden per company as % of reporting cost, EU average 

Information obligation 

1. Obligation to draw up annual account and disclosure of accounts 

2. Annual reports 

3. Auditing of annual accounts 

4. Publication of reports on web 

Small 

Medium-
sized 

Large** 

50% 

75% 

75% 

25% 

25% 

25% 

25% 

25% 

25% 

100% 

100%** 

100%** 

* the source study takes 0% admin burden for large companies assuming that all is business as usual, i.e. that all 
large companies already provide for annual accounts and reports and audit annual accounts on a yearly basis; we 
have taken 25% not to underestimate the cost 

** due to lack of data, cost for small companies was used 

Source: Consortium 2009, Administrative burden studyError! Bookmark not defined., own calculations 

Step 4 – Calculating and obtaining results 

Given our assumption (Step 2) concerning 40% of collecting societies already being under an 
obligation to produce and make public the annual accounts, annual report and audit reports, 
these collecting societies will only incur part of an additional cost resulting from the need to 
adjust  their  current  practices  to  the  requirements  of  the  present  proposal.  Consequently,  the 
data  from  Table  P.5.1  (number  of  collecting  societies),  adjusted  by  the  40%  share  of 
collecting societies, was multiplied by country-specific cost figures (EU average presented in 
Table P.5.2) and then by administrative burden % as presented in Table P.5.3). 

294 

According  to  the  Standard  Cost  Model  which  is  a  tool  advised  in  the  Commission  IA  Guidelines  for 
calculation of costs stemming from legislative information obligation, Reporting cost (or administrative 
cost) = business as usual cost (not affected by our proposal) + administrative burden (new cost implied 
by our proposal). For illustration, if companies did not have any reporting practices before our proposal, 
business as usual cost = 0 and all the reporting cost would be constituted by the administrative burden.  

EN 

180 

   EN 

 
                                                 
The remaining 60% of the  collecting societies which  are  assumed  not  to  prepare  any  of  the 
above  mentioned  information  will  incur  higher  costs  to  comply  with  the  proposal. 
Accordingly, the data from Table P5.1 (number of collecting societies), adjusted by the 60% 
share  of  collecting  societies,  was  multiplied  by  country  specific  cost  figures  (EU  average 
presented in Table P5.2). In all cases average cost per company was rounded to full hundreds. 

As  a  result,  an  average  additional  administrative  burden  for  European  collecting  societies 
stemming from the proposed measures is estimated at approximately €16 000 per collecting 
society  per  year,  which  amounts  to  an  EU-wide  average  burden  increase  of  around  €4.1 
million per year. 

Step 5 – Conducting sensitivity analysis 

First  a  change  of  company  size,  ceteris  paribus,  was  tested.  Under  the  assumption  that  all 
European collecting societies are: 

• 

• 

• 

small  companies  (as  defined  in  Directive  78/660/EEC,  see  Step  1):  the  average 
administrative burden would amount to €5 300 per collecting society per annum, or 
€1.35 million for the EU, 

medium-sized  (as  defined  in  Directive  78/660/EEC,  see  Step  1):  the  average 
administrative burden of €14 100 per collecting society per annum, or €3.6 million 
for the EU, 

large  (as  defined  in  Directive  78/660/EEC,  see  Step  1):  the  average  administrative 
burden of €46 700 per collecting society per annum, or €11.9 million for the EU. 

Second,  the  assumption  about  the  current  reporting  practices  in  the  Member  States  (Step  2) 
was lifted and all collecting societies were deemed to prepare no information at the moment. 
Other steps being the same as in Step 4, the average burden per collecting society per year is 
estimated at €22 800 with the total for the EU at €5.8 million. 

Third, it was assumed that all companies prepare some sort of reporting and new obligations 
would  be  entirely  an  additional  administrative  burden  (as  presented  in  Table  P5.3).  Under 
these conditions the average burden per collecting society per year is estimated at €5 900 with 
the total for the EU at €1.5 million. 

To  sum  up,  the  overall  administrative  burden  stemming  from  the  proposal  would  situate 
somewhere between €1.5 million and €5.8 million for all EU collecting societies (taking into 
consideration  their  sizes)  per  year,  which  would  translate  into  an  average  per  collecting 
society of between €5 900 and €22 800 per year.  

Step 6 – Putting the compliance cost in perspective  

In  order  to  better  illustrate  the  compliance  cost  estimated  above,  it  has  been  compared  to 
certain  indicators  of  collecting  societies  activity,  such  as  the  turnover  (collections  of  2010) 
and operating expenses. This data, together with the personnel cost, have been extracted from 
the Annual reports of the collecting societies for 2010 (see Table F.1.1 in Annex F). For the 
purpose of this estimation and to make sure the share of the additional administrative burden 
is not underestimated, a collecting society with the lowest operating expense has been chosen 
per each size category.  

EN 

181 

   EN 

 
As can be seen in table P.5.4, the compliance cost stemming from the current proposal would 
not  exceed  1.2%  of  operating  expenses  and  0.4%  of  turnover  for  small  collecting  societies, 
and, respectively, 1.3% and 0.1% for the medium-sized ones.  

Table P.5.4 Administrative burden as a share in operating expenses and turnover of collecting 
societies by size  

Turnover/ 
Collections 
2010 

Operating 
expenses 

Personnel cost 

Compliance cost due to the current 
proposal (per collecting society) 

(million EUR) 

(million EUR) 

(million EUR) 

(EUR) 

(a) % of 
operating 
expenses 

(b) % of 
turnover 

1.4  

17.8  

56.3  

0.4 

1.1 

3.8 

0.2 

5 300 

1.2% 

0.4% 

0.8 

14 100 

1.3% 

0.1% 

2.5 

46 700 

1.2% 

0.1% 

Collecting 
society 

Small: 
AGATA (LT) 

Medium-sized: 
Bonus Presskopia 
(SE) 

Large: 
Bild-Kunst (DE) 

Source: Annual reports 2010 of collecting societies (see table F.1.1 in Annex F), own calculations 

Step  7  –  Taking  into  account  the  Commission  proposal  on  simpler  accounting  for  smaller 
companies295  

On  25.10.2011  the  Commission  proposed  a  Directive  to  replace  and  modernise  the  existing 
Accounting  Directives.  The  proposal  simplifies  the  Accounting  requirements  for  small 
companies  and  improves  the  clarity  and  comparability  of  companies’  financial  statements 
within the Union.  

To  illustrate  how  this  proposal  would  affect  the  compliance  costs  arising  from  the  current 
initiative,  an  adjustment  to  the  previous  calculations  were  made  according  to  the  cost 
reduction presented in Table P.5.5 below. 

Table  P.5.5  Changes  in  underlying  costs  of  selected  information  obligations  for  small 
companies due to the Accounting directives review 

Cost for small companies 

Current Cost (c.f. table P.5.2) 

New accounting directives cost 

Ratio: Current cost / New accounting directives cost 

Annual 
report 

Annual 
financial 
statement 

Auditors 
report 

238

238

100%

1 976 

1 115 

56% 

3 855

948

25%

295 

IA for the proposal of a Directive repealing and replacing the Accounting Directives 78/660/EEC and 
83/349/EEC, Annex 7, p. 71  
http://ec.europa.eu/internal_market/accounting/docs/sme_accounting/review_directives/20111025-
impact-assessment-part-1_en.pdf  

EN 

182 

   EN 

 
 
                                                 
Subsequently, costs for small companies per MS were multiplied by the percentage from table 
P.5.4  so  as  to  obtain  the  cost  for  different  scenarios  taking  into  account  the  Commission 
proposal on simpler accounting mentioned above. 

Table P.5.6 Changes in compliance cost of option 4 due to Accounting directives review 

Changes due to Accounting directives review 

Current 
estimation 

New estimation 
after accounting 
review 

change % 

Mixed scenario*, all collecting societies 

4 062 382 

3 972 453 

Per collecting society 

15 931 

15 578 

All collecting societies are small 

1 351 457 

508 511 

Per collecting society 

5 300 

1 994 

All collecting societies deemed to prepare no 
information at the moment 

5 760 559 

5 658 226 

Per collecting society 

22 590 

22 189 

All collecting societies prepare some information at 
the moment 

1 515 117 

1 443 793 

Per collecting society 

5 942 

5 662 

-2.2% 

-62.4% 

-1.8% 

-4.7% 

Source:  Consortium  2009  Administrative  burden  study;  IA  for  the  proposal  of  a  Directive  repealing  and 
replacing the Accounting Directives 78/660/EEC and 83/349/EEC, Annex 7, p. 71; own calculations. 

Notes: * 40% of collecting societies already being under an obligation to produce and make public the annual 
accounts,  these  collecting  societies  will  only  incur  part  of  an  additional  cost  resulting  from  the  need  to  adjust 
their current practices to the requirements of the present proposal 

The most important change stemming from the adjustments applied would clearly be seen for 
the  small  companies  (62%  reduction  in  costs).  The  other  scenarios  would  only  marginally 
change  (cost  reduction  between  2  and  5%)  since  they  take  into  account  the  real  size 
distribution of collecting societies and the number of small CSs is very limited in the EU.  

To sum up, the results for the scenarios analysed under the sensitivity analysis (Step 5) and 
adapted in line with the revision of the Accounting directives are as follows:  

• 

• 

• 

Under the assumption that all European collecting societies are small companies (as 
defined  in  Directive  78/660/EEC,  see  Step  1):  the  average  administrative  burden 
would amount to €1 994 per collecting society per annum, or €508 511 for the EU; 

no change for medium-sized or large collecting societies; 

Assuming  all  collecting  societies  were  deemed  to  prepare  no  information  at  the 
moment, the average burden per collecting society per year is estimated at €22 189 
with the total for the EU at €5.7 million; 

EN 

183 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
• 

Assuming all collecting societies prepare some sort of reporting and new obligations 
would be  entirely an additional  administrative  burden (as presented in Table  P5.3), 
the average burden per collecting society per year is estimated at €5 662 and the total 
for the EU at €1.4 million. 

EN 

184 

   EN 

 
26. 

ANNEX  Q:  COMPLIANCE  COST  OF  OPTION  B2  –  THE  EUROPEAN  LICENSING 
PASSPORT 

26.1.  Database and data processing costs 

Collecting societies were consulted on the costs of operating the IT infrastructure required for 
the granting and administration of their licences for each revenue streams. Collecting societies 
indicated that they do not generally break down their costs specifically for different revenue 
streams296 and generally could not provide a clear breakdown of their costs by cost centre for 
each revenue  stream. Further, no clear breakdown of costs per cost centre is available from 
the  annual  report  or  published  accounts  of  collecting  societies,  although  collecting  societies 
reported that their main costs were personnel costs. On average, personnel costs account for 
approximately 55% of the operating expenses of collecting societies. Most societies, however, 
indicate that IT costs are an important cost factor. For those societies that report IT costs in 
their  annual  reports  and  annual  accounts,  it  is  not  possible  to  draw  clear  conclusions.297  In 
some  instances,  it  can  be  inferred  that  IT  costs  would  amount  from  roughly  5%  to  15%  of 
their operating expenses, but this only accounts for operating expenses and would not reflect 
investments  in  IT  systems.  Further,  information  on  the  specific  costs  of  managing  multi-
territory  licences  is  generally  not  available.  It  is  accordingly  not  possible  to  estimate  those 
costs. 

Scarce  anecdotal  evidence  may  give  a  broad  indication  of  the  costs  involved.  One  major 
society reportedly invested 70€ million over the course of 7 years in upgrading its database 
for  multi-territory  licensing.  ICE,  a  joint  venture  between  PRS  for  Music  and  STIM,  was 
initially created in 2009 to provide a joint database for the two societies. However, the costs 
of setting up and running ICE are not publicly available. ICE reportedly employs a staff of 75 
and  administers  a  database  of  approximately  15  million  works.298  The  staffing  costs  of  ICE 
could be estimated at 5.6€ million per annum – roughly equivalent to the personnel costs of a 
small  society  such  as  TEOSTO.299  The  total  costs  of  running  ICE  would  accordingly  be 
expected  to  be  in  excess  of  5.6  €million  per  annum  -  compared  to  the  approximately  82€ 
million  collected  by  EU  authors'  societies  for  internet  and  new  media  in  the  EU  in  2009. 
Further, ICE is used not only for multi-territory online licences but for most revenue streams, 
including  off-line.  One  middle-sized  collecting  society  estimates  the  costs  involved  in 
managing rights on a multi-territory basis, in particular costs associated with IT infrastructure 
but also those related to staff, IT support, licensing, external consultants and premises, at 4.8€ 
million per annum.  

Moreover,  the  costs  of  documenting  rights  on  a  multi-territory  basis  would  be  expected  to 
include  high  set  up  costs  and,  initially,  relatively  high  running  costs.  This  is  because  the 
documentation  of  works  ownership  on  a  multi-territory  basis  requires  the  creation  or 

296 

297 

298 

299 

Some societies deduct a different administrative charge from different revenue streams. However, this 
method of charging rightholders and members does not imply that costs have been allocated to specific 
revenue streams. Note that "administrative costs" or "administrative charges" are used in the industry to 
refer to the costs charged by collecting societies for their services. 
Some  societies  outsource  some  data  processing,  which  is  reported  in  broader  category  of  overall 
expenses for services from third parties; others include the rental of computer software in the broader 
category of property expenses. 
ICE 
http://globalrepertoiredatabase.com/rfir/ICE%20GRD%20RFI%20Response.pdf, p. 7. 
On the basis of the average cost per collecting society employee in Sweden, where ICE is based.  

Repertoire  Database 

the  Global 

Information, 

response 

Request 

for 

to 

EN 

185 

   EN 

 
                                                 
upgrading  of  IT  systems  which  are  future  proof,  flexible,  and  able  to  interoperate  to  some 
extent  with  existing  tools.  Further,  the  initial  costs  of  "populating"  the  database  would  be 
expected to be high. This entails "disambiguating" ambivalent records, resolving conflicts in 
the data (e.g. in the case of a joint database, if two societies each claim 70% ownership in the 
same  work)  and  the  importing  of  data  concerning  works  published  or  used  in  the  past  over 
several decades.  

However,  the  costs  of  running  and  administering  such  a  database  would  be  expected  to 
decrease  significantly  over  time.  This  is  largely  because  the  initial  investments  will  be 
amortised, and because the data will have been entered and "cleaned" once and for all. The 
registration of new works would concern a smaller number of works and would potentially be 
processed electronically. It would also be registered in a manner which is consistent with the 
standards of the database, thus minimising the need for further intervention in the data. 

Finally,  ICE  illustrates  that  databases  do  not  need  to  be  replicated  by  each  and  every 
collecting  society.  ICE  reportedly  documents  close  to  15  million  works.  In  contrast,  it  is 
estimated  that  the  entire  world  repertoire  would  amount  to  50  million  works  (high  end 
estimate).300  

The  main  advantage  of  the  Passport  option  in  this  respect  is  that  it  allows  societies  to 
aggregate their services and rely on a smaller number of databases and IT infrastructures. This 
would avoid the duplication of costly investments. 

26.2.  Electronic data-processing, invoicing, reporting 

There are already a number of tools available for collecting societies. E.g. for the electronic 
processing of usage reports, one format is available free of charge and has been used already 
by a number of collecting societies.301 For the reconciliation of conflicting invoices, a number 
of licensing entities have developed a common standard.302 For the electronic registration of 
works,  common  standards  are  already  available.303  While  these  standards  and  tools  are 
available, generally at no extra costs, their implementation depends largely on the availability 
of a database. 

Some  collecting  societies  have  indicated  that  short  timescales  for  reporting,  invoicing  and 
reporting  can  realistically  be  achieved  by  them.  Reporting  usage  in  detail  to  rightholders  is 
also done by some societies, and is not thought to be problematic, as it depends mainly on the 
existence of appropriate databases and on the implementation on automatic processing of the 
data. 

26.3.  Arbitration 

The  costs  of  an  arbitration  mechanism  would  vary  according  to  the  precise  nature  of  the 
arbitration  mechanism  chosen.  On  a  low  end  estimate,  societies  that  already  operate 
alternative  dispute  resolution  (excluding  royalty  disputes)  report  that  the  costs  of  setting  up 

300 
301 

302 

303 

See Annex I. 
E.g.  the  DDEX  format  has  been  used  already  by  CELAS,  GEMA,  PAECOL,  PRS  for  Music,  NCB, 
SABAM, SACEM, SGAE.  
E.g.  the  Claim  Confirmation  &  Invoice  Details  (CCID  version  13)  format,  which  is  used  at  least  by 
ARMONIA  (a  group  comprised  of  SACEM,  SIAE  and  SGAE),  CELAS,  GEMA,  SACEM, 
SACEM/DEAL, PRS for Music and PAECOL.  
E.g. the CISAC Common Works Registration format, available to CISAC members. 

EN 

186 

   EN 

 
                                                 
such a mechanism would be in the range of €35000, and the operating costs in the range of € 
11000 per year. At the other end of the scale, operating a full blown copyright tribunal would 
cost approximately € 86000 per year. However, these costs relate to bodies which operate in 
relation  to  several  rights  and  revenue  streams.  The  costs  of  operating  an  arbitration 
mechanism limited to online rights might be lower. 

26.4.  Administrative burden 

The  main  information  obligations  resulting  from  compliance  with  the  passport  option  are 
providing  users,  rightholders  and  societies  with  access  to  information  on  the  repertoire 
administered  by  the  passport  entity;  and  providing  users,  rightholders  and  societies  with 
information as to how the passport entity complies with passport rules.  

The cost of providing remote access to such a database is expected to be marginal, especially 
in  comparison  with  the  cost  of  creating  and  administering  a  multi-territory  database. 
Similarly, the cost of informing users, rightholders and societies as to how compliance with 
passport criteria is ensured are expected to be marginal. 

26.5.  Conclusion 

Investments are required in order for societies to deliver multi-territory licences. Currently, it 
is not possible to quantify the investments required.304 However, it is clear that a number of 
licensing  entities  would  be  expected  to  be  able  to  comply  with  passport  requirements  at  a 
reasonable cost. It is also clear that duplicating those investments would not be necessary to 
gain  a  comprehensive  overview  of  rights  ownership  in  the  EU  –  there  is  no  need  for  27 
databases  to  record  the  entire  EU  repertoire,  as  relatively  recent  databases  are  already  in  a 
position to reference a large share of the EU repertoire. Further, it would not be economically 
viable for all societies to duplicate those costs – for many, these would be unsustainable. 

The passport option sets requirements which are aimed to provide minimum guarantees that 
copyright is licensed and managed with accuracy. It also seeks to ensure that societies which 
do not have databases running only face minimal costs in order to gain access to the multi-
territory  licensing  market,  by  using  existing  or  developing  infrastructure  developed  by 
passport entities. 

304 

In future, the G&T requirements foreseen in this impact assessment would be expected to bring more 
clarity as to the costs involved. 

EN 

187 

   EN 

 
                                                 
27. 

ANNEX  R:  COMPARISON  OF  THE  COMBINATIONS  OF  G&T  AND  "LICENSING" 
OPTIONS  

27.1.  Guarantee  sufficient  transparency  and  control  over  the  activities  of  collecting 

societies 

Objectives ► 

Effectiveness  

Efficiency 

Guarantee the 
application of 
G&T standards 
in CS 

Guarantee 
transparent and 
fair handling of 
income by CS 

Ensure legal 
certainty for 
users and 
licensors 

Enhance the capability 
of licensors by ensuring 
they use licensing 
infrastructure fit for the 
online environment 

Cost-effectiveness 

0 

+ 

0 

+ 

++ 

++ 

0 

= 

= 

0 

= 

= 

0 

- 

- 

Policy Options ▼ 

Status quo 

Option A3: 
Codification 

Option A4: 
Framework of 
G&T rules  

Table  R.1.1:  Contribution  of  comprehensive  G&T  rules  to  improving  the  supply  of  multi-
territory licences for the online use of musical works.  

The  codification  of  existing  rules  (option  A3)  would  contribute  to  achieving  transparency 
and  control  over  the  activities  of  CS  mainly  by  ensuring  that  existing  rules  are  clearer  and 
more easily enforced (by recourse to dispute resolution). However, it would fail to capture the 
more  recently  identified  problems  in  relation  to  financial  transparency  and  control  of 
rightholders – which are feature of some more recent national legislation. Accordingly, while 
there  would  be  some  improvements  in  transparency  and  control,  and  in  the  handling  of 
royalties,  these  would  remain  limited  to  general  principles.  Combining  codification  with 
different licensing options provides a further view of how the objective of ensuring sufficient 
transparency and control would be met: 

1. The passport (option B2) would, on the one hand, bring more transparency on the income 
derived  from  online  rights,  by  promoting  rights  management  practices  which  account 
precisely  revenue  and  costs  at  the  level  of  individual  works.  However,  the  passport  option 
would  not  bring  further  transparency  as  to  how  a  society  finances  the  costs  of  its  online 
operations  (i.e.  whether  from  cross-subsidisation  from  other  revenue  streams,  financial 
income, etc.). Lack of financial transparency would thus remain. Similarly, while the passport 
acknowledges that rightholders and societies should choose how best to licence online rights 
(i.e. by choosing the best passport society), it does not strengthen the ability of rightholder to 
control the decision of their collecting society. 

2. Parallel direct licensing (option B3) would to some extent mitigate the limited scope of a 
codification  exercise,  by  allowing  rightholders  to  licence  their  rights  in  parallel  to  the  CS. 
Thus lack of financial transparency and of rightholder control would only affect those online 
revenue  streams  that  rightholders  do  not  licence  in  parallel.  In  all  likelihood,  this  would 
concern online services of lesser commercial importance, as well as rightholders who are not 

EN 

188 

   EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
sufficiently  important  economically  to  licence  their  rights  directly.  To  some  extent,  the 
combination of codification with parallel direct licensing might thus seem more proportionate 
(than  parallel  direct  licensing  with  a  framework  of  G&T  rules),  as  the  benefits  of  imposing 
more stringent regulation would be limited to such cases. However, this would be at the cost 
of  accepting  that  “small”  rightholders  and  “small”  services  should  be  subject  to  less 
transparency and control. 

3.  Conversely,  ECL/country  of  origin  (option  B4)  would  put  more  emphasis  on  the  limited 
scope of codification. This is because the ECL/country of origin option, by giving societies a 
presumption  that  they  can  licence  the  rights  of  non-affiliated  members,  EU  wide,  raises  the 
demands and expectations on collecting societies. 

Compared to codification,  a framework  of G&T  rules  (option A4) would further improve 
the oversight of all rightholders over CS and guarantee a fair handling of collected royalties. 
Further, the options available in relation to multi-territory licensing are also likely to have an 
impact on the transparency and control of collecting societies.  

1. The passport (Option B2) would improve transparency and the fair handling of revenues 
for all rightholders. This is because entities which come under the scope of the passport rules 
would have to provide a sophisticated and accurate level of transparency in the reporting and 
distribution  of  remuneration  collected  from  online  uses,  in  line  with  the  demands  of  online 
licensing. This would complement the framework of G&T rules to give a full picture of the 
activities of CS, from their general financial activities (including their investments decisions) 
to the their online activities. 

2.  Parallel  direct  licensing  (Option  B3)  does  not  provide  any  rules  which  would  directly 
improve  the  transparency  and  control  of  rightholders,  as  it  relies  principally  on  allowing 
rightholders to license rights directly. Indirectly, it is possible that this option would give an 
incentive for societies to be more transparent in order to reduce the incentives for rightholders 
to license directly. It would also reduce the negative impacts for rightholders resulting from a 
possible  deficient  implementation  of  the  G&T  standards,  as  rightholders  will  not  be  tied 
exclusively to their society in the way they currently are.  

3. The Extended Collective Licensing ("ECL")/country of origin (Option B4) would not, 
on  its  own,  improve  the  transparency  and  control  of  rightholders  over  CS:  this  is  because 
licensing would remain dependent on local societies, with no guarantee that such societies are 
transparent,  well  governed,  and  apply  existing  rules.  In  this  sense,  ECL/country  of  origin 
would  increase  the  need  for  a  G&T  framework  to  improve  the  oversight  and  control  of 
rightholders over societies granting ECLs in the country of origin of a service. However, the 
fact  would  remain  that  a  local  society  in  each  respective  territory  would  benefit  from  the 
extension  effect,  thus  weakening  the  control  of  rightholders  over  the  way  their  rights  are 
licensed, and limiting the incentives for the local society to improve its services.  

27.2. 

Improve the supply of multi-territory licences for online users 

Objectives ► 

Effectiveness  

Efficiency 

EN 

189 

   EN 

 
 
 
  
 
 
Guarantee the 
application of 
G&T standards 
in CS 

Guarantee 
transparent and 
fair handling of 
income by CS 

Ensure legal 
certainty for 
users and 
licensors 

Enhance the capability 
of licensors by ensuring 
they use licensing 
infrastructure fit for the 
online environment 

Cost-effectiveness 

Policy Options ▼ 

Option B2 + 
framework of 
G&T rules  

Option B3 + 
framework of 
G&T rules  

Option B4 + 
framework of 
G&T rules  

++ 

++ 

+ 

- 

+ 

= 

+ 

+ 

+ 

++ 

+ 

- 

- 

= 

- 

Table R.2.1: Comparison of multi-territory licensing options and comprehensive G&T rules.  

Combined  with  the  application  of  a  G&T  framework,  the  above  analysis  of  impacts 
demonstrates  that  options  based  on  the  passport  (Option  B2)  or  based  on  parallel  direct 
licensing  (Option  B3)  are  the  most  conducive  to  encouraging  the  emergence  of  competitive 
licensing  infrastructures  supplying  multi-territory  licences.  The  ECL/country  of  origin 
licences (Option B4), while not leading to such licensing structures, may improve (subject to 
opt-outs) legal certainty for some users.  

Codification (option A3) or a framework of G&T rules (option A4) would also affect the way 
these  options  improve  the  supply  of  multi-territory  licences,  mainly  because  they  would 
increase,  the  trust  and  confidence  of  rightholders  in  CS.  Over  time,  this  would  reduce  the 
incentives  for  rightholders  to  deliver  multi-territory  licences  through  other  means  than  a 
collecting society. Some rightholders have indicated that they would be prepared to re-entrust 
some of their rights to CS, should there be appropriate levels of governance and transparency. 
This is more likely to be the case under option A4 than under option A3, as the latter would 
not  deliver  transparency  in  the  financial  activities  of  collecting  societies,  and  would  only 
marginally improve the ability of rightholders to control collecting societies. 

The passport (Option B2) would essentially ensure that rightholders and societies choose the 
best licensing infrastructures to license their works on a multi-territory basis. This would be a 
market-driven  aggregation  process,  with  positive  knock-on  effects  for  online  services  and 
consumers.  There  would  be  improved legal certainty for users (dispute resolution available) 
and a clear framework for rightholders and societies to aggregate repertoire, including, if need 
be,  on  the  basis  of  the  right  to  "tag  on"  their  repertoire  to  a  passport  entity.  Rules  on  data-
processing would set a clear and high benchmark for the quality of the services of collecting 
societies.  

The  main  effect  of  combining  codification  with  the  passport  would  be  to  facilitate  the 
unfettered  freedom  of  rightholders  to  withdraw  their  rights  or  entrust  them  to  another 
collecting  society.  This  would  potentially  allow  rightholders  to  “vote  with  their  feet”  more 
easily and withdraw their online rights from their collecting society if they feel that it is not 
adequately  licensing  their  online  rights,  either  themselves  of  through  a  passport  society. 
However,  it  remains  the  case  that  codification  would  not  directly  improve  financial 
transparency.  This  means  that  rightholders  would  not  have  a  clear  picture  of  the  costs  and 
decisions  involved  in  licensing  online  rights.  Codification  would  also  only  provide  very 

EN 

190 

   EN 

 
 
 
 
 
 
 
 
 
general  principles  applicable  to  the  decision  making  process  and  representation  of 
rightholders,  which  are  unlikely  to  yield  significant  improvements  in  the  ability  of 
rightholders to better control and participate in the decisions of collecting societies. 

Comprehensive  G&T  rules  would  contribute  significantly  to  improving  the  effectiveness  of 
the  option.  Rightholders  would  have  a  clear  picture,  including  of  the  implications  from  a 
financial  point  of  view,  of  whether  their  society  should  engage  itself  in  licensing  under 
passport  rules,  or  choose  to  entrust  their  rights  to  a  passport  entity.  Well  governed  and 
transparent societies would be able to reach the most appropriate solution for the licensing of 
their rights on a multi-territory basis in the interest of rightholders.  

Parallel direct licensing (Option B3) would provide a clear framework for the emergence of 
flexible licensing structures delivering fast and timely licences. For consumers, this could lead 
to  more  online  services  launching  faster.  The  main  drawback  of  this  option  is  the  risk  of  a 
two-tier licensing infrastructure, with no guarantee that the lower tier could have access to the 
upper  tier  of  licensing  infrastructures  (which  would  be  fit  for  the  online  environment),  nor 
indeed  to  the  multi-territory  market.  This  could  be  detrimental  in  particular  to  less 
commercially attractive repertoire (e.g. niche and local repertoire).  

Codification  (option  A3)  would  not  change  the  risk  that  parallel  direct  licensing  leads  to  a 
two-tier licensing infrastructure, with niche and less commercially attractive repertoire being 
licensed  by  the  “lower  tier”  of  collecting  societies.  However,  it  would  make  it  easier  for 
rightholders to exercise their right to withdraw or to licence directly, as these rights would be 
clearly spelled out and could be enforced through dispute resolution. 

Similarly,  the  addition  of  a  G&T  framework  (option  A4),  while  improving  the  trust  and 
confidence of rightholders in collecting societies, is unlikely to change this fact. As a result, 
the breadth of repertoire available in new multi-territory online services would be reduced and 
cultural diversity could suffer.  

ECL/country of origin (Option B4) would have positive effects on aggregation of repertoire 
only  to  the  extent  that  rightholders  do  not  opt  out  and  will,  to  some  degree,  provide  legal 
certainty for users. On the other hand, it is unlikely to lead to the development of licensing 
infrastructures fit for the online environment, as some societies might not have the resources 
or the incentives to adapt their licensing infrastructures.  

Codification would again improve the ability of rightholders to opt-out of the ECL or indeed 
withdraw their rights entirely out of their collecting society. It would also allow rightholders 
the  possibility  of  resolving  conflicts  with  societies,  including  on  opt-outs,  in  a  more 
convenient, cost effective and timely manner than judicial proceedings. However, codification 
would  not  yield  sufficient  trust  and  confidence  that  rights  can  be  safely  left  in  a  society 
granting  ECL/country  of  origin  licences,  because  it  would  not  directly  lead  to  improved 
transparency and control. 

Comprehensive  G&T  rules,  by  increasing  the  trust  and  confidence  of  rightholders,  might 
marginally  reduce  the  opt-outs  of  rightholders  and  thus  improve  aggregation,  although  it  is 
still  likely  that  there  would  still  be  opt-outs  from  a  number  of  societies  by  a  significant 
number of rightholders and CS. It would also set high standards of governance and financial 
transparency that should be observed by societies granting ECL/country of origin licences. 

EN 

191 

   EN 

 
28. 

ANNEX S: MONITORING INDICATORS 

This  section  outlines,  for  each  objective,  the  success  criteria,  their  indicators  and  where  the 
information could be gathered from. 

28.1.  Guarantee  sufficient  transparency  and  control  over  the  activities  of  all 

collecting societies 

28.1.1.  Ensure transparency and control over collections and distributions 

Success criteria 

Indicators 

Source of information 

Access to documents and 
information  as  set  out  in 
the proposal.  

Number of societies that grant access to such 
documents and information to the public and 
to their members. 

Websites of collecting 
societies, surveys among 
rightholders and users. 

Ability  to  influence  key 
decisions. 

Number of societies that transposed rules on 
rightholder involvement in the decision-
making process including representation in 
the governance bodies. 

Number of disputes concerning these issues. 

Review of societies 
documents, information from 
societies and national 
authorities, contacts with 
rightholders. 

28.1.2.  Guarantee distribution of collected royalties 

Success criteria 

Indicators 

Source of information 

Timely 
efficient 
and 
distribution  of  collected 
royalties  (including  via 
reciprocal  representation 
agreements). 

Number of societies that transposed rules on 
rights of rightholders to approve distribution 
schedules, separation of assets, accounting 
revenues and costs per revenue stream, 
prudential investment rules, etc. 

Royalties collected/royalties distributed 
ratio. 

Costs/revenue ratio. 

Amount of undistributed royalties per year. 

Time taken to distribute royalties. 

Number of disputes concerning these issues. 

Annual accounts and auditor's 
report, review of societies 
documents, information from 
collecting societies and 
national authorities. Contacts 
with rightholders. 

EN 

192 

   EN 

 
 
28.2. 

Improve multi-territory licensing for on-line use of musical works 

28.2.1.  Ensure the development of licensing infrastructures fit for the online environment 

Success criteria 

Indicators 

Source of information 

Availability  of  accurate 
recording 
databases 
rights 
ownership 
information 

Ability  to  process  electronic  registration  of 
works 

Ability  to  process  work-share  and  multi-
territory ownership information 

Electronic, 
timely 
work-share basis 

invoicing 

accurate, 
of 

Availability  of  the  databases  to  interested 
parties. 

Reduction/avoidance of double invoices 

Use of IT  tools  in  the reporting of  uses  and 
in the invoicing.  

Tools  and  procedures  to resolve  conflicts  in 
ownership data. 

Passport  entities,  collecting 
societies 
organisations 
administering such databases. 

or 

Rightholders (registering their 
works  and  accessing 
the 
databases). 

Users  

Users,  passport  entities,  other 
industry  players  providing  IT 
solutions. 

and 

Accurate 
distribution 
rightholders 

timely 
to 

Accurate  and  timely  reports  to  rightholders 
on works usage per territory. 

Annual  reports,  accounts  and 
auditor's  reports  of  collecting 
societies, rightholders. 

28.2.2.  Ensure that all repertoire can be aggregated and licensed on a multi-territory basis 

Success criteria 

Indicators 

Source of information 

Availability  of  repertoire 
for  multi-territory  online 
licensing 

Number  of  passport  entities  and  breadth  of 
repertoire available 

Passport  entities,  collecting 
societies, 
rightholders, 
commercial users. 

Whether  part  of 
licensed on a territorial basis 

the  repertoire 

is  still 

Number  of  societies 
repertoire to a passport entity 

tagging  on 

their 

Increase  in  online  services  operating  across 
the EU (indirect indicator) 

28.2.3.  Ensure legal certainty for users and licensors  

Success criteria 

Indicators 

Source of information 

Legal  certainty  for  the 
conditions  of  operation 
of  entities  licensing  on  a 
multi-territory basis 

Availability 
of 
arbitration  mechanisms 
for 
multi-territory 
licences 

Compliance  of 
passport and G&T rules. 

licensing  entities  with 

Existence of arbitration mechanisms. 

Bringing  of  complaints,  issues  dealt  with, 
results. 

Member  States,  national  case 
entities, 
law, 
commercial 
users, 
rightholders. 

passport 

Passport entities, rightholders, 
commercial users. 

EN 

193 

   EN 

 
 
 
 
 
 
29. 

ANNEX T – GLOSSARY 

29.1.  Legislative references 

Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the 
harmonisation of certain aspects of copyright and related rights in the information society, OJ 
L 167, 22.6.2001, p.10. ("Copyright in the Information Society Directive") 

Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 
on  rental  right  and  lending  right  and  on  certain  rights  related  to  copyright  in  the  field  of 
intellectual property, OJ L 376, 27.12.2006, p. 28. ("Rental and Lending Directive") 

Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 
on  the  resale  right  for  the  benefit  of  the  author  of  an  original  work  of  art,  OJ  L  272, 
13.10.2001, p. 32. ("Resale Right Directive") 

Council  Directive  93/83/EEC  of  27  September  1993  on  the  coordination  of  certain  rules 
concerning  copyright  and  rights  related  to  copyright  applicable  to  satellite  broadcasting  and 
cable retransmission, OJ L 248, 6.10.1993, p. 15. ("Satellite and Cable Directive") 

Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the 
legal protection of computer programs (Codified version), OJ L 111, 5.5.2009, p. 16–22.  

Directive 2004/48/EC of the European Parliament and of the Council on the enforcement of 
intellectual property right, OJ L 157, 30.4.2004, p. 45–86. 

Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the 
legal protection of databases, OJ L 77, 27.3.1996, p. 20–28.  

Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 
on the term of protection of copyright and certain related rights (codified version), OJ L 372, 
27.12.2006, p. 12–18.  

Directive 2011/77/EU of the European Parliament and of the Council of 27 September 2011 
amending  Directive  2006/116/EC  on  the  term  of  protection  of  copyright  and  certain  related 
rights, OJ L 265, 11.10.2011, p. 1-5. 

29.2.  Definitions 

"Creative industries": they include services such as publishing activities (books, periodicals 
and software), motion pictures, video and television programme production, sound recording 
and  music  publishing  activities,  programming  and  broadcasting  activities,  computer 
programming,  architectural  and  engineering  services,  advertising,  design  activities, 
photographic  activities, 
interpretation  activities,  creative,  arts  and 
entertainment activities. 

translation  and 

"Copyright  and  related  rights":  copyright  is  vested  in  authors  whereas  related  rights  are 
vested  in  performers,  phonogram  (i.e.  record)  and  film  producers  as  well  as  broadcasting 
organisations. Copyright and related rights include so-called "economic rights" which enable 
rightholders to control (license) the use of their works and other protected subject matter (i.e. 
performances,  phonograms,  audiovisual  productions  and  broadcasts)  and  to  be  remunerated 

EN 

194 

   EN 

 
for  their  use.  These  rights  normally  take  the  form  of  exclusive  rights  and  include  (among 
others): the right to copy or otherwise reproduce any kind of work and other protected subject 
matter; the right to distribute copies to the public and the right to communicate to the public 
performances  of  such  works  and  other  protected  subject  matter.  These  rights  are,  to  a  large 
extent, harmonised at the EU level. They can be managed directly by the original rightholder 
(e.g. the author of a book) or by those to whom the rights have been transferred (e.g. a book 
publisher).  They  can  also  be  managed  collectively  by  a  collecting  society.  Authors  are  also 
granted so called "moral rights" (these are normally not granted to rightholders protected by 
related rights though some legislations provide for moral rights for performers). Moral rights 
may include the right to decide on disclosure of the work; the right to claim authorship of the 
work and the right to object to any derogatory action in relation to the work. Moral rights are 
not harmonised at the EU level. 

"Work": creative output of authors protected by copyright. It includes: literary (books, lyrics, 
etc.), dramatic (plays, opera librettos, etc.), musical and artistic (photography, painting, etc.) 
works. 

"Other  protected  subject  matter":  output  of  holders  of  related  rights  i.e.  performers, 
phonogram and film producers and broadcasting organisations.  

"Commercial users": any person or entity involved in the provision of goods or services who 
for its activities needs a licence from rightholders of copyrights and/or related rights. 

"Collecting societies": organisations traditionally set up by rightholders at national level and 
whose sole or main purpose is to manage copyright or related rights on their behalf.  

"Collective rights management": means the provision of the following services: the grant of 
licences  to  commercial  users,  the  auditing  and  monitoring  of  rights,  the  enforcement  of 
copyright  and  related  rights,  the  collection  of  royalties  and  the  distribution  of  royalties  to 
rightholders. 

"Repertoire":  the  sum  of  the  rights  of  all  rightholders  that  a  collecting  society  directly 
represents. 

"Reciprocal  representation  agreement":  bilateral  agreements  between  collecting  societies 
whereby  one  collecting  society  grants  to  another  the  right  to  represent  its  repertoire  in  the 
territory of the other. Thus, along with its own national repertoire, society A also obtains the 
right  to  license  the  repertoire  of  society  B  with  which  it  has  a  bilateral  arrangement.  In  the 
case of authors' rights in musical works, the reciprocal agreements are normally limited to the 
territories in which the societies operate. 

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Commercial  
user 

Consumer

Rights in 
FR, PL, X repertoire
for PL territory only

PL Collecting Society 

FR 
repertoire, 
PL rights

PL
repertoire 

X 
repertoire 

Consumer

Reciprocal 
representation 
agreement 
PL-FR societies 

Author 

Publisher 

Commercial  
user 

Rights in  
FR, PL, X repertoire 
for FR territory only

Consumer

Consumer 

FR Collecting Society 

X 
repertoire 

PL 
Repertoire, 
FR rights 

FR 
repertoire 

Author 

Publisher

Table T.2.1: Simplified illustration of the functioning of a "traditional" reciprocal representation agreement for 
the licensing of musical works. 

"Reproduction  right":  the  right  to  authorise  or  prohibit  direct  or  indirect,  temporary  or 
permanent reproductions of a work or other protected subject matter by any means and in any 
form, in whole or in part (Article 2 of Copyright in the Information Society Directive). 

"Distribution right": the right to authorise or prohibit any form of distribution to the public 
of  the  original  or  copies  of  a  work  or  other  protected  subject  matter  by  sale  or  otherwise 
(Article 4 of Copyright in the Information Society Directive and Article 9 of the Rental and 
Lending Directive). 

"Right  of  communication  to  the  public":  the  right  to  authorise  or  prohibit  any 
communication to the public of a work or other protected subject matter by wire or wireless 
means  (includes  acts  such  as  broadcasting).  Recognised  as  a  broad  exclusive  right 
encompassing the making available right (see below) to authors (Article 3(1) of Copyright in 
the Information Society Directive); of a more limited scope for other rightholders (Article 8 of 
the Rental and Lending Directive). 

"Right  of  making  available":  the  right  to  authorise  or  prohibit  the  making  available  to  the 
public of a work or other protected subject matter in such a way that members of the public 
may  access  them  from  a  place  and  at  a  time  individually  chosen  by  them  (Article  3  of 
Copyright in the Information Society Directive). 

"Rental  and  lending  right":  the  right  to  authorise  or  prohibit  the  rental  or  lending  of  the 
original  or  copies  of  a  work  or  other  protected  subject  matter  (Article  3  of  the  Rental  and 
Lending Directive). 

"Artists' resale right": a right to receive a royalty based on the sale price obtained for any 
resale of the work, subsequent to the first transfer of the work by the author provided that the 
resale  involves  as  sellers,  buyers  or  intermediaries  art  market  professionals,  such  as 
salesrooms, art galleries and, in general, any dealers in works of art (Article 1 of the Resale 
Right Directive). 

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"Mechanical rights": term originally used to refer to the right to reproduce musical works in 
a  physical  music  carrier  such  as  a  record  or  a  CD.  Also  used  now  to  refer  to  the  right  to 
reproduce a musical work for online uses. Mechanical rights are covered by the reproduction 
right. 

"Performance  or  performing  rights":  term  used  to  refer  broadly  to  rights  related  to  the 
"communication" of works (as opposed to physical distribution) by acts such as broadcasting 
on TV or radio, playing of music in places such as bars or concert halls, etc. Also used to refer 
to the making available of work or other protected subject matter in the Internet.  

"Blanket  licence":  The  expression  is  used  to  refer  to  licences  which  cover  the  entire 
repertoire represented by a collecting society. 

"Compulsory  licence":  refers  to  a  situation  established  by  law  for  specific  kinds  of  uses 
whereby the owner  of the rights cannot oppose  the granting of a licence but the licence fee 
shall still be agreed between the user and the rightholder or determined by a tribunal or other 
competent body.  

"Reprography  copying":  a  possible  exception  or  limitation  of  the  reproduction  right  in 
respect of reproductions on paper or any similar medium, effected by the use of any kind of 
photographic technique or by some other process having similar effects (Article 5(2)(a) of the 
Copyright in the Information Society Directive) 

"Private copying": a possible exception or limitation of the reproduction right in respect of 
reproductions on any medium made by a natural person for private use and for ends that are 
neither directly nor indirectly commercial (Article 5(2)(b) of the Copyright in the Information 
Society Directive). 

"Anglo-American repertoire": industry jargon for musical works registered by their authors 
with the collecting societies in the U.S. and the United Kingdom or originating from the U.S. 
and the United Kingdom. 

"Continental repertoire": industry jargon for musical works registered by their authors with 
the collecting societies in continental Europe or originating from continental Europe. 

"Music  publisher":  music  publishers  market  musical  works  and  provide  authors  with  a 
number of other services. Publishers usually track various royalty payments, monitor uses and 
license certain uses on behalf of authors. They often pay the author an advance on royalties 
and promote the work, e.g. by creating "demo" recordings or finding performers and record 
producers  which  might  be  interested  in  the  work.  In  return,  publishers  obtain  a  share  of 
royalties  from  rights  and/or  a  transfer  of  certain  rights  e.g.  mechanical  rights  (see  Annex  J, 
table J.3, for an illustration of the revenue streams of publishers). 

"Record  producer"  (also  referred  to  as  "phonogram  producer):  record  producers  take  the 
initiative  and  arrange  the  recording  of  music  performances  as  well  as  the  marketing  and 
distribution of those recordings.  

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