The recent clearance of a joint venture between three collecting societies is one step nearer to breaking down national barriers to the provision of copyright licensing and administration services within the EU. The joint venture between three collecting societies (PRSfM, STIM and GEMA) – and the European Commission’s decision to clear it (subject to commitments) is interesting not only because it fits under the e-commerce umbrella (see our previous blogs on this subject here, here, here, here), but also because it provides a solution to the long-criticised practice by collecting societies of dividing up the licensing and administration of copyright along national boundaries. 

To be clear, there is a distinction to be made between on the one hand the barriers to cross-border trade created by the scope of national copyright laws and, on the other, the use of contractual terms in copyright licences which create territorial barriers having the same effect. This decision deals with the latter.

Several “firsts”

The joint venture will provide new products on both sides of this two-sided market:

  • The joint venture will provide online platforms such as iTunes, YouTube or Deezer with a single licence for music rights for the repertoires of all three collecting societies for every country in which the platforms operate. Prior to this, online platforms needed to obtain a licence from each collecting society across multiple territories. 
  • The joint venture will also provide copyright administration services on a multi-territorial basis to collecting societies and to large music publishers.  This is the first time collecting societies have offered copyright administration services on a multi-territorial basis. On the whole, collecting societies have hitherto only administered each other’s repertoires for the home country of the administrating collecting society.

What was the Commission concerned about?

The Commission’s concerns lay in the market for the provision of copyright administration services to a narrow set of customers - large music publishers (so-called “Option 3 publishers”). These are publishers who license the mechanical rights to their own repertoires themselves and obtain copyright administration services from collecting societies. The Commission was concerned that, post-merger, the parties would force Option 3 publishers to source all their administration services from the joint venture and would exclude competing collecting societies from providing such services.  The Commission was also concerned that the merger would bundle administration services or impose exclusivity clauses all of which would foreclose competing collecting societies from the market. 

The commitments made by the parties:

  • not to leverage their dominance in any one market to oblige Option 3 publishers to buy their copyright administration services from the joint venture;
  • not to enter into exclusive contracts; 
  • to offer its services to competing copyright societies on fair reasonable and non-discriminatory terms when compared to the terms it offers its parent companies; 
  • to facilitate switching; and 
  • to allow termination of the contract at any time on the provision of reasonable notice.

This joint venture put into practice the idea, made legally binding in the recently adopted Collective Management Directive (“CMD”), that right-holders should to be able to switch to a different collecting society irrespective of the territory of their residency or that of the collecting society administering the rights. Crucially, the Collective Management Directive provides for multi-territorial licensing of online rights - a key rationale for the above-mentioned joint venture.

It will not be surprising if the impact of the CMD as well as the European Commission’s investigations in relation to the e-commerce sector enquiry and the review of copyright rules across the EU, pave the way for more of these exciting “tie-ups” and new business models in the future.