Overview
Contracts
Existing practice
Music mediator
Amendments to exploitation and remuneration conditions
Impact on foreign producers and artists
Comment
The Freedom of Creation, Architecture and Heritage Act (the so-called 'Creation Act') was published on July 8 2016. Its 120 articles include many provisions that apply to different creation and heritage sectors.
The act enshrines the right to freedom of creation and the right to broadcast, and states that these rights must:
- be exercised in accordance with the principles governing freedom of expression; and
- respect the rights of creators.
Obstruction (in a concerted manner and using threats) of these rights can result in criminal penalties, including imprisonment and fines.
More specifically, the act fundamentally amends the rules regarding music production and exploitation.
In the section on contracts between phonogram producers and performers, the act sets out several obligations, including a requirement to:
- conclude a written agreement specifying the rights that have been transferred and their field of ​exploitation, duration and territory;
- provide expressly for the transfer of exploitation rights in a non-predictable form;
- pay distinct remuneration by way of salary for the fixation of the performance;
- provide separate remuneration regarding exploitation in a physical format and availability in an electronic format; and
- guarantee a minimum remuneration (in principle, this is determined by a collective agreement) when the phonogram is exploited via streaming.
The act is broadly in line with the phonographic industry's existing practices. Further, it formalises the agreements that were negotiated between the representative organisations of producers, musicians and online services during the review of the act.
The act also establishes a music mediator, whose goal is to conciliate between different players in the music industry:
- phonogram producers;
- performers;
- music service providers; and
- show producers.
Amendments to exploitation and remuneration conditions
The act also amends the following exploitation and remuneration conditions:
- The equitable remuneration system in force for terrestrial radio stations now applies to online stations.
- The act amends the calculation method regarding broadcasting quotas of French songs on the radio, to ensure diversity.
- Alongside technical provisions on calculating and sharing remuneration for private copying, the act extends the remuneration system to certain cloud exploitations. Thus, as an exception to the principle that copy must be provided by the user, recording and remote storage services for radio and television programmes will give rise to remuneration for private copying. This provision is subject to agreements between broadcasters and distributors under the supervision of the National Audiovisual Council.
The method for calculating the minimum remuneration is subject to negotiations and, once agreed, will require the applicable collective agreements to be updated.
Impact on foreign producers and artists
In accordance with the act, performers must receive a salary as remuneration for performances. However, in a June 15 2006 decision, the European Court of Justice held that the provision in the French Labour Code regarding the presumption of salaried status for performers constituted an obstacle to the freedom to provide services, which is guaranteed under Article 49 of the Treaty on the Functioning of the European Union. In light of this decision, Parliament modified the Labour Code to clarify that this provision does not apply to artists who are considered service providers in the state where they normally provide similar services. The act has failed to include this exception in order to take independent artists into account.
The introduction of the equitable remuneration system for terrestrial and online radio stations will lead to revenue losses for artists and producers. It is first likely that the remuneration rate that applies to online radios will be lower than those negotiated with producers' collecting societies. Above all, the remuneration that accompanies the system of statutory licencing benefits only recordings made in Europe. Artists from the United States, Africa or Asia, and more generally recordings made in these countries, will not receive equitable remuneration. It is unlikely that this deprivation of rights will comply with the principles of French law and international treaties.
The act's contractual provisions will enter into force on November 1 2016 and, in principle, will apply only to agreements entered into between producers and artists after that date.
For further information on this topic please contact Eric Lauvaux at Nomos by telephone (+33 01 43 18 55 00) or email ([email protected]). The Nomos website can be accessed at www.nomosparis.com.