On 26 February 2014, the European Parliament and the Council of the European Union agreed a Directive on the collective management of copyright and the related rights as well as on multi- territorial licensing of rights in musical works for online use in the internal market (hereinafter referred to as the “Directive”).
According to Article 43 of the Directive, Member States were to bring into force by 10 April 2016 the provisions agreed in the Directive. Italy is late in transposing the law into national law since, for the time being, only a draft law has been presented on 15 April 2016.
The main objectives of the Directives include the harmonisation of the operation of the so- called collecting societies managing copyright and the related rights in order to:
- improve the efficiency of collective management organisations of authors’ rights and related rights and assure an even greater protection of such rights in respect of free movement of goods and services, within the framework of the single European market;
- create a digital single market of copyright and related rights on works for online use and regulate platforms offering a musical service on the web.
Indeed, as stated by Recital 6 of the Directive, “The need to improve the functioning of collective management organisations has already been identified in Commission Recommendation 2005/737/EC (3). That Recommendation set out a number of principles, such as the freedom of rightholders to choose their collective management organisations, equal treatment of categories of rightholders and equitable distribution of royalties”.
Of course some of the first commentators on the issue attributed to the Directive the task to overthrow the monopoly of SIAE. As a matter of fact, the objectives pursued by the new Directive seem to be quite different. Hence, some observations must be made on the scope of the change introduced by the new law.
In the first place, authors, artists, interpreters and performers are given the right to choose to become members of different collecting societies for different types of works and for different uses.
Thus Article 5 of the Directive provides that “rightholders shall have the right to authorise a collective management organisation of their choice to manage the rights, categories of rights or types of works and other subject-matter of their choice, for the territories of their choice, irrespective of the Member State of nationality, residence or establishment of either the collective management organisation or the rightholder. Unless the collective management organisation has objectively justified reasons to refuse management, it shall be obliged to manage such rights, categories of rights or types of works and other subject-matter, provided that their management falls within the scope of its activity”.
In addition, “rightholders shall have the right to terminate the authorisation to manage rights, categories of rights or types of works and other subject-matter granted by them to a collective management organisation or to withdraw from a collective management organisation any of the rights, categories of rights or types of works and other subject-matter of their choice, as determined pursuant to paragraph 2, for the territories of their choice, upon serving reasonable notice not exceeding six months. The collective management organisation may decide that such termination or withdrawal is to take effect only at the end of the financial year”.
Therefore, authors who filed rights, categories of rights or types of works and other subject- matter with SIAE may freely withdraw them by submitting a notice not exceeding six months. The collective management organisation may not oppose but, at the most, may decide that such termination or withdrawal is to take effect only at the end of the financial year.
In the second place, a greater participation by rightholders is expected in the management of the collective organisation, implementing harsher controls on conflicts of interest and establishing new obligations for collective management organisations.
In particular, Article 15 of the Directive, expressly provides that “Member States shall ensure that a collective management organisation does not make deductions, other than in respect of management fees, from the rights revenue derived from the rights it manages on the basis of a representation agreement, or from any income arising from the investment of that rights revenue, unless the other collective management organisation that is party to the representation agreement expressly consents to such deductions”. And also, “The collective management organisation shall carry out such distribution and payments to the other collective management organisation as soon as possible but no later than nine months from the end of the financial year in which the rights revenue was collected, unless objective reasons relating in particular to reporting by users, identification of rights, rightholders or matching of information on works and other subject-matter with rightholders prevent the collective management organisation from meeting that deadline”.
Control and transparency mechanisms have been introduced on financial statements and management policies, even through the publication, in the websites of the collective management organisations, of the following information:
“a) the rights revenue attributed to the rightholder, the amount paid by the collective management organisation to the rightholder per category of rights managed and per type of use for the rights managed within the representation agreement, and any rights revenue attributed to the rightholder and not yet paid for any period;
b) deductions made in respect of management fees;
c) deductions made for any purpose other than in respect of management fees pursuant to Article 15;
d) information on any licences granted or refused with regard to works and other subject-matter covered by the representation agreement;
e) resolutions adopted by the general assembly of members in so far as those resolutions are relevant to the management of the rights under the representation agreement”(see Article 19).
Finally, new rightholders’ obligations were established to set up mechanisms for handling complaints and for the alternative resolution of disputes, by making available “effective and timely procedures” (Articles 33 and 34).
Lastly, Title III of the Directive deals with multi-territorial licensing and applies only to collective management organisations of authors’ rights in musical works.
The new system should suggest be a simplification in the licensing processes to the advantage of companies wishing to create a music service on the web in Europe, which will no longer be forced to individually contact each national collective management organisation, but may interact and negotiate with a single interlocutor to obtain a pan-European licence.
For this purpose, the Directive enables management companies to interconnect through mandates for the mutual representation of their repertoire on a non-discriminatory and non- exclusive basis for multi-territorial and multi-repertoire licensing (Article 29-30). Should a collective management organisation refuse or not be able to grant such licensing because the mentioned mutual representation agreements have not been entered into – upon the expiry of the term of 10 April 2017, set out in Article 31 of the Directive – rightholders may withdraw the online rights in their licensed musical works so as to manage, autonomously or through any other intermediary, multi-territorial licences for their online rights in musical works.
The consequences of this new law will concern the facilitation of the voluntary aggregation of repertoire for online use of musical works all over the European Union and the increase of a competition pressure pushing each national management company to develop more efficient licensing practices, contributing to the birth of a new future scenario for online musical works.
In light of the foregoing, it is clear that the implementation difficulties that Member States shall have to address are, mainly, the harmonisation of the different national laws that govern the operation and management of collecting societies, practical inefficiencies in the management of copyright and the related rights in the framework of the various internal markets, lack of transparency and efficiency in the procedure for the distribution of profits to rightholders, as well as the non-licensing of rights on new digital platforms, and, lastly, the phenomenon of piracy.
As regards Italy and the much debated monopoly of SIAE, it cannot be left unsaid that the Directive, in actual terms, does not affect the monopoly. It is only Italy which can abrogate article 180 of Copyright law and put an end to the monopoly of SIAE.
Therefore even after the approval of the Directive, the monopoly regime in which SIAE operates is still to be considered intact.
At the most, authors wishing to avoid adherence to SIAE can, on the basis of the terms of the Directive, turn to other Authors’ societies of other Member States operating also in Italy.