The Commission's proposal aims to establish a legal framework for the collective management of rights that are administered by collecting societies on behalf of rights holders.  The provisions follow a consultation in 2010 which identified:

  • the need for a framework which facilitates online licensing of musical works; and 
  • •the need to improve the governance and transparency standards of collecting societies in general. 

Much of the Directive sets out standards and procedures which should be followed by collecting societies to make the organisations much more transparent.  These include: provisions to avoid delay in payments to rights holders; objective criteria required for tariff setting and requirements for more reporting including an annual transparency report.  While important, we do not think that this will materially effect players in the digital media market.

The provisions relating to multi-territorial licensing of online rights in musical works are of greater interest.  The current proposal does not impose an obligation on collecting societies to offer multi-territorial licensing but does ensure that if a collecting society decides not to do so, that access to multi-territorial licensing is available with regard to online musical works. 

Where a collecting society does not offer a multi-territorial licence a collecting society could request that their repertoire be represented by another collecting society which does offer multi-territorial licensing, and the ability for a collecting society to refuse such a request is limited.  If rights holders' online rights are not offered as part of a multi-territorial licence then, in such circumstances the rights holder must be allowed to either offer multi-territory licensing themselves, or authorise another collecting society to offer multi-territory licensing on their behalf.   

Also of great potential importance is an article requiring member states to allow recourse to their courts for licence disputes with collecting societies. Will this go some way to levelling the playing field in those jurisdictions which do not have a rate setting body simliar to the UK's Copyright Tribunal?  Yet to be seen, but this is a jurisdiction licensees are likely to test.

The implementation of the Directive is some way off, as we are looking at a likely period of 18 months for the Directive to be adopted, plus a further period for Member States to implement the Directive into national law.