The European Parliament and Council have agreed the text of the EU Directive on the "collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market". The Draft Directive, which was proposed by the Commission in 2012, is intended to facilitate legal online music services by improving the management of all collecting societies and setting minimum standards for the multi-territorial licensing of rights in musical works for the provision of online services.

Overall, the new Directive lays down general requirements, applicable to all collecting societies in the EU, which are necessary to ensure the proper functioning of the management of copyright and related rights. These relate to areas such as membership and organisation, management of revenue and transparency and reporting. More specifically, the Directive also sets out the requirements that collecting societies established in the EU must fulfil specifically when granting multi-territorial licences of authors' rights in musical works to online services providers. In a major change to current practice, service providers will be able to deal with the collecting society of their choice, from a number who will operate across EU borders, rather than having to deal with a different collecting society in each jurisdiction as is currently the case. Furthermore, collecting societies will be obliged to issue licences in respect of smaller / less popular repertoires to ensure they have access to the market. The Directive also contains provisions regarding royalty payments, including a time limit stipulating that payments must be made to rightsholders no later than nine months from the end of the financial year in which the rights revenue is collected.

Whilst the Directive will to some degree facilitate the licensing of music for online services, it does not deal specifically with the multi-territorial licensing of other rights, such as rights of music performers and record labels in sound recordings in which musical works are embodied, which are also necessary for the use and exploitation of music online.  As such, it is unclear how useful the Directive will be in practice to unlock a single European licensing market.

At the time of writing, the final version of the Directive has not yet been published pending its formal adoption– the full Parliament vote is expected to take place in February 2014. Once adopted, the deadline for implementation by Member States will be 2016. The UK has in the meantime pressed ahead with the draft Copyright (Regulation of Relevant Licensing Bodies) Regulations which would give the government a backstop power to direct collecting societies to implement a code of conduct should their self-regulation not meet the required minimum standards, and has indicated that any necessary changes will be made to the UK Regulations once the EU Directive is adopted.

For further information, please see here for the European Parliament's press release and here for Commissioner Michel Barnier's speech.