The European Commission has issued a proposed Directive on the “collective management of copyright and multi-territorial licensing of rights in musical works for online use”.  The focus of the Directive is on the freedom of choice for rights holders (namely record labels and musicians) – they should be entitled to choose which collecting society to use in managing their rights and decide which territories that collecting society should be responsible for, irrespective of the territory in which that collecting society is established.

Music collecting societies currently operate predominantly on a national basis within the EU, with each society managing the rights in their respective territories only.  The EC is currently looking at this structure and considering ways of improving licensing models in the EU.  This ties in with the EC’s agenda of breaking down the barriers within the EU which impede access to content and impose artificial price differentials.  There is also a concern that the current structure does not best serve the interests of rights-holders, licensees or consumers, due to the lack of competition between the societies.  

Much of the Directive focuses on the standards which collecting societies in the EU are expected to observe to ensure a minimum standard of service for rights holders and includes specific provisions which address the multi-territorial licensing of online rights in musical works.

In practice, this could mean that a few collecting societies (those which are best managed and offer the best returns) might emerge and provide a pan-European service for the majority of valuable repertoires in the EU.    The focus on improving the service for rights holders could also result in greater competition between collecting societies.  This could, in turn, potentially drive down pricing for licensees looking to acquire licences across a number of EU territories, particularly when compared with the current administrative costs of having to negotiate licences individually for each territory.

These proposals have been on the EC’s agenda for some time, having made initial recommendations for multi-territorial licensing in 2005.   The Directive is still in draft form and has not yet been adopted.