Source: People’s Daily

The State Intellectual Property Office (hereinafter referred to as SIPO) has met with several foreign and Chinese record companies, as well as several major domestic online music service providers. During this time, SIPO instructed the latter entities to obtain comprehensive authorization from the record companies prior to playing or selling music and not to obtain or grant sole licenses for the music they provide. The copyright environment for music distributed online in China has seen a clear turn in the right direction in recent years with SIPO launching successive anti-piracy Sword Actions, while at the same time redoubling its efforts to crack down on online copyright infringement and piracy. With the public beginning to grow accustomed to paying for music online, the National Copyright Administration (hereinafter referred to as “NCA”) has begun to handle issues related to the dissemination of music as well as the authorization thereof.

The problems the online music market faces are as follows: first, online music services are increasingly purchasing sole licensing rights from record companies, whereupon they raise the price of the licensing fees, thus ensuring that smaller providers are unable to compete. Second, there have been other online music service providers which have been providing music without having received the proper authorization from the rights holder.

The NCA views monopolizing and price-gouging behaviors undertaken on the part of online music service providers as not conducive to musicians as it may keep their music from being broadcast on a larger scale. Furthermore, the NCA holds that this behavior not only hampers innovation and creativity in local music, but also hinders the healthy development of the online music industry. It may also be the case that the granting of sole licensing rights could lead to a rebound in piracy activities, which will bring harm to the current music copyright system. It should be noted that granting sole licenses is not a common practice in the international music industry. Record companies outside of China rarely grant a single music platform sole rights to their entire libraries. When an online music platform is granted a sole license in an album, the term of that license is usually rather short. Furthermore, the sole license is only granted at the album-level, not the library-level. Thus, what has been going on in China is not within international norms.

Thus, when they met with online music providers such as Tencent, Net Ease, Ali and Baidu, the NCA notified them of the obligation that online music services have to fulfill the promises they made in signing the Declaration of Self-Regulation Online Music for Music Copyright Protections in accordance with the requirements of Chinese copyright law, which are the following:

  • that the online music service provider will abide by all copyright laws and regulations, refuse to engage in any type of infringing behavior and refrain from disseminating music online without having obtained prior authorization.
  • that the online music service provider will cooperate with and support the NCA in their focused regulation of online music, will handle copyright disputes in an appropriate manner and prioritize the use of means such as conciliation and mediation to solve copyright disputes where they do arise.
  • that the online music service provider will follow the principles of fairness and reasonableness in their purchasing of music copyrights, not drive up prices, not engage in predatory bidding and not purchase sole licensing rights.
  • that the online music service provider will be active in its dissemination of online music, promote the sublicensing of online music and to eliminate barriers that are both unlawful and unreasonable and which serve to hinder the wider dissemination and licensing of music copyrights among multiple entities.
  • that all online music service providers shall establish an improved internal copyright management system, which shall handle complaints lodged by the rights holder in a timely and effective manner, protecting the rights and interests of both the artists and the consumers; and, that no online music service provider shall engage in any form of collective management activities with respect to music copyrights; and,
  • that in order to promote a prosperous online music market whose development is both healthy and orderly, the possible establishment of a sound method of licensing with respect to online music shall be actively explored, and that this method shall be consistent with the rules of the market as well as international norms.

In addition to the aforementioned domestic firms, the NCA interviewed a number of foreign firms such as Universal Music, Warner Music and Sony Music, reminding them of the requirement that they abide by copyright laws, regulations and international treaties, that they should exercise and safeguard their rights in accordance with the law and that they refrain from any manner of music-related infringement.