PURPOSE: to increase transparency and efficiency in the functioning of copyright collective management organisations, and facilitate the granting of cross-border licensing of authors’ rights in online music.

LEGISLATIVE ACT: Directive 2014/26/EU of the European Parliament and of the Council on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market.

CONTENT: the Directive lays down: i) requirements necessary to ensure the proper functioning of the management of copyright and related rights by collective management organisations; (ii) requirements for multi-territorial licensing by collective management organisations of authors’ rights in musical works for online use.

The directive is linked to the development of the Digital Agenda for Europe and Europe 2020 strategy. Its main points are as follows:

Multi-territorial licensing of online music : currently, in the online music sector, online service providers wishing to obtain licenses for cross-border music services across EU borders have to obtain licences from separate collective management organisations in each EU Member State. The new Directive will enable service providers to obtain such licenses from collective management organisations operating across EU borders.

Clear description of rights of rights holders : the Directive provides that Member States must ensure that collective management organisations act in the best interests of the rights holders whose rights they represent. Rights holders 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 rights holder.

Rights holders will be free to entrust the management of their rights to independent management entities.

Requirements applicable to collective management organisations : in order to ensure proper management of copyright, collective management organisations must observe rules on transparency and reports, as well as on governance and the collection and use of revenue. The Directive establishes, for example, that collective management organisations must have a supervisory role regarding financial management, as well as provisions on their members’ right to vote and their right to vote in the general assembly though a proxy.

Timely and appropriate remuneration for artists : each collective management organisation regularly, diligently and accurately distributes and pays amounts due to rights holders. Revenue will have to be distributed to artists as quickly as possible, and no later than nine months from the end of the financial year in which the rights revenue was collected, unless objective reasons prevent the collective management organisation from meeting that deadline. There are also provisions regarding the use of all sums that could not be distributed.

Representation agreements with other collective management organisations: the Directive introduces rules on representation agreements amongst collective management organisations regarding the grant of multi-territorial licences. To ensure that the creators of music in all Member States have access to licences covering more than one country and to preserve cultural diversity , collective management organisations that do not themselves issue copyright licences for more than one country will be able to request another organisation to represent their repertoire. Under certain conditions, those organisations would be obliged to do so. Collective management organisations will have to manage the repertoire they represent under the same conditions that they apply to their own repertoires.

Dispute resolution : the Directive also introduces provisions on complaint handling and dispute resolution. Member States may provide that disputes between collective management organisations, members of collective management organisations, rights holders or users can be submitted to a rapid, independent and impartial alternative dispute resolution procedure.

ENTRY INTO FORCE: 09/04/2014.

TRANSPOSITION: 10/04/2016.

The European Parliament adopted by 640 votes to 18, with 22 abstentions, a legislative resolution on the proposal for a directive of the European Parliament and of the Council on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market.

Parliament agreed its position in first reading under the ordinary legislative procedure. The amendments adopted in plenary are the result of an agreement negotiated between the European Parliament and the Council. They amend the proposal as follows:

Purpose: the aim of the directive is to lay down requirements applicable to collective management organisations with a view to ensuring a high standard of governance, financial management, transparency and reporting.

The amended text underlines that collective management organisations should continue to play, an important role as promoters of the diversity of cultural expression , both by enabling the smallest and less popular repertoires to access the market and by providing social, cultural and educational services for the benefit of their rightholders and the public.

General principles: Member States should ensure that collective management organisations act in the best interests of the rightsholders whose rights they represent and that they do not impose on them any obligations which are not objectively necessary for the protection of their rights and interests or for the effective management of their rights.

Rights of rights holders: the amended text provides that rights holders 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 these rights.

Rightholders should be free to entrust the management of their rights to independent management entities . Such independent management entities are commercial entities which differ from collective management organisations inter alia because they are not owned or controlled by rightholders.

However, to the extent that such independent management entities carry out the same activities as collective management organisations, they should be obliged to provide certain information to the rightholders they represent, collective management organisations, users and the public.

Organisation of collective management organisations: to ensure that rightholders’ rights are properly managed, collective management organisations will also have to comply with transparency and reporting requirements as well as minimum rules on governance and on the collection and use of revenues.

Each collective management organisation should take all necessary measures so that the persons who manage its business do so in a sound, prudent and appropriate manner, using sound administrative and accounting procedures and internal control mechanisms. Procedures to avoid conflicts of interest should also be set in place.

Management of rights revenues: collective management organisations should be diligent in the collection and management of rights revenue.

A collective management organisation shall keep separate in its accounts: (a) rights revenue and any income arising from the investment of rights revenue; and (b) any own assets it may have and income arising from such assets, from management fees or from other activities.

Distribution of amounts due to rights holders: each collective management organisation should regularly, diligently and accurately distribute and pay amounts due to rightholders.

Amounts should be distributed and paid to rights holders 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 prevent the collective management organisation from meeting that deadline.

When a rights holder authorises a collective management organisation to manage his rights, the collective management organisation should transmit to the rights holder information on management fees and other deductions made on revenue arising from these rights before obtaining his consent to manage his rights. The deductions in question must be reasonable.

Rights managed under representation agreements: collective management organisation should not discriminate against any rightholder whose rights it manages under a representation agreement, in particular with respect to applicable tariffs, management fees, and the conditions for the collection of the rights revenue and distribution of amounts due to rightholders.

Agreements between collective management organisations for multi-territorial licensing: Member States should ensure that any representation agreement between collective management organisations whereby a collective management organisation mandates another collective management organisation to grant multi-territorial licences for the online rights in musical works in its own music repertoire is of a non-exclusive nature. The mandated collective management organisation shall manage those online rights on a non-discriminatory basis.

Obligation to represent another collective management organisation for multi-territorial licensing: where a collective management organisation which does not grant or offer to grant multi-territorial licences for the online rights in musical works in its own repertoire requests another collective management organisation to enter into a representation agreement to represent those rights, the requested collective management organisation is required to agree to such a request if it is already granting or offering to grant multi-territorial licences for the same category of online rights in musical works in the repertoire of one or more other collective management organisations.

The Committee on Legal Affairs adopted the report by Marielle GALLO (EPP, FR) on the proposal for a directive of the European Parliament and of the Council on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market.

The committee recommended that Parliament’s position adopted in first reading, following the ordinary legislative procedure, should amend the Commission proposal as follows:

Subject matter : the amended text stipulated that this Directive lays down requirements necessary to ensure the proper functioning of the management of copyright and related rights by collective management organisations . It also lays down requirements for multi-territorial licensing by collective management organisations of authors' rights in musical works for online use.

Scope : the scope of this proposal has been clarified. It should be possible for Member States to decide that Titles II and IV, with the exception of Articles 35(1a) and 40, are to apply to collective management organisations which, although established outside of the Union, are engaged in activities in their territory. Collective management organisations may also be able to choose to have certain of their activities carried out by subsidiaries or other entities that they own or control.

This Directive is without prejudice to arrangements in the Member States concerning the management of rights, such as extended collective licensing or legal presumptions of representation or transfer, provided that the arrangements in question are compatible with Union law and with the international obligations of the Union and of the Member States.

Title III shall not apply to collective management organisations when they grant, on the basis of the voluntary aggregation of the required rights, a multi-territorial licence for the online rights in musical works required by a broadcaster to communicate or make available to the public its radio or television programmes simultaneously with or after their initial broadcast as well as any online material, including previews, produced by or for the broadcaster.

Collection and use of rights revenue : rights revenue and any income derived from its investment, including interest, may only be used for the deduction of management fees by a decision of the general meeting of members. The collective management organisation shall not be allowed to use rights revenue or any income derived from its investment, including interest, for its own account.

Deductions : the amended text stipulated that the collective management organisation shall, upon receiving a request for membership from a rightholder, communicate to that rightholder its rules on deductions from rights revenue and any income derived from its investment. Deductions should be reasonable in relation to the services provided by the collective management organisation to rightholders.

Licensing and conditions on the use of rights : licensing terms shall be based on objective and non-discriminatory criteria. Collective management organisations providing licences for rights shall not be required to use as a precedent for other types of services, particularly online services, licensing terms agreed with a user, when the user is providing a new type of service which has been available to the public for less than three years. Rightholders shall receive appropriate remuneration for the use of the rights. Tariffs shall be calculated on the basis of objective criteria which reflect, inter alia, the nature and extent of the economic value of the use of the rights in trade.

Collective management organisations shall reply without delay to requests from users, indicating inter alia the information needed for the collective management organisation to provide a proposal for a licence. Upon receipt of that information, the collective management organisation shall promptly notify the user that it has received all the relevant information or specify what additional information it needs in order to provide a proposal for a licence. A collective management organisation shall either propose a license or give a reasoned statement of why it does not intend to licence a particular service within 90 days of receiving a request for a licence together with all the relevant information.

Obligations of users : a new Article has been included stipulating that Member States shall ensure that users comply with the deadlines and schedules set for payments.

Representation agreements between collective management organisations : collective management organisations shall have the right to conclude representation agreements with other collective management organisations in the area of rights management in order to facilitate, improve and simplify the procedures for licensing users, including for the purposes of single invoicing, under equal, non-discriminatory and transparent conditions, and to offer multi-territorial licenses.

Disclosure of information to the public : Member States shall ensure that a collecting society makes public the following information, inter alia: (i) a list of the persons who manage the business of the organisation; (ii) general policy regarding distribution of the amounts due to rightholders; (iii) rules on management fees and withdrawals against income from the investment thereof; (iv) rules on deductions from rights revenue; (v) standard licensing contracts and applicable tariffs; (vi) any information on works for which one or more rightholders have not been identified including, where available, the title of the work, the name of the author, the name of the publisher and any other relevant information available which could be necessary in order to identify the rightholders.

Transparency of multi-territorial repertoire information : a new Article stipulated that a collective management organisation which grants multi-territorial licences for online rights in musical works shall provide to online music service providers, members and other collective management organisations, by electronic means , up-to-date information allowing the identification of the online music repertoire it represents. This shall include the musical works represented,including the names of the artists and the title of the recording .

Accurate and timely reporting and invoicing : the Commission may lay down, by means of an implementing act, standard forms for providing relevent information and standard formats for the invoices. Those implementing acts shall be adopted in accordance with the examination procedure .

Dispute resolution : the amended text stipulated that Member States shall ensure that disputes between collective management organisations and users concerning, inter alia, existing or proposed licensing conditions, tariffs, the calculation of tariffs or any refusal to grant or renew a licence can be submitted to a court or to an independent and impartial dispute resolution body with expertise in intellectual property law. Member States shall provide in their specific dispute resolution legislation that the users are to deposit an interim tariff in an escrow account until the final and irrevocable decision is taken by a court or dispute resolution body in relation to the disputed tariff.

Compliance with this Directive : Member States shall ensure that procedures are set up enabling members of a collective management organisation, rightholders, collective management organisations covered by this Directive, users and other interested parties to submit complaints to the competent authorities with regard to the activities of collective management organisations which are covered by this Directive. Member States shall provide that their respective competent authorities impose appropriate administrative sanctions and take appropriate measures where national provisions adopted in implementation of this Directive have not been complied with, and shall ensure that they are applied.

Reporting : by 5 years after the end of the transposition period, the Commission shall assess the application of this Directive including its impact on the development of cross-border services and on cultural diversity. This report shall be used to assess the financial impact of implementing this Directive and the possibility of introducing related funding for collective management organisations, if necessary.

The Council held a public debate on several aspects of the EU’s strategy to modernise copyright laws. In particular, the debate focused on three key elements of the strategy: (i) the copyright framework across the digital single market, (ii) the different national policies on private copying levies, and (iii) the collective management of copyright and multi-territorial licensing of online music.

In regard to this third element, i.e. the collective management of copyright and multi-territorial licensing of online music, the Council took note of a progress report as well as of an oral update by the Presidency.

A Presidency compromise proposal was sent to delegations on 5 April 2013, involving partial or substantial redrafting of a majority of the articles of the text. This text is being examined in a series of Working Party meetings. The final meetings of the Working Party under the irish Presidency are scheduled for 4 June and 12 June. It is understood that Parliament’s Legal Affairs Committee envisages adopting its report on the proposal in early July.

To recall, the proposed Directive pursues two complementary objectives: firstly, it aims to put in place an appropriate legal framework for the collective management of authors’ rights by providing for rules ensuring improved governance and greater transparency of all collecting societies; secondly, it aims to facilitate the multi-territorial and multi-repertoire licensing by collecting societies of the rights of authors in their musical works for online uses within the internal market.

PURPOSE : to protect the interests of the members, rightholders and users and to set minimum quality standards for the exercise by collecting societies of their freedom to provide multi-territorial licensing services for online uses of musical works in the internal market.

PROPOSED ACT: Directive of the European Parliament and of the Council.

BACKGROUND: the dissemination of content which is protected by copyright and related rights and the linked services, including books, audiovisual productions and recorded music require the licensing of rights by different holders of copyright and related rights, such as authors, performers, producers and publishers. Such services may be provided offline, such as showing a film in a cinema or playing music in a concert hall, but also increasingly online.

In some sectors, licences are most often granted directly by individual rightholders (e.g. film producers). In other sectors, the collective management of rights plays a very important role, in particular of authors' rights in musical works.

Collecting societies enable rightholders to be remunerated for uses which they would not be in a position to control or enforce themselves, including in non-domestic markets. Moreover, they have an important social and cultural role as promoters of the diversity of cultural expressions by enabling the smallest and less popular repertoires to access the market.

The Commission recommends action in two areas.

· Firstly, there are significant differences in the national rules governing the functioning of collecting societies, in particular as regards their transparency and accountability towards their members and rightholders. Collective rights' management in all sectors needs to adapt in terms of the service provided to members and users as regards efficiency, accuracy, transparency and accountability.

· Secondly, in the licensing of the rights of authors in musical works, online music service providers face difficulties in acquiring licences with an aggregated repertoire for the territory of more than one Member State. This situation leads to fragmentation of the EU market for these services, thereby limiting the provision of online music services by online service providers.

This proposal is presented in the context of the Digital Agenda for Europe and the Europe 2020 Strategy. In its "Single Market Act" the Commission underlined that, in the internet age, collective management must be able to evolve towards more transnational, possibly EU-wide models of licensing. In its Communication "A Single Market for Intellectual Property Rights" the Commission announced that it would be proposing a legal framework for the collective management of copyright and related rights. The importance of this legislative proposal was also highlighted in the Commission's "European Consumer Agenda" .

IMPACT ASSESSMENT : the impact assessment examines two groups of options to deal with:

(1) options pertaining to governance and transparency standards in collecting societies are as follows:

· retaining the status quo (A1);

· better enforcement (A2) of existing EU law;

· the codification of existing principles (A3) reflecting in legislation the principles that have emerged from the case-law of the Court of Justice, the Commission's antitrust decisions and Recommendation 2005/737/EC;

· a governance and transparency framework (A4) which would codify the existing principles and provide a more elaborate framework of rules on governance and transparency, increasing the possibilities of control over collecting societies.

(2) The following policy options were examined to address the complexities of the collective licensing of authors' rights in musical works for online uses:

· retaining the status quo (B1);

· the European Licensing Passport (B2): this would foster the voluntary repertoire aggregation for online uses of musical works at EU level and the licensing of rights through multi-territorial licensing infrastructures. It would lay down common rules for all collective licensors throughout the EU and would create competitive pressure on societies to develop more efficient licensing practices;

· parallel direct licensing (B3);

· extended collective licensing and country of origin principle (B4);

· a centralised portal (B5).

After carefully weighing up the advantages and disadvantages of each of the approaches, options A4 (governance and transparency framework) and B2 (European Licensing Passport) were retained.

LEGAL BASIS: Articles 50(2)(g), 53 and 62 of the Treaty on the Functioning of the European Union.

CONTENT: the proposal for a directive aims to put in place an appropriate legal framework for the collective management of rights that are administered by collecting societies on behalf of rightholders. It aims to:

· improve the standards of governance and transparency of collecting societies so that rightholders can exercise more effective control over them and help improve their management efficiency;

· facilitate the multi-territorial licensing by collecting societies of authors' rights in musical works for the provision of online services.

(1) Collecting societies : the proposal establishes organisational and transparency rules which apply to all types of collecting societies. It provides, inter alia:

· rules governing the membership organisation of collecting societies;

· rules on collecting societies’ financial management: a collecting society must: (i) specify the applicable deductions in its agreements with rightholders; (ii) assure members and rightholders fair access to any social, cultural or educational services, if funded by deductions; (iii) pay the amounts due to rightholders accurately and without undue delay and make efforts to identify rightholders.

· rules on levels of disclosure: (i) information to rightholders on amounts collected and paid, management fees charged and other deductions made; (ii) information to other collecting societies on the management of rights under representation agreements; (iii) information to rightholders, other societies and users on request; (iv) annual publication of a transparency report.

(2) Multi-territorial licensing by authors' collecting societies of online rights in musical works: the proposal establishes the conditions that an authors' collecting society must respect when providing multi-territorial licensing services for online rights in musical works, namely:

· being able to process efficiently and transparently the data needed for the exploitation of such licences by using a time-sensitive, authoritative database containing the necessary data;

· being transparent as regards the online music repertoire it represents;

· offering rightholders and other societies the possibility to correct the relevant data and to ensure their accuracy;

· monitoring the actual usage of the works covered by the licences, being capable of processing usage reports and invoicing;

· paying rightholders and other collecting societies without delay and provide them with information on works used and financial data related to their rights (e.g. amounts collected, deductions made).

In order to ensure that repertoires can be easily aggregated for the benefit of music service providers who want to offer a service as complete as possible across Europe and for the benefit of cultural diversity and consumers at large, specific safeguards will apply to ensure that the repertoire of all societies have access to multi-territorial licensing.

The proposal also ensures that collecting societies put in place complaint handling and dispute resolution procedures so that these are available for members and rightholders.

BUDGETARY IMPLICATIONS: the proposal has no implications for the EU budget.