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Commission hearing on music royalties


The European Commission is holding a hearing today on a potential breach of competition law caused by an agreement among 16 EU royalty-collection societies that creates a "one-stop shop" music licence, according to the International Herald Tribune.

The agreement, known as the Santiago Agreement, was signed in October 2000 by five organisations that collect royalties on behalf of music authors, including the Performing Rights Society (PRS) from the UK and Broadcast Music Inc from the US.

The Agreement is designed to tackle the problems that traditional copyright licensing schemes face in light of the growth of new technologies and internet use. The most obvious of these is territoriality, or lack of it, for once uploaded to the internet, copyrighted music is accessible from almost anywhere in the world.

The traditional licensing framework requires a commercial user wishing to offer such music to obtain a copyright licence from every single relevant national society. The Santiago Agreement sought to adapt the traditional framework to the on-line world by allowing each of the participating societies to grant "one-stop shop" copyright licences which included the music repertoires of all member societies and which were valid in all their territories.

The Agreement was notified to the Commission in April 2001 by the collecting societies of the UK, France (SACEM), Germany (GEMA) and the Netherlands (BUMA). These were subsequently joined by all societies in the European Economic Area (except for the Portuguese society (SPA) and the Swiss society (SUISA)).

In May the Commission sent a "Statement of Objections" to each of the EU collecting societies party to the Agreement, explaining that while it strongly supports the "one-stop shop" principle for on-line licensing, it also considers that such crucial developments in on-line-related activities must be accompanied by an increasing freedom of choice for EU consumers and commercial users as regards their service providers.

According to the Commission, the structure put in place by the parties to the Santiago Agreement results in commercial users being able to apply for the licence from only the collecting society established in their own Member State. This, says the Commission, could be in breach of competition rules.

The collecting societies were given two-and-a-half months to reply to the Commission's objections, and are also entitled to request a hearing at which they can submit their arguments directly to the representatives of the national competition authorities. It is this hearing which is being carried out today.

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