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Commission consults on music royalties deal

The European Commission has today launched a consultation on proposals by the Dutch and Belgian royalty collecting societies to end their participation in the agreed restrictions as set out in the so-called "Santiago Agreement".17 Aug 2005

The Santiago Agreement was signed in October 2000 by five collecting societies, 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 online 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. These were subsequently joined by all societies in the European Economic Area (except for the Portuguese society (SPA) and the Swiss society (SUISA)).

The proposed commitments would affect only BUMA and SABAM the Dutch and Belgian organisations that collect music royalties on behalf of music authors. In terms of the commitments BUMA and SABAM would end their involvement in restrictions on the cross-licensing arrangements for online music that they have with other societies.

This follows a warning by the Commission that the agreement, known as the Santiago Agreement, might be in breach of EU competition rules.

In April 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 online licensing, it also considers that such crucial developments in online-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.

In response BUMA and SABAM have now put forward commitments that will oblige them not to be party to any agreement containing an “economic residency clause”.

The proposals have been put forward for consultation, prior to formal approval by the Commission.

The proceedings against the other collecting societies targeted by the Commission’s statement of objections are continuing, although the Commission has confirmed that it will look at any proposal on commitments that other collecting societies may submit.

“Online distribution brings many benefits to artists and to consumers,” said Competition Commissioner Neelie Kroes. “I am committed to ensuring that the licensing system does not hamper the development of a genuine European single market between collecting societies to the benefit of these artists and consumers.”

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