Cross-border Access and the Portability of Services (WG1) Subgroup Music, March 1, 2013 Views of...

Licences for EuropeStakeholder dialogue 2013

Cross-border Access and the Portability of Services (WG1)

Subgroup Music, March 1, 2013Views of SIAE and European Authors’ Societies

DefinitionsDSP: Digital Service Provider offering to the public music works by any on line channel CMO: collective music rights management organization multi-territorial licence or MT: licence granted by a CMO for online uses, which covers musical works in more than one Member StateRights: authors’ exclusive rights of reproduction and communication to the public, including making available

March 1, 2013 GESAC - SIAE

Questions raised by L4E WG 1 exercise

1. What are you doing to improve cross-border access to content and content portability?

2. What are the main problems or obstacles you are facing?

3. What contractual or technological solutions could improve the situation?


2007 – Transformation begins

After 2007, authors’ on-line rights collective management moves from national blanket licenses to new options for multi territorial DSPs

All representation contracts between music collecting societies are revised

Major publishers withdraw their mandates for on line rights and confer them on specially mandated entities

It becomes possible to have paneuropean mono-repertoire licenses


2012 – New Landscape for Transborder Licenses

More than 250 Digital Music Service in EU and growing (source: Online Music Market in Europe, GESAC-IFPI-ICMP)

National blanket licenses from CMOs to DSPs and web sites for their geo-localized services (small scale users)

MT licenses per repertoire from CMOs Pan-European schemes of several Direct Licensors:

ARESA (Bmg)- CELAS (Emi) – PAECOL (Sony) – IMPEL (PRSformusic) – DEAL (Umpi)- STAR (Kobalt) – PEDL (Wcm), etc.

Hubs: e.g. Armonia (SACEM, SIAE, SGAE, SPA, DEAL, Peer Music)


Authorized usages in multi territorial licenses

Download on demand Listening/streaming on demand Pre listening/preview on demand User(s) are the natural person(s) using the Service via

Internet or mobile site/s exclusively for private use. The Territories where usage takes place are

determined by the users billing addresses and/or IP addresses


Territories of MT Licenses

Example: SIAE (Società Italiana Autori ed Editori)

Home Territory: Italy, Vatican City and San Marino

Countries of the EUROPEAN ECONOMIC AREA

Switzerland

Other territories


Portability of Services

Service providers providing services to consumers across the EU need to ensure that they have secured all the necessary rights in the Member State in which they operate. Content distribution limitations can depend on: Service providers (online platforms) geo-localising Single Rights Holders limiting the authorization Different Rights Holders in countries served by DSP

None of these applies to Music MTLCollective solution provided by CMSs for music do not

create obstacles to the portability of services. March 1, 2013 GESAC - SIAE

Collective licences facilitate cross-border

access to cloud-stored content

Non-exclusive multiterritorial authorizations for the exploitation of Music in Cloud Services already in place Amazon, Google Cloud, iCloud, Xbox…

The Agreements are of an experimental, temporary nature, and will not constitute a precedent for any new agreement which could possibly replace each of them once the Parties have a better knowledge of the exploitation concerned.


CLOUD TECHNICAL MEASURES

CMO licenses cover the use of technical measures generally acknowledged to be reliable to prevent use not authorized in the usage rules of the Service

The Licensee DSP undertakes - to notify the Licensor of any widespread, unauthorized

material acts of use that come to its attention - to cooperate with the Licensor’s commercially reasonable

requests, strictly within the confines of the law- to assist with licensors’ reasonable requests for actions to

obtain compensation for losses suffered in connection to abuses.


Possible Obstacles to multi territory availability

Commercial policies of DSPsInvestment recoveryUnfair competition with illegal servicesLack of transparency in the chain of rightsComplexity of negotiations with certain right holdersFragmentation of repertoires National Tax Regulations on royalty transfers


Taxation v. EU Single Market

Member States continue to operate different processes, rates and systems for income tax on royalties withheld at source.

Conventions against double taxation do not work uniformly and smoothly.

Withholding tax can be a barrier to pan-European licensing.

Harmonized withholding tax system for royalty transfers can support re-aggregation of repertoires


Licensed Repertoires

Licensing requests often follow a “priority” order dictated by the market share in the territory where the service is launched.

DSPs policies in the launch of their services can increase marginalization risks for “small” repertoires.

DSPs use just repertoires considered more attractive: cultural diversity endangered

DSPs use repertoires ignoring the Authors’ Society actually administering them: market distortion


Proposed Directive on Collective

Management of RightsTo grant MT licenses CMOs must comply with minimum quality standards in electronic data handling in order to:

accurately identify CMO’s licensed music repertoire rapidly invoice online service providers pay the amounts due to each right-holder on time.

On a per-work basis Only compliant CMOs will be allowed to grant multi-territorial

licences of authors' rights in musical works for online uses. CMO can outsource services related to MT Licenseshttp://ec.europa.eu/internal_market/copyright/management/index_en.htm


http://ec.europa.eu/internal_market/copyright/management/index_en.htm

http://ec.europa.eu/internal_market/copyright/management/index_en.htm

Data Source: KEA "Licensing music works and transaction costs in Europe", 2012


. Fewer Licences . More Territories . Faster Procedures

Re-aggregation facilitates the mass use of music in several territories with a single licence and helps avoiding incorrect invoicing or double invoicing.

CMOs granting multi-territorial multi-repertoire licences must accept to represent the repertoire of other CMOs for the purpose of multi-territorial licensing (obligation to tag on)

Benefits: Consumers get a wider choice, right holders see their content used more often; DSPs have their administrative activity facilitated.


The Administrative Process

DSPs deliver Usage reports per country per month to all Licensors (iTunes 3 reports x month x 29 territories/Beatport 2 reports x quarter x 42 terr.s)

Each Licensor processes all reports (Ex. 2,34 M records in iTunes

report FR Dec. 2011) identifies works in its repertoire delivers claim files and invoices

Double claims must be detected – conflicts must be reconciled – 100% claims must be realized


Simplifying the rights administration process

Licensing Hub: (www.armoniaonline.eu)

partners: SACEM-SIAE- SGAE + UMPI +SPA + Peer and SONY

Joint back office: (www.iceservices.eu)

PRSformusic, STIM, GEMA

Transparent legal status of works/chain of rights: (www.globalrepertoiredatabase.com)ECSA, ICMP, CISAC, Sony, EMI, UMPI, Warner/Chappell, APRA, GEMA, PRS for Music, SACEM, SIAE, SGAE, STIM, Apple, Google, Omnifone.


http://www.iceservices.eu/

http://www.globalrepertoiredatabase.com/

Automated global transaction processing

infrastructure Standards can:

deliver the crucial operating efficiency required for MT licensing

lower transaction and communications costs increase revenues for all sectors involved

Automation of transactions across the value chain is made possible by the Use of interoperable identifiers, formats and processes.


Digital Data Exchange DDEX Consortium is a standards-setting organisation of media

companies, music CMOs, DSP and technical intermediaries. DDEX was formed to:

Design standardised XML message formats for the exchange of metadata across the digital content value chain

Develop common protocols for the automated communication and management of messages

Exchange huge volume of data Process analytical claims per transaction Signatories to DDEX MoU (APRA , ARESA, ASCAP, BMI, CELAS,

GEMA, KODA, NCB, PAECOL,PRS for Music, SABAM,SACEM, SGAE, SIAE, STIM,SUISA) are committed to adopt a common approach to Digital Sales Reports


Claim Confirmation & Invoice Details CCID

CCID is the standard format for work claim files and invoices that improves communication between licensors and licensees

It contains standardised dispute reporting facility

It increases transparency in individual invoices

It supports multiple currencies for usage and invoicing


Contractual + TechnologicalSolutions: Tests in progress

New conflict reconciliation tools for multiple multi territory licenses are a remedy to:

Avoid double paymentsMake Licensor’s warranty effectiveSolve conflicts among direct licensorsAvoid unlicensed/unpaid exploitation for copyright worksIntroduce residual blanket licenses for unclaimed

exploitationRemunerate “marginal” repertoires


Claims Reconciliation

Scope

“Claims Reconciliation” gives licensors an overall view of disputes and unclaimed works, respecting confidentiality of data Functionality

Provides an overview of invoices issued by licensors for a given DSP, territory and period. Loading the sales report and invoices is also a starting point to get information upon disputed and unclaimed works.

Provides general statistics as well as work by work details on disputes. Both statistics and detailed information are needed to support the bilateral discussions with other licensors.

Shows statistics on unclaimed usages as well as related details. This is needed for ensuring legality of exploitation and correctness, accuracy and completeness of collections

Checks Work Documentation available on the Fast Track documentation data base CIS-Net to support detailed analysis and fixing disputes.


The Way Forward

Collective licensing delivers an effective solution for MT availability and portability of services.

CMOs plan initiative to achieve more aggregation. Technological solutions used and that are underway for

identification, reporting, invoicing, etc. are key for the success of MTL.

EC needs to develop policy on competition and cultural diversity in order to ensure effective and inclusive re-aggregation.

Tax regime needs to be revised at EU level in order to ease the operation of MTLs and to boost more innovative services.

March 1, 2013

Cross-border Access and the Portability of Services (WG1) Subgroup Music, March 1, 2013 Views of...

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