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Elbonia: Your next (and only) music destination?

Industry bald men fight over someone else's comb

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The EU's competition commissioner has stepped up the war of words on authors' and composers' collection societies, ahead of their biennial copyright summit next month. It's the latest in a long-running saga over pan-European licensing of online content, now into its second decade. Competition Commissioner Neelie Kroes says French collection society SACEM will offer pan-European licenses for music, AP reports.

Creators have the option of allowing national collecting societies to bargain on their behalf. These societies have reciprocal agreements with each other - ensuring creators get paid for overseas use. But this territorial system makes launching a global online service time-consuming and expensive. The EU wants to simplify this, arguing that launching music services shouldn't just be a game for the big boys. But the issue of simplification has become tangled with a separate issue: lowering costs at the expense of creators by destroying local collective bargaining.

Suppose the "one stop shop" happened to be located in Elbonia - where the economy is primarily mud-based - and you could obtain a pan-European license for music (all the rights in the EU) priced in the nominal Elbonian currency of the grubnick. Suppose the Elbonian performing rights society decided to price this very low indeed: let's say two grubnicks for the lot. Then they deducted 70 per cent of the fee for administration. What's left doesn't buy a lot of mud. Naturally, some traditional broadcasters and online services fancy getting their licenses this way.

In 2000 the author's societies came up with a "one stop shop" for online licensing that became known as the Santiago Agreement. Under this agreement, a national society would administer the rights, but only the society in the applicant's member state. The Commission objected to this, arguing that Santiago's territoriality failed to open up competition among societies, and scotched the agreement in 2004. Last year, after a complaint by Irish broadcaster RTE, the EC ruled that the territorial societies were monopolies.

While collection societies are objecting to the rule, the territorial system appears to be collapsing without outside assistance. EMI, which has a large and lucrative music publishing operation, set up a joint venture between itself, the PRS and the German society GEMA called CELAS - offering pan-European music rights. It did so without the permission of the creators themselves - a dubious legal move. Last year the three other major labels followed suit. This means the national society no longer has exclusive rights, so if you're launching a music service, you'll need to negotiate a PRS license and one with each of the majors. It's more complicated than ever.

One small detail appears to have been overlooked, however. The rights belong to the creator - the composer, songwriter or author - to do with as she or he sees fit. The apparatus of collection, pan-European licensing and heavyweight regulatory intervention is only there because creators think it's worthwhile. Those rights don't belong to Brussels bureaucrats, or national quangos. ®

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