Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC approves joint venture for cross-border licensing of online music, (Jun 16, 2015)
Organizations Mentioned:FÖreningen Svenska Tonsä | Gesellschaft fü | PRS for Music Limited | hrungs- und mechanische Vervielfä | ltigungsrechte | r musikalische Auffü | ttares Internationella Musikbyrå | u.p.a.
By Linda O’Brien, J.D., LL.M.
Following an in-depth investigation, the European Commission (EC) has cleared under the European Union (EU) merger regulation the proposed creation of a joint venture by three music collecting societies for multi-territorial online music licensing and copyright administration services, the EC announced today. The three societies are PRS for Music Limited (PRSfM) of the U.K., Föreningen Svenska Tonsättares Internationella Musikbyrå u.p.a. (STIM) of Sweden, and Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte (GEMA) of Germany.
Collecting societies manage the copyrights of authors, performers, and writers of musical works. They grant licenses on their behalf to users of musical works, monitor and detect these licenses' unauthorized use, and collect and distribute to rightholders the revenue derived from the exploitation of their musical works. Online platforms such as iTunes, Spotify, YouTube, or Deezer must obtain licenses for the music copyrights in order to distribute music to their customers and, in particular, obtain from rightholders both performing rights and mechanical rights.
The joint venture will provide copyright holders with a number of services, namely:
Licensing music to online platforms. The joint venture will provide licenses for the combined music repertoire of PRSfM, STIM, and GEMA on a multi-territorial basis, that is, for use in several countries. Through a single license, online platforms will therefore obtain the rights for three repertoires and for all countries in which they operate. Currently, online platforms need separate licenses from each of PRSfM, STIM, and GEMA.
Provide copyright administration services to collecting societies and the so-called “Option 3 music publishers.” These services include the collection and processing of royalties from online platforms and the provision of database services. “Option 3 publishers” are large music publishers that have withdrawn the mechanical rights related to their Anglo-American repertoire from the collecting societies and have started to license these rights directly. These publishers rely on the collecting societies solely for administrative services.
The Commission had concerns that the creation of the joint venture would make it more difficult for other collecting societies to offer copyright administration services by raising the barriers to entry and growth in this market.
To address the Commission’s concerns, the companies submitted the following commitments:
PRSfM agreed not to use its control over the performing rights that it manages to force Option 3 publishers or their service providers to purchase copyright administration services from the joint venture. The joint venture will allow other collecting societies and “Option 3 publishers” to choose which copyright administration services they want to use.
The joint venture will offer key copyright administration services to other collecting societies on terms that are fair, reasonable and non-discriminatory when compared to the terms offered to its parents PRSfM, STIM and GEMA. The joint venture will also facilitate the switching of collecting societies relying on the joint venture’s copyright database to another provider of database services. Collecting societies can terminate their contract with the joint venture at any time.
The joint venture will not enter into exclusive contracts with its customers for copyright administration services other than for database services.
The commitments aim at maintaining market conditions that allow other collecting societies to enter the market by ensuring that the joint venture's customers will remain free to switch to competing providers.
“The proposed joint venture would make it easier for online music platforms such as iTunes, YouTube, or Deezer to get the licenses they need to offer cross-border music services to consumers,” said Margrethe Vestager, Commissioner in charge of competition policy. “The Commission is satisfied that the commitments will ensure that other collecting societies can also compete and offer copyright administration services.”
Companies: PRS for Music Limited; Föreningen Svenska Tonsättares Internationella Musikbyrå u.p.a.; Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte
News: AcquisitionsMergers Antitrust