SGAE members approve new statutes while international publishers and CMOs seek alternative options

By Emmanuel Legrand

SGAE finally managed to get its new statutes approved by its members, but the outcome might be too little, too late to get the 120-year-old Spanish rights society readmitted in the global network of rights societies.

  SGAE failed attempts to implement changes to its statutes and clean up its act following an embezzlement scheme known as “La Rueda” led to the society's membership to the International Confederation of Societies of Authors and Composers (CISAC) to be suspended in 2019.  

  Gadi Oron, Director General of CISAC, noted that SGAE General Assembly’s vote in favour of the new statutes was “a positive and important signal of the society’s readiness for change, and it’s leadership’s efforts to effect this change.” But he added that the vote “does not in itself qualify the Spanish society to renew its membership of CISAC." He went on: "However, we are ready to support SGAE in adopting the additional reforms that CISAC has identified as essential for the society to be readmitted into the Confederation.”

The end of an era

  SGAE's Extraordinary General Assembly held in Madrid on January 30 has approved by a qualified majority the new proposal of Statutes that will make the society compliant with the country's new Intellectual Property Law, which entered into force last March. The new statutes received the approval of 22,070 members, or 85.19% of the voters, with 3,323 members (12.38%) voting against the proposal and 514 abstained, out of a total of 25,907 votes.

  SGAE President Pilar Jurado, heralded that with the approval of the new statutes "history is being made" and that it signals "the end of an era.” However, SGAE did not comply with a request from the Spanish Ministry of Culture to reset the 2018 distribution of royalties “according to the principles of equity and proportionality.” On this latter point, Jurado said that the situation “has evolved so much that I think you have to sit down to talk about reality and not fictions of past that have nothing to do with the present moment.”

Damaged reputation

  For El Pais, the past couple of years have damaged SGAE's standing nationally and internationally, with members such as filmmaker Pedro Almodóvar leaving the society, and major music publishers asking for guarantees in order not to leave the society.

  Creative Industries Newsletter (CIN) has learned that several publishers as well as rights societies such as the UK's PRS for Music and France's SACEM have looked into setting up an alternative to SGAE in Spain, with no conclusive solution so far.

  The situation in Spain has been monitored closely by ICMP, the International Confederation of Music Publishers, whose Director General John Phelan, told CIN that "the Spanish music market dysfunction stemming from SGAE’s maladministration of publisher and authors’ rights and royalties must cease.” He added: “The end-goal is for the industry to get to a place where Spain’s music market is not beset by SGAE’s administrative malpractice. This is the stated aim of ICMP’s members, the Spanish government and several international institutions.”

Search for alternatives

  For Phelan, alternative licensing vehicles “are being established and we welcome credible competition within the market.”

  One such alternative is Unison, a rights society operating out of Barcelona. Unison's legal action against SGAE led a commercial court in Barcelona to rule at the end of 2019 that rights holders had the right to withdraw all or part of their rights from SGAE. In an interview with CIN, Unison CEO and co-founder Jordi Puy said that the December ruling was a “groundbreaking historic moment in the collective management of music” that opened a new era for alternatives to SGAE to flourish.

  Puy said SGAE's system started to crumble after the vote of the 2016 European Directive on collective management organisations. “For many years, we realised that there were problems of collective rights management [in Spain],” said Puy.

Offering more transparency

  Following the 2016 Directive, Puy and some partners from the IP or tech side got together to plan a new society for the digital era, that would improve the quality of rights management in Spain. “The directive opened the market and we saw this opportunity in 2016 to create a new model and optimise the protocols of collection and distribution to make them more transparent,” said Puy.

  The project won the support of some industry figures such as Scott Cohen, co-founder of The Orchard and now with Warner Music Group, or Shain Shapiro from Sound Diplomacy, both of whom sit on the organisation's board. Puy found individual investors and secured a start-up loan from the Spanish government, and set up Unison, starting with the architecture by engaging professionals from the tech and IT side.

  Then Unison started a legal action against SGAE before Spain's competition authorities, leading to the December ruling, which allows rights holders to withdraw their rights “without unnecessary and unjustified restrictions.” Puy said that Unison's policy is not necessarily to get into a confrontation with SGAE but to fight the society in court “when we think that things are not right.”

New clients join Unison

  Since the December ruling, SGAE claimed that both multinational and independent publishers, as well as practically all authors had chosen to stay with the society. “This is simply not the case,” reacted Puy. “We have clients coming our ways.”  

  Puy declined not give specifics about his new clients nor how many joined since the ruling. “We've seen all audiovisual authors leaving, and we have seen people coming to us, mainly writers who left SGAE and independents songwriters,” said Puy. “We have clients signed from the USA, Portugal, France, Spain, writers and publishers, representing a very significant volume of works for a new company and we are confident that the next months will prove our capacity to serve our clients.”

  Puy said he expects to be able to do a first distribution of royalties in March. “We are starting collections from the moment of signature but the process is depending on the type of use,” he explained. “It can take time. These are early steps, but we are definitely representing writers and have obligations to collect on their behalf. Over time, we will see collections increasing.”

Ready to collect

  Asked how Unison plans to collect from public performances from broadcasters, Puy is cautious: “We are collecting data based on the usage of our catalogue and we are engaging with broadcasters on the fact that we are managing these rights and they have to pay to us. Legally they have to do so. They have not paid us yet, because they pay annually, but we monitor usages, and engage with music users, so when the payment cycle comes around, we will collect.”

  He added, “One thing is true: they cannot pay SGAE for the catalogue that we administer. And if they pay SGAE, we will challenge it, although we are in favour of civilised resolution and negotiations. We are not litigators, we are business people who want to do deal, rather than go to court. We go to court when there is no other alternative. With music users we are 100% in favour of negotiations.”

  Puy said Unison has been in communication with CISAC for over year and is “confident” that the Paris-based body “will find the right way to integrate new organisations like ours. Maybe in 2020...”