SoundExchange reports six territories to the USTR

By Emmanuel Legrand

The decision by US neighbouring rights (NR) society SoundExchange to report to the United States Trade Representative (USTR) six countries that are refusing to pay NR royalties for the use of US recordings in their respective countries has drawn criticism and perplexity from sister societies based in the countries singled out by the US rights society.

  SoundExchange's filing with the USTR is part of the 2020 “Special 301” review, which identifies the countries with which the US has intellectual property issues with. In the filing, SoundExchange argued that the UK, France, Canada, Japan, the Netherlands and Australia should pay annually $170 million to US performers and labels, and instead only pays $3.8M, when in turn SoundExchange pays to these countries $100m annually. 

  The filing lists for each country the specific grievance SoundExchange has identified. SoundExchange is asking the USTR to "engage in bilateral discussions with each of these countries, with the goal of each country applying full national treatment for American producers and performers."

Discriminatory treatment

  "This discriminatory treatment is a denial of full national treatment in contravention to the purpose and principles of national treatment obligations found in multilateral treaties and trade agreements, and other bilateral commitments to the United States in each of these countries," wrote SoundExchange. 

  In addition, SoundExchange asked the USTR that Canada "be retained on the Watch List in 2020." Canada, wrote SoundExchange, "should fully implement the USMCA national treatment obligations and provide full payments to American producers and performers for music streaming services and digital radio in Canada, as well as for traditional broadcasts and other public performances, and for all recordings."

  The disagreement between SoundExchange and other societies around the world has been brewing for a few years now, with a frustrated SoundExchange not able to collect international monies for the use of US repertoire abroad, and societies around the world not ready to apply to the US what they apply to other territories.

Need for reciprocity

  In response to the filing, societies from countries listed by SoundExchange said the issue was not with them or their legislation but rather had its roots in the US copyright system, where NR only exist in a limited form, since 1998's DMCA and the creation of a performance right on recordings applicable only to non-interactive digital services. In other words, Pandora pays NR to SoundExchange, but not Spotify, nor terrestrial radio stations.

  One of the key issues that the filing from SoundExchange failed to mention, according to executives from neighbouring rights societies, was that the USA was still not a signatory to the Rome Convention of 1961, which establishes a reciprocity between countries that have adopted the treaty. The 1961 International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations granted for the first time a copyright for the sound recording for the benefit of producers of recordings (labels) and performers. It is in place in 94 countries but not in the United States.

  The Convention was followed by the WPPT (WIPO Performances and Phonograms Treaty), adopted in 1996 by the World Intellectual Property Organisation (WIPO), which came into effect in 2002 and has so far been ratified by 103 states. The United States ratified the WPPT in 1999 and implemented it in 2002.

Compliance with treaties

  The Treaty granted performers and producers of phonograms economic rights in their performances fixed in phonograms: (i) the right of reproduction; (ii) the right of distribution; (iii) the right of rental; and (iv) the right of making available. However, the US did not fully implemented the WPPT, since it still omits public performance rights on recordings.

  Executives contacted by this writer said that as the US has not ratified the Rome Convention, nor has it established performance rights for recordings for terrestrial radio for the use of recordings in public spaces (equitable remuneration), it has no standing to claim collections in countries that have both measures in place. 

  "We are operating in compliance with national legislation, EU directives and global treaties," said Markus Bos, chief executive of Dutch neighbouring rights society SENA. "On the basis of the 1996 WIPO Performances and Phonograms Treaty (WPPT), American rights owners and performers on recordings financed by entities based in the US are remunerated for modes of communication where our constituents are protected in the US. This is a direct consequence of the American decision to limit the application of the right to remuneration for broadcasting and communication to the public provided by this WPPT treaty."

Congress should legislate

  Marc Guez, Managing Director of France's neighbouring rights society SCPP, which collects on behalf of major companies and indie labels, said: "We pay SoundExchange the rights that French law authorises us to pay for their phonograms. The fact that the United States is not a signatory to the Rome Convention of 1961 is the reason why we cannot pay them a part of the rights we collect for their exploitations."

  For Guez, the solution is simple: "It is up to the United States Congress to legislate" and adopt in full the Rome Convention." Guez is also adamant that no retaliatory measure from the US would have a legal ground since France "respects the Rome Convention and no sanction against it would be justified."

  Jerome Roger, MD of France's other neighbouring rights society for labels SPPF, echoes the same points, noting a substantial amount of royalties in France come from the private copying regime but such scheme is not authorised in the US, nor is there equitable remuneration for the use of recordings by over-the-air radio and in public space. 

  "There is no remuneration for private copying in this country [the US], therefore we do not have to pay remuneration in this respect to the repertoires fixed in the US," said Roger.

US catalogues not eligible

  As for equitable remuneration, Roger added that "this system does not exist as you know in the US for traditional broadcast or for 'public communication', ditto for private copying." He concluded: "The US is not a signatory to the Rome Convention and the US catalogues distributed in France are not eligible for payment of fair remuneration [in France]."

  The UK's neighbouring rights society PPL said in a statement that as a British collective management organisation for performers and recording rights holders, the primary legal basis for PPL’s operations is the copyright law applicable in the UK, specifically in this case the Copyright and Performances (Application to Other Countries) Order 2016.

  Explained PPL: "The UK Government’s approach for assessing whether a foreign performer qualifies for Equitable Remuneration (ER) from UK 'plays' licensed by PPL is to look at reciprocity. This effectively means a “mirror test” is applied and performers looking for ER from the UK are likely to be unsuccessful if their country of nationality/residence (and the country where their performance was recorded) does not give UK performers a right to ER. Therefore, under the UK Government’s approach, US-based performers claiming ER from PPL for recordings made in the US only receive monies for certain simulcasting and webcasting services; the same digital transmissions which (if they took place in the US) result in UK performers being paid.”

  In conclusion, summing up the feeling among NR societies, the Netherlands' SENA's Bos has an advice for US policy-makers: "We do encourage the US to fully apply this WPPT treaty and upgrade their legislation giving rights owners and performers a remuneration right for terrestrial broadcasting and public performance in the US. This will automatically lead to entitlement to this kind of remuneration under our national law."