Monday, February 24, 2020

Supreme Court's case Oracle v. Google shows polarised views on copyright and fair use

By Emmanuel Legrand

The US Supreme Court will start hearing arguments in the Oracle v. Google case on March 24, 2020, in what Google described as “the copyright case of the decade.” The case shows deep divides between the proponents of copyright protection and the advocates of “fair use.”

  Google is asking the Supreme Court to reverse the decisions of the US Court of Appeals for the Federal Circuit, which overturned a district court ruling that found that the use by Google of Oracle-owned Java software fell under “fair use” provisions of copyright law. Google was accused by Oracle of using without license 11,000 lines of Java's original code.

filed its brief with the Supreme Court, while Google’s reply brief is expected on March 13, 2020. Oral argument will take place in Washington, DC on March 24, 2020. The Supreme Court is expected to issue its decision by the end of June 2020.

Rewrite copyright protection rules

  "Google is attempting to rewrite the fundamental copyright protections that fuel innovation in this country,” said Oracle General Counsel Dorian Daley.

  "Openness and interoperability have helped developers create a variety of new products that consumers use to communicate, work, and play across different platforms,” responded in a statement Google Policy Communications Senior Associate Jose Castaneda.

  Project Disco has identified 32 amicus briefs supporting Oracle, from the Department of Justice (DoJ) to a wide range of copyright-driven sectors, such as Hollywood studios (MPA), major record labels (RIAA) and independents (A2IM), music publishers (NMPA, AIMP), rights organisations (ASCAP, BMI), songwriters (Songwriters Guild of America, SONA), authors (Authors' Guild), book publishers (APA), media organisations (News Media Alliance), copyright experts (Sandra Aistars, former Register of Copyrights Ralph Oman), and conservative think tanks.

Not just about software

  Meanwhile, 26 briefs have come in support of Google, mostly tech and software firms, such as Microsoft and IBM, trade organisations such as the Computer & Communications Industry Association (CCIA) and the Internet Association (IA), and advocacy groups such as the Electronic Frontier Foundation and Public Knowledge.

  [A comprehensive summary of the various briefs in favour of Oracle can be found on the Project Disco site
here and the briefs supporting can be found here. All the briefs are available of the Supreme Court's site.]

  Austin, Texas-based lawyer Chris Castle penned the brief on behalf of the Songwriters' Guild of America, Swedish songwriter Helienne Lindvall, American singer, songwriter and producer Blake Morgan and David Lowery, frontman for Cracker and Camper van Beethoven, and activist for the cause of creators. Castle told Creative Industries Newsletter that although the case was about software, its relevance resonated way beyond, not least because of Google's use of “fair use” as the foundation of its defense.

  "What’s at stake is Google’s hoped for expansion of fair use to cover verbatim copies on a mass scale,” explained Castle. “We go into this in some detail in the brief. That could make fair use like the mouse that ate New York.”  

Clarify the fair use doctrine

  Castle said that the case can impact all creative sectors. “I think it’s a mistake to see it as a software case that doesn’t involve any other creator group just because it’s Oracle," said Castle. He added: “The point of the brief is to get the perspective of independent artists and songwriters in front of the court so the justices can see an argument about why we are all in this together in the copyright house.”

  Central to the case is the notion of “fair use.” In their filing, various music industry organisations, including the RIAA, 
argue that “any analysis or clarification of the fair use doctrine by the Court in this case will have an immediate and enduring impact on amici’s members, who include those who invest in, manufacture, license, and distribute music, as well as the writers and artists who create it.”

  The Motion Picture Association
concurred: “The unintended consequences of applying legal concepts developed in fair use cases involving purely expressive works to a software case like this one, especially in the radical manner advocated by Google, could cause a seismic shift away from long-established law and legitimate marketplace expectations.”

Harmful consequences

  The MPA added, “The harmful consequences would be felt not only in the instant case, but also across the creative industries, should the resulting analysis be inappropriately applied to future cases involving traditional, purely expressive works.”

  Filing on behalf of the United States, Solicitor General Noel Francisco and assistant attorney general of the DoJ's Civil Division Joseph Hunt, found that Oracle "holds a valid copyright" over the Java code and that Google's policy arguments were “unpersuasive." 

  Their filing reads: "Petitioner has not identified any industry understanding that software 'interfaces' are per se uncopyrightable, and concerns about the interaction of copyright and emerging technology do not justify such an atextual rule."

Threat to software development

  Microsoft, on the other hand, argued that by overturning the jury’s verdict favourable to Google, the court took “an un-duly narrow view of fair use that elevates functional code to the same level of copyright protection as the creative expression in a novel. That ruling threatens modern paradigms of software development.”

  In a brief filed on behalf of behalf of 72 intellectual property law scholars, Professor Pam Samuelson
wrote that “programmers should have to write their own implementation code, as Google did, but interfaces that enable compatibility should be free from copyright restrictions,” adding that the Federal Circuit’s “copyrightability ruling in Oracle misconstrued the text of the Copyright Act.”  

  Google welcomed the support shown by the various authors of the amicus briefs. “A remarkable range of consumers, developers, computer scientists, and businesses agree that open software interfaces promote innovation and that no single company should be able to monopolise creativity by blocking software tools from working together," said Google's Castaneda.

Authors and publishers urge Canada's government to ratify 'immediately' USCMA

By Emmanuel Legrand

Songwriters, composers and music publishers in Canada have urged the Canadian government and the Parliament to ratify “as soon as possible” the US-Canada-Mexico Agreement (USCMA).

  The trade agreement contains intellectual property provisions, in particular the extension of the term of protection to the life of the author plus 70 years. Currently, in Canada, the term is of 50 years following the death of an author. The adoption of the measure would put Canada in line with most Western countries.

  However, the Canadian government is understood to contemplate only introducing this provision after the 30-month transition period from the effective ratification of the treaty.

Enact immediately the treaty

  The letter – signed by Canadian Musical Mechanical Rights Agency (CMRRA), Music Publishers Canada, Screen Composers Guild of Canada (SCGC), Songwriters' Association of Canada, and rights society SOCAN alongside
Quebec's Association des Professionnels de l'Edition Musicale (APEM) and the Société Professionnelle des Auteurs et des Compositeurs du Québec (SPACQ) – asked Parliamentarians to enact “immediately, without unnecessary delay and with no conditions” the term extension provisions in USCMA.

  The signatories argued that “modernising the Copyright Act to ensure Canadian rights holders have the same protections as their international competitors is a much-needed move to help Canadian creators, and the companies that invest in them, to continue exporting their creations around the world. A forward-looking, digitally attuned copyright regime will foster Canadian innovation, investment, and growth in a key economic sector for our great country.”

  They added: “It is imperative that USCMA be ratified quickly to ensure that Canadian songwriters, composers and the small and large businesses that invest in music publishing are properly compensated for their work. Adding another 20 years to the life of a copyright means a robust creative sector, more Canadian cultural exports, and the growth of many innovative businesses that have embraced the digital market. It is long past time for Canada to catch up to its international trading partners in this respect.”

Outdated term of copyright

  The letter echoes a similar initiative from the International Confederation of Societies of Authors and Composers (CISAC). In a letter to Canadian policy-makers Jean Michel Jarre, the President of the Paris-based organisation, whose members represents over four million creators in the world, alongside Vice Presidents Angélique Kidjo, Marcelo Piñeyro, Miquel Barceló and Jia Zhang-ke have called on the early ratification of USCMA without delays, arguing that Canada is the only G7 country with an outdated term of copyright. 

  “Canada’s authors and publishers deserve to be fairly recognised for their work and enjoy the same protection as their overseas peer authors without delay,” reads the letter.

IMRO partners with Finland's Mind Your Rights to improve global live music reporting

By Emmanuel Legrand

Ireland's performance rights organisation IMRO (Irish Music Rights Organisation) has adopted Mind Your Rights' technology Concertify to improve the quality and the speed of reporting of international live concert performances.

  Concertify works as a service and data platform that simplifies data and the transfer of data between artists, event organisers, copyright societies, copyright owners and music publishers. The Irish society said the introduction of Concertify "will enhance IMRO’s international royalty administration services by ensuring greater efficiencies, transparency and cost savings for its songwriter, composer and publisher members worldwide."

  For IMRO Commercial Director, Media Licensing Sean Donegan, Concertify has "the potential to become an essential tool in the advancement of live music reporting, distribution and interaction within the entire royalty collection society network.”

Innovative approach

  "Concertify offers societies new digital tool-sets, contributing to IMRO's data-driven and digitally innovative approach to rights management," said Roope Pajasmaa, the chief executive of Finnish technology start-up company Mind Your Rights, which specialises in the development of platforms for efficient and transparent cross-border music rights management.

  He added: "Concertify, when adopted by the industry, will allow all key information related to live concert copyright collections to be available to all the involved constituencies, including the home society, the licensing society, artist representatives, and publishers."

CD Baby shuts down its online music retail store

By Emmanuel Legrand

Downtown Holdings-owned digital distributor and service company CD Baby is "retiring" its online retail store to focus on distribution, monetisation, and promotion services. CD Baby retail store will be phased out on March 31st, 2020, according to a post on the company's site.

  The company said the store only represented a very small portion of its clients' income and was no longer central to its activities.The store offered CDs, vinyl, or high-res digital files from a wide range of independent artists' music.

  CD Baby will continue its physical distribution programme, to warehouse CDs and vinyl and fulfill orders of physical products placed through Amazon, Alliance, local record stores, and other outlets. 

No longer a money-maker

  "20 years ago, when CD Baby launched the online store, it was revolutionary to help independent musicians gain direct access to their fans and the market," reads the company's blogpost. "By 2009, sales through our store accounted for only 27% of the total revenue we paid to artists every week. By 2019, sales on our store comprised less than 3% of our clients’ total earnings. With a few exceptions, the store is no longer a money-maker for most of our artists."

  Looking at the future, CEO Tracy Maddux said the company would "focus on what is making a difference for musicians today: our distribution, monetisation, and promotion services."

Monday, February 17, 2020

BPI calls on UK government to protect creators from online fraud and IP theft

By Emmanuel Legrand

The British Government has published an initial consultation response to the Online Harms White Paper, which the music industry sector sees as a way to increase oversight of online platforms and to better regulate illegal content.

  The government's ambition is "to make the UK the safest place in the world to be online and the best place to start and grow a digital business," according to Baroness Morgan, then Secretary of State, Department for Digital, Culture, Media & Sport (she has been replaced by Oliver Dowden in the recent reshuffling of the Boris Johnson cabinet) and Priti Patel, Secretary of State, Home Office.

  In the foreword to the consultation's response, they wrote: "We are a pro-technology government and we are keen to continue to work with industry to drive forward the digital agenda. We are continuing to work at pace to ensure the right regulatory regime and legislation is in place."

Go further to protect creators

  The White Paper tackles various issues from freedom of expression and protection of children and makes a series of recommendations about content removal and tackling online abuses.

  Music industry organisation theBritish Phonographic Industry welcomed the government's commitment to make the UK the safest place online, but also called on policy-makers "to go further and protect creators from other forms of harm, including fraud and IP theft."

 Geoff Taylor, Chief Executive BPI and BRIT Trust said: "The BPI welcomes the global lead the UK Government is taking to make big tech platforms more accountable for the content they host and the online harms they enable. As these proposals are taken forward, we would encourage Government to consider extending them to encompass other forms of harm, including fraud and IP theft, which have a serious negative impact on the public and on creators."

Fight the threat of piracy

  Tom Kiehl, acting CEO of cross-industry lobbying group UK Music, said his organisation supports the efforts to protect people from online harm, but also calls the British government to "deal with harms that damage our economy and people’s jobs." He added: "The scope of any legislation needs to be widened to ensure big tech takes greater responsibility for the activities and actions it supports online to protect our culture and creativity."

  For Kiehl, "the continued threat of piracy and failing to properly value copyright protected works online risks damaging the investment, innovation and future talent on which our world-leading music industry depends."

Simon Darlow: Buyouts 'devalue' composer's works

Songwriter and composer Simon Darlow (pictured), Deputy Chairman of British rights society PRS for Music, spoke about the buyout practice at the 2020 edition of the Creators Conference organised by the European Composer and Songwriter Alliance (ECSA) in Brussels. Here's his contribution in full:

”The practice referred to as a buyout is when a producer, typically in the audio-visual or video game sectors, obtains the rights of the creator in exchange for a one-off fee. The transfer of these rights is all too often a precondition of the commissioning process.
  The buyout of the mechanical right has become standard practice in the US and the UK. Although there are still companies which will share mechanicals with the composer, buyouts are becoming increasingly common here in Europe.  
  More and more, however, we hear of composers also being forced to surrender their performing rights. This is also against a background of shrinking fees, which makes the situation intolerable.
  This trend manifested itself in the most extreme manner at the end of last year when Discovery Networks US stated it would require a complete buyout of the performing and mechanical rights in the future and a waiver of rights for all works previously commissioned by them.
  Whilst a significant backlash from the creator community forced Discovery to abandon this proposal, it is a clear indication of the direction of travel if left unchecked.    
  Earlier this year, The Ivors Academy held a consultation with its members on the practice of buyouts in the UK. The most striking results of the survey are those which show the true nature of the relationship between producers and creators. For example, 41% of creators said they had been required to give away more of their mechanical rights than they wanted and a further 35% said they have been subject to full buyouts or work for hire commissions in the last five years.
  Young composers are the most at risk of being exploited, eager as they are to get work and build their careers. The next generation of composers face a bleak future, where they no longer own their rights and their works generate no income for them. To be balanced, however, an upfront payment for rights is not always a bad option for a composer.
  There are instances where such practices are in the best interests of the creator because of the nature of the work or the markets in which it will be used. As an example, I’m in the middle of some work for a Middle Eastern TV company where performing rights are barely recognised, so a good fee and the maintenance of all my rights should there be any further international exploitation was the best deal I could do.
  For the record, I’ve never done a complete buyout and would not, but in general buyouts devalue the composer’s worth considerably. The key is that it must be the choice of the creator to decide, not for the producers to dictate.
  It’s the very purpose of copyright, to allow the rights holder the freedom to control the use of their work, their property.     The solutions are many, if not easy. We need to ensure the copyright protections around the world work in protecting creators and their rights. Equally, the creative community needs to stand together on this issue and say with one voice that we will not work on these terms.
  I am privileged to have a career as a songwriter and composer. I’ve had hits with artists such as the Buggles, Dollar, Grace Jones, Toyah, Cliff Richard, Shirley Bassey and others. I have composed for numerous TV programmes such as BBC News, the Premier League, Top Gear and Shanghai TV News.
  I have been offered buyout contracts and have always refused them, because I won’t work on such terms. But I am one of the lucky few.  
  Copyright has been central to my living for about 39 years and I would not be here talking to you about this without it. The residual use of all the songs and pieces of music I have written over the years have been central to my income and enabled me to sustain a career.
  It is up to those who have been fortunate like myself, to not give up our rights and be vocal about it. We must encourage the next generation of composers to be strong too. ECSA of course is an ideal platform from which to do this. So, let’s be loud and proud of our work and our right to fair remuneration.”

Thursday, February 13, 2020

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."

Monday, February 10, 2020

Creators urge EU member states to implement the Copyright Directive

By Emmanuel Legrand

European Union member states have been urged to implement rapidly the Copyright Directive in the EU Single Digital Market in order to continue to “deliver on promises made to creators,” according to Alfons Karabuda, President of ECSA, the European Composer & Songwriter Alliance.

  Speaking at the organisation's Creators Conference 2020 in Brussels on February 3, Karabuda said creators had a lot to be grateful since the EU “delivered on its promises” to support creators by adopting the Copyright Directive, but now, he added, the onus is on members states to do the same. “The Directive is not yet a reality and the ball is in the court of EU member states,” said Karabuda. “Member States should see the opportunities for authors with the Copyright Directive.”

  Alluding to the situation in the UK, where Boris Johnson's government announced in January that it was not planning to implement the Directive, Karabuda said: “I have to say I am also a bit sad today, not only because of Brexit but also because of the recent decision [by the British government] not to implement the Directive. Our British friends have helped us improve that Directive so why should British creators not benefit from these achievements? British creators should benefit from the same protections as all creators in the EU.”

Regulating streaming platforms

  “Transposing the Directive is key,” echoed keynote speaker Jean-Noël Tronc, CEO of French rights society SACEM and Vice-President of the board of European authors societies' organisation GESAC. Tronc said that while France took the lead in being the first country to transpose the neighbouring right for news publishers, “some giants still resist.” 

  The next frontier for Tronc is the need for more regulation of streaming platforms “that more and more behave as producer and editors of content and have an impact on what consumers listen to. They are the media of the future, and soon they will also be doing anything form production to distribution of content.”

  Tronc noted that the new Audiovisual Media Services Directive (AVMSD) called for SVOD services to play 30% of European content, but nothing similar exists for music. “The AVMS Directive has a provision on European content, but how come we don't have that for music?” he asked.

Achieving fairness

  The implementation of the Copyright Directive was one of the two main topics discussed during the conference with buy-outs. At the session 'Where are EU member states on closing the value gap?', former German Member of the European Parliament Helga Trupel, who was a strong supporter of the Directive, said the copyright reform was “part of the whole picture of what do we do with the freedom of platforms. If you want to bring them back into society, you need good tools. This copyright reform says there is an incentive to license and having discussions between platforms, rights holders, and CMOs, and that they should do licensing agreements with monopolies.”

  For Trupel, the Directive “is not about censorship” but about “fairness in market, sovereignty in Europe and certainty for users, as well as “making platforms, the richest companies in the world, responsible for what they do.” She expects, however, a continued resistance from digital platforms to the Directive: “We have this law and it has to be implemented and it will be implemented, but I think we will have the same fight we had at European level at national level.”

  Sarah Jacquier, the Policy and legal officer at the French Ministry of Culture, said France is advancing in the implementation of the Copyright Directive, first with neighbouring rights, but also with Article 17, which tackles the value gap, by making it mandatory for ISPs to obtain licenses from rights holders or take down content, through a new law that will be presented soon before the Parliament.

Working with stakeholders

  “Reaching Article 17 was a huge achievement, but there is still a lot of work ahead,” she explained. “Now that we have it we have to make it work, and it is a responsibility for all of us. We tried to stay as close as possible to the text which is already detailed and also add clarity in the text. We need flexibility but also clarity for stakeholders.”

  For Marco Giorello, Head of the Copyright Unit at the European Commission's DG CONNECT, “we should be proud of what we have done with Article 17. It would have been difficult to do better, and Article 17 is in quite good shape considering all the pressure.”

  Giorello said that at this stage, he's only seen two drafts on Article 17, one from France and the other from the Netherlands. “It's still early days and a lot of discussions are going on on Article 17,” he noted. “We are having regular discussions [with member states]. We have a committee that gathers the views of member states. A lot more will happen in the coming months. It is very early to give trends.”

Setting the scene

  Giorello said that considering the high level of opposition against the Directive, the implementation process is going on quite smoothly. He elaborated, “I think there is a clear obligation to implement the Directive and the discussions that we are having with member states are constructive. Now we are largely past [the opposition to the Directive]. Sweden is a good example. In the end the government voted against it and now Sweden is one of the most engaged country. Of course, let's see in one year when comes out of it, but the temperature went down a lot and everybody is playing the game.”

  For Giorello, the Directive is “setting the scene for other countries that will look at the issues.” He added: “We have many more question about the Directive from the US government, the Canadian government, the Japanese government. It is one of these areas, like data protection, where Europe took the leadership with something brave and something new.”

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...”

France's music publishing revenues reached €393m in 2018

By Emmanuel Legrand

The French music publishing sector was worth €393 million in 2018, up 7% from the previous year, according to figures unveiled by French music publishers' associations CSDEM (contemporary repertoire) and CEMF (classical).

  The figures, published in the 'The 2017-18 Music Publishing Barometer', show that revenues from collective management organisation SACEM represent two third of the sector's revenues at €246m, up 3% year-on-year, while sync revenues were up 33% to €68m in 2018 and revenues from international collections were up 7% at €47m. 

  "Revenues from SACEM were up 3% thanks mainly to a growth in digital revenues and stable performance rights, which managed to balance the drop in revenues from mechanical rights," explained Anne Jouano, Sony/ATV France's CFO and President of CSDEM's studies commission. She added that publishers' growth was mainly due to sync and international revenues. Mechanical rights were down 4% year-on-year in 2018, to €126m.

Sync revenues up 17%

  The Barometer was compiled by research company Xerfi and was based on a questionnaire sent to a panel of 280 music publishers, representing over 56% of the rights distributed by SACEM to publishers. 

  Overall, the share of revenues from collective management have suffered a slight "compression" between 2014 and 2018, dropping from 67% to 63% of music publishers' total revenues. SACEM collects mechanical rights from phonographic and video exploitation, private copying, and foreign rights; public performance rights (live, radio, television, broadcasting in public places, foreign rights); and digital rights (streaming, download, mobile ringtones). 

  Synchronisation revenues accounted for 17% of the market in 2018, up 3 points in 4 years, while international rights collected directly by sub-publishers accounted for 12% of the market in 2018, up 2 points in 4 years. Digital rights were up 17% between 2017 and 2018 to €13.8m, but only represent 3.5% of music publishers' revenues.

Losing out on digital royalties

  One of the explanation to the low share of digital revenues is due to the fact that major music publishers and big independent publishers operating in France do not collect directly digital royalties for the use of Anglo-American repertoire in their territory. These streams of revenues are directly collected by their parent companies through one-stop deals with collective management organisations (such as SACEM for Universal Music Publishing or SOLAR, a joint venture between PRS for Music and GEMA for Sony/ATV).

  Stéphane Berlow, founder/CEO of Spin-Off, estimated during a presentation of the report that over €15m did not appear on the balance sheets of French publishers due to pan-European agreements. "Revenues generated by the Anglo-American repertoire in France does not transit through the French affiliates of the major companies," said Berlow, a former MG of BMG France. "For French publishers, this is a loss of value because this money does not flow back through the system any more."

  The average turnover of music publishers in France was around €655,000, with 61% of the companies surveyed claiming a turnover under €1m, 25% a turnover between €1m and €10m, and 14% over €10m. Major companies accounted for 48% of the business. "The French market is very fragmented," said Berlow.

A drop in profitability

  In terms of music genres, the survey showed that 81% of the revenues came from the exploitation of pop/contemporary music, with 10% coming from classical music and 9% from music libraries.

  Publishers in France experienced a 5.4% drop in profitability in 2018, "a trend that affects most publishers, regardless of their size," said CSDEM. Two main reasons explain the erosion of profitability: the increase in non-recoupable expenses linked to the increasing number of project, in particular involving new talent, and a 7% increase in overhead costs between 2017 and 2018.

  Interestingly,  local repertoire represented 33% of music publishers' total revenue in 2018, but accounted for 63% of the company's gross margin. New local talents represented 31% of the revenues generated by local repertoire, and 37% of the gross margin. 

Implement tax breaks

  Juliette Metz, the President of CSDEM and CEO of music publishing house Encore Merci, said that the report showed that music publishers in France have managed to maintain a high level of activity, despite losing on the digital front and investing heavily on new talent (half of the 896 contracts signed in 2018 by French publishers related to new talent).

  However, she warned that such activity could be at risk if some measures were not taken by the government. In particular, Metz said publishers would expect to benefit from tax breaks, similar to the ones benefiting record labels, and that a specific support scheme for music publishers should be set up within the newly created Centre National de la Musique. "It is important for us to benefit from tax breaks and support systems since publishing is the only part of the music sector that is not supported in any ways," she said.

British creative sector calls for government to ensure future access to EU market

By Emmanuel Legrand

In the wake of Brexit, the UK government decision's not to implement the European Union's Directive on Copyright in the Digital Single Market, as well as the uncertainty about the future relationship between the EU and the UK continued to provoke reactions from stakeholders in the creative sector. The negotiations between the UK and the EU about the post-Brexit framework will be crucial to the future of the creative sector.

  Speaking on behalf of the independent community, Helen Smith, Executive Chair of Brussels-based independent music companies organisation IMPALA, warned that "a sector specific approach is essential to ensure ongoing terms accommodate the needs and opportunities of the cultural sectors in a post-Brexit world.”

  Smith added: “This is particularly key for small businesses and emerging artists, who won’t have the means to work their way around complex barriers. If we want an illustration of why that’s important, we just need to look at IMPALA’s album of the year shortlist published yesterday. That is the diversity we want to continue to see crossing borders. Brexit will not prevent that, the independents’ voice will keep being heard.”

Prioritise concrete terms

  IMPALA as well as many other organisations has expressed concern about the the UK’s decision regarding the EU’s copyright directive, which was adopted in the European Parliament with the votes of the UK. “We urge both the UK and the EU to prioritise concrete terms that recognise that the European music market is borderless in nature and needs nurturing with sector-specific deal terms,” said Smith.

  Smith's stance was echoed by Paul Pacifico, CEO of British independent music company's body AIM, who urged the government to "uphold their pre-election promises to support UK creators and creative businesses.” He added: “For British music to survive and thrive in a post-Brexit landscape it needs a modern copyright framework that fits the digital era."

  Speaking at the AIM Connected conference, Pacifico
outlined a series of initiatives the indie community is pushing for with other sectors of the industry. Said Pacifico: “We are working alongside the Musicians Union and UK Music to promote the idea of a ‘touring passport’ to try to avoid a slide back to the bad old days of carnets and other bureaucratic hurdles that will make career development for emerging artists especially, all the more difficult, expensive and fraught with risk. We are scrutinising aspects of cross-border data sharing, transshipment of goods and all of the other areas of our businesses that could be disrupted if not considered properly, whatever the outcome of the various trade negotiations now underway."

Fixing the value gap 

  Pacifico also said that AIM is "working hard to ensure the UK doesn’t miss out on the opportunity to benefit from the legal certainty we were hoping to gain from the implementation of the European Copyright Directive. Whilst the Government has stated clearly that it will not implement the Directive, we will not let up in our campaign to ensure the value gap does not persist and that we are able to better balance the relationships and value-flows with some of the platforms, who remain crucial partners to our businesses, even though clearly some still need to reflect a better and more even balance of value in the protection of rights and flow of royalties.”

  The Society of Authors (SoA) and the Authors Licensing and Collecting Society (ALCS) have both expressed concern about the future copyright framework in the UK if the country does not implement the Copyright Directive. SoA chief executive Nicola Solomon
said his organisation will continue to "press government" to obtain similar legislation as the Directive in the UK.

  "The directive includes many provisions which would see a more level playing field for authors when their work is used by platforms and publishers including provisions for transparency, fair pay and reversion of rights which are no longer being exploited," explained Solomon. "It includes checks on the activities of platforms which are vital to maintain privacy and the value of content."

Risk of losing trade

  Solomon noted that exports of published material are currently worth £2.9bn to the UK economy, with 36% of these exports going to Europe. Therefore, she added, "it is vital that access to these markets is maintained after Brexit and that there are no additional barriers to trade. We believe that our European trading partners are likely to insist on us applying law analogous to the directive when negotiating trade deals in order to maintain and support that well functioning marketplace. If we fail to enact it we risk losing important trade to the detriment of UK publishers and authors."

  Meanwhile, ALCS has requested an "urgent meeting to discuss the new approach taken by the Government" in a letter to the Secretary of State for Digital, Culture, Media and Sport, Baroness Nicky Morgan. "At a time when the UK creative industries are growing to unprecedented levels, we are also seeing a persistent decline in the earnings of professional authors, representing a real terms decrease of 42% since 2005," wrote Barbara Hayes, deputy chief executive of ALCS. "Chapter 3 of the directive includes the necessary means to redress this imbalance by placing a fairer value on creativity."

Canada panel recommends increasing oversight over foreign streaming services

By Emmanuel Legrand

The Broadcasting and Telecommunications Legislative Review Panel has submitted to the Canadian government its final Report with recommendations on modernising the legislation governing Canada's communications sector.  

  The 235-page report makes no less that 97 recommendations for the government's consideration, such as giving telecom regulator Canadian Radio-television and Telecommunications Commission (CRTC) new powers and responsibilities, including oversight of foreign streaming services, which would also be required to invest in Canadian content.

  The Report follows an 18-month review of Canada's communications laws including the Broadcasting Act, the Telecommunications Act, and the Radiocommunication Act. "This is the first time that the three statutes are reviewed together in a comprehensive and integrated fashion," noted Janet Yale, Chair of the Broadcasting and Telecommunications Legislative Review Panel.

 Provide regulatory tools

  "We believe that our recommendations will provide policymakers and regulators with the legislative framework and regulatory tools necessary to realise the promise of communications technologies," wrote Yale in a letter to the Minister of Innovation, Science and Industry Navdeep Bains and the Minister of Canadian Heritage Steven Guilbeault.  

  One of the most controversial recommendation relates to requirements that could be imposed on audio and video streaming platforms. The panel recommended that the CRTC should oversee DSPs such as Netflix, starting with a new mandatory registration system.

  "Under this approach, any media content undertaking with significant Canadian revenues and delivering media content by means of the internet would be required to register [with the CRTC]," according to the report. Once registered online streaming services operating in Canada would be required to invest in programming that will "attract and appeal to Canadians."

Contribute to the system

  "Right now, it's easy for them to be in Canada because they have no obligations. And we're saying ... if you benefit from operating in a Canadian system, you should contribute," said Yale at a press conference.

  For Yale, "the single most important message to convey on behalf of Canadians is one of urgency. I encourage your government to move promptly to consider this Report and engage with Canadians to implement the necessary changes to ensure that Canada is positioned for success."

  In their joint response to the panel, Bains and Guilbeault neither said which recommendations they'd support, nor if they would deal with the matter with "urgency." They said: "Reforms are needed to level the playing field on which conventional broadcasters and digital media companies compete. We recognise that, for Canada's culture to keep flourishing and for our economy to keep growing, we need to ensure that Canada's telecommunications and broadcasting landscape is properly aligned with today's digital age."

Major positive impact

  ADISQ, the organisation that represents music companies from French-speaking Quebec said the report "could have a major positive impact for the music sector." In particular, ADISQ welcomed the proposal to impose obligations on programming to online services that generate a minimum income in Canada.

  "The music industry has long asked for online music services, such as Spotify or Apple Music, to contribute to our broadcasting system, as do Canadian companies," said ADISQ president Philippe Archambault. "We are very pleased to read that the committee recommends spending and discoverability requirements for Canadian content to all businesses, domestic and foreign, offering audio or audiovisual content to Canadians."

  However, ADISQ regretted that the committee did not recommend that telecommunications service providers contribute to the funding of content, since "a large part of their attractiveness rests on the consumption by Canadians of cultural content online."

Worse than imagined

  Lenore Gibson, the Chair of the board of the Canadian Association of Broadcasters (CAB), which regroups commercial broadcasters, said the panel's recommendations "deserve careful study," especially the recommendations on digital media content providers.

  Not everyone applauded the panel's recommendations. Copyleft scholar Michael Geist described on Twitter the reports' content as “even worse than imagined with an astonishing series of recommendations to create the most regulated Internet in the OECD.”

Exactuals acquires Backlash Solutions

By Emmanuel Legrand

Royalty payments and metadata specialist Exactuals has acquired Backlash Solutions, a New York- based digital music company managing data and generating royalty statements for labels, distributors, and publishers. Backlash Solutions President & CEO Joe DeCanio and his team will join Exactuals, establishing a new office in New York City alongside Exactuals' existing hubs in Los Angeles and Nashville. 

City National Bank-owned Exactuals said its NYC office will "introduce and oversee a cloud-based system that will provide clients with a new option for calculating royalties and generating statements." It will also streamline the process for submitting royalty payment data from any royalty system into Exactuals' PaymentHub, which handles complex payments such as residuals, royalties, marketplaces, and more. 

Integrated end-to-end solution

Together with AI-powered matching data system RAI, these products will provide an integrated end-to-end solution, from data to calculations to payments said Mike Hurst, Co-Founder and CEO of Exactuals. Hurst commented: “With our powerful payment solutions and their deep understanding of royalty calculation technology, we can create a product that addresses every single need a record label, music publisher, or other company could have regarding payments.”

“I’ve always been impressed by Exactuals’ technical solutions for royalty payments and music metadata, so I jumped at the opportunity to bring my team’s strengths together with theirs to create a game changing solution for the music industry,” said DeCanio. “Now, music companies can go to one place to handle their royalty calculations, payments, and much more. The result is that everyone will be paid quicker and more transparently.”