Collective licensing has been effective for over a hundred years, for all stakeholders, but it has been questioned recently by those who believe it may no longer be fit for purpose in the digital world. Yet, the concept of the power of the collective - or the complete repertoire entrusted to rights managers like the Alliance by rightsholders themselves - remains strong and requires a true re-assessment for online.
There is widespread acknowledgement that the collective has served the offline world well in the broadcasting and public performance arenas. But this very success has been challenged because, on the face of it, online is not served well by the territorial nature of the collective of old. Indeed, this has been identified by rightsholders, rights managers, music users and the European Commission alike.
Rightsholders and managers want to see an effective method of collection and royalty distribution for online and mobile across Europe and music users would like fewer outlets to visit to get their licence to operate. But the desire to improve the system for rightsholders and to remove administrative burden for users should not be confused with a call to break up the nature of collective licensing.
It has been easy for music users to blame a monopolistic and what they believe is a monolithic structure of collecting societies across Europe and argue that it has to go. However, their desire to approach fewer outlets is more a consequence of the increasingly international nature of business than it is a failure of the concept of collective licensing.
'collective strength can be harnessed to deliver rightsholder benefits'
Sure, there have been things wrong with the internal workings of the system, and I and my predecessors here at the Alliance have long highlighted what we believe needs to be done to make the European model more efficient.
But none of us have ever argued against the collective, because the collective remains a powerful way for everyone to do business with each other.
For rightsholders, the power of collective licensing cannot be over-stated. When and where the collective works well, licences negotiated based on repertoire volume provide an extremely effective solution. Of course, rights-holders should be able to experiment with different models and the collective needs to be flexible enough to enable this to happen; adhering to the concept of rightsholder choice. And of course we will need to travel through a period of uncomfortable transition and change before we get to the new end game.
On the other side of the tracks, there is huge value in a blanket licence to a music user too, particularly as they are now well understood, and music users can see that they have access to everything they want, when they want it.
As we move towards new licensing models, the benchmark for everybody - users, consumers, governments, rightsholders - must be that those new models do not decrease the value and overall benefits relative to blanket licences. For example, for consumers a wide choice of music offerings must continue to be available. For governments, new models must continue to offer ready-made support for the creative economy on which economic projections of the future are increasingly based.
So, I don’t believe the solution to pan-European online and mobile licensing lies in the break-up of the collective, but rather in a true understanding of the nature of the challenge facing us.
Right now across Europe, there’s a significant debate taking place about how pan-European licensing for online and mobile can best be achieved to the benefit of all stakeholders. The European Commission set out its Recommendation as far back as 2005.*
We at the Alliance have supported that Recommendation because we believe the concept behind it sets out the best deal for rightsholders. In the Recommendation of 2005, the EC’s Internal Markets Directorate promoted rightsholder choice. In November 2007, Commissioner Borg confirmed this principle.
The rightsholders and the majority of collecting societies have also accepted this. Yet some music users have perhaps not surprisingly advocated a route that would ultimately drive down the value of music. In this scenario, rightsholders would see the very rights managers they had entrusted their rights to competing with each other to drive the price down.
There may be frustration at the speed of change, but there is evidence of progress and societies and rightsholders have accepted the challenge of changing the way the collective works for online and mobile.
There will be many models put forward in order to find a solution for pan-European online licensing and in order to find a way that both ensures value and choice for rightsholders and which reduces administrative burden for licensees.
The system needs to be flexible, but in our view, one that harnesses the strength of the collective whilst delivering benefits to rightsholders is the ideal route. An alternative system to the collective is not necessary. The market should be left to decide its future without new systems being imposed. And, with willingness from collecting societies to adapt and change, the system can be improved and a new, more flexible and user-friendly collective for the licensing of music for online and mobile can be achieved.
Steve Porter is Chief Executive of the MCPS-PRS Alliance
*Commission Recommendation of October 2005 on collective cross-border management of copyright and related rights for legitimate online music services.