Response to the preliminary findings and policy options with respect to the collective management of copyright across national borders, working document from the 7th of July 2005.

Copyright Unit

Directorate General for Internal Market

CEPIC (Coordination of European Picture Agencies Press Stock Heritage ) has with great interest read the preliminary findings and policy options with respect to the collective management of copyright across national borders

We welcome the view from the commission that a “one stop shop” will not be a solution for the future. We agree with the view that a single entry point in the world would be costly and detrimental to rightsholders, the cost of maintaining the web of reciprocity would be burdensome and corresponding deductions would be made by both the affiliate and the management society before the rightsholders are paid.

However we feel that the proposal in the working paper to create several new cross-border collecting societies to grow up beside today’s non cross border collecting societies will make the road from the copyright holder to the big cross border collecting society even longer. We believe that transparency will be even less and the possibilities for the copyright holder to get some information about the economies of the society will be nil.

It is difficult today to get information. Some of the organisations that work in the collecting society’s area do not seem to consider the difference between the copyright creator and the copyright owner. It is very important that the money goes to the correct recipient. As it is now, museums, archives, picture agencies and limited companies which have received in different ways the copyright to creative works may not get their part of the remuneration.
We had hoped that the working paper should have taken up more democratic questions i.e. about membership etc. We agreed with much in the executive summary: COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT AND THE EUROPEAN ECONOMIC AND SOCIAL - COMMITTEE The Management of Copyright and Related Rights in the Internal Market from 18.06.04.
We have the same opinion as it is expressed in following:

3.5. The Issues that require a legislative approach
Whilst competition rules remain an effective instrument for regulating the market and the behaviour of the collecting societies, an Internal Market in the collective management of rights can be best achieved if the monitoring of collecting societies under competition rules is complemented by the establishment of a legislative framework on good governance the Internal Market, common ground on the following features of collective rights management would be required:

3.5.1. The Establishment and Status of Collecting Societies
Diverging conditions and a number of models exist for establishing a collecting society. Regarding their status, collecting societies may be corporate, charitable, for profit or not for profit entities. The consultation process demonstrated that apparently, the efficiency of a collecting society is not linked to its legal form. A collecting society may be duly constituted in the form it chooses or is required under national law, as long as it complies with the relevant national legislation pertaining to any such entity and provided the respective national law has no discriminatory effects. This is subject to compliance with and review under Articles 82 and 86 of the Treaty where a collecting society is constituted as a legal monopoly or where it is granted special rights under national law.

However, as collecting societies, in their role as rightsholders' trustees, have particular responsibilities due to the economic, cultural and social functions they fulfil, the establishment of a collecting society should be subject to similar conditions in all Member States. In order to promote good governance, common ground appears to be required at Community level in relation to the persons that may establish a society, the status of the latter, the necessary proof of efficiency, operability, accounting obligations, and a sufficient number of represented rightsholders.

3.5.3. The Relation of Collecting Societies to Rightsholders
Usually only one society operates for each group of rightsholders in the territory in question as their trustee and it is the only gatekeeper of their market in respect of the collective management of their rights. The principles of good governance, non-discrimination, transparency and accountability of the collecting society in its relation to rightsholders are, therefore, of particular importance. These principles should apply to the acquisition of rights (the mandate), the conditions of membership (including the end of that membership), of representation, and to the position of rightsholders within the society (rightsholders' access to internal documents and financial records in relation to distribution and licensing revenue and deductions, genuine influence of rightsholders on the decision-making process as well as on the social and cultural policy of their society). Regarding the mandate, it should offer rightsholders a reasonable degree of flexibility on its duration and scope. Furthermore, in the light of the deployment of Digital Rights Management (DRM) systems, rightsholders should have, in principle, and unless the law provides otherwise, the possibility if they so desire to manage certain of their rights individually.

3.5.4. The External Control of Collecting Societies
In some Member States, collecting societies are subject to control by public authorities or specific bodies, but with very differing scope and efficiency. The external control encompasses the behaviour of the societies, their functioning, the control of tariffs and licensing conditions and also the dispute settlement. From an Internal Market viewpoint, the existing differences regarding the control of collecting societies are significant and cannot be ignored. Divergent rules on control from one Member State to another constitute obstacles to the interests of rightsholders and users alike, given the exclusive position of most collecting societies and their network of reciprocal agreements. As a consequence, in all Member States, adequate external control mechanisms should be available. From an Internal Market viewpoint, it would appear useful to establish common ground on certain parameters of external control and make specific bodies (e.g. specialised tribunals, administrative authorities or arbitration boards) available in all Member States and to establish common ground on their competencies, their composition and the binding or non-binding nature of their decisions.

As the above report points out there are a lack of procedural facilities for the collective management societies and an absence of rapid dispute settlement mechanism.

The individual creator or the copyright owner of the economic part must have the freedom to decide for themselves which right they wish to confer on collective management societies and which rights they wish to manage individually. This must be safeguarded by legislation. We welcome that this also is the view in the working document of the staff.

We understand that collecting societies are a good way to collect remuneration for some of the copyright owner’s rights, which could be difficult to receive in some other way. Therefore there are even more needs for the rights to be appropriately regulated in order to ensure the transparency required under competition law. We find it necessary to create common tools and comparable parameters for all the collecting societies throughout Europe.

In some countries there are vehicles which chose which organisations can enter a special collecting society. As it is now, in some collecting societies the members within the societies are voting on membership without considering if the organisations fulfil the requirement or not. As some of the members run the risk of receiving less money if more organisations in the same area become members of that collecting society they vote against accepting more members which might dilute their own income.

It is even so that in the statues of some collecting societies every member has a veto against accepting new members. This cannot be according to transparency throughout Europe.
We think it is important that for example, the justice department decides if an organisation fulfils the criteria for membership of a collecting society, especially if there is a law -as in the Nordic countries- which legislate that remuneration should be collected by such an organisation. There could i.e. be a rule that if a group of copyright holders of more than 200  exclusive members  (not members also in other organisations within the collecting society) should be allowed without voting to enter as new members of the collecting society. In many cases it is first as a member you get information about economic and other details. The agreements the collecting societies in Nordic countries make also bound rightsholders outside the society and are confidential to members. Non-members can not find out.

Groups of copyright owners should be entitled to exercise rights to send representatives of their choice with voting rights to members meetings, and that such rightsholders should be taken into consideration when members of management bodies are being appointed.
We therefore welcome implementation of the proposal 7.2 (6):
Membership cannot be refused to individual categories of rightsholders who represent mainly non-domestic interests. In addition, these rightsholders should have a voice in how royalties are distributed that is the commensurate to the economic value of the rights they represent.

However as we point out it is not only the non-domestic interest that should be taken care of but also organisations that represent other domestic rightsholders even if those are in the same field as members already in the collecting society. It is not transparent if some organisations can be kept out and that is the case in many countries in Europe. The only way to solve the problem is that another body i.e. justice department decides what organisations can become members.

If there is a dispute which cannot be solved by the collecting society itself such a body within the justice department could be the entity for solving the problems or the problem could be solved by the court. However it is needed that there is also a possibility to go to EU for an opinion in a special case.

It is also important as is stressed in the report that internal democratic structures of collective management societies are fundamental for legitimising their activity. The establishment of minimum standards for organisational structures, transparency, accounting and legal remedies are necessary.

Participation should be on the basis of equal entitlement of all the various member groups. It is also necessary that the financial figures and division of the remuneration is not a secret inside the collecting society only seen by a few.

For the sake of transparency the yearly economic reports should be open for everybody. It is also important that the amount of revenue is divided on the principle of identical treatment in identical circumstances. It is also important to give appropriate management costs in such a way as to be comprehensible to those entitled to benefit.
There is something wrong if the administration costs between collecting societies can differ from 7 percent to 25 percent, as we have observed. The administration cost should be more transparent. If it is like this it means that some copyright owners have to pay the administration so that the collecting society has the opportunity to compete with other collecting societies that can not afford e.g. to become cross border collecting societies.

We ask for an efficient, independent, regular, transparent and expert control mechanism in all Member States - incorporating all the legal, social, financial and cultural aspects.

We also agree upon comparable and compatible arbitration mechanism throughout the EU, access to which is affordable by small users and small authors, for disputes between rightsholders and collective management societies, between one collecting society and another and between collecting societies and copyright owners outside the collecting society.

There is also need for an appropriate procedure for the cross-border settlement of conflicting decisions in the member countries.

We also wish to see increased requirement for collective management societies to provide information, internally and externally and publications of tariffs, distribution keys, annual accounts and information on reciprocal agreements. We wish collective management societies to be accountable to those they represent in terms of their expenditure on administration and other associated costs. Information on administration and how a collective management society is run should be available, so that rights-holders can ensure that their money is not being wasted on unnecessary administrative expenses.

In the commission proposal and justification it is recommended that, in the first instance, that option 3 should be adopted for rights clearance for online music. We cannot speak for the music industry but we do not feel that there is any demand for that solution in the photo industry.
It has to be said that the photo industry differ much from digital music. The photo industry has been digital early – even before the creation of a global Internet - since beginning of 1990. The international news picture agencies Reuters, AP, AFP, EPA and DPA have been selling their pictures worldwide with digital copyright clearance more than 15 years.  For the picture industry digital picture selling in most cases is a right for the right holder not for a collecting society. Cepic represents today more than 900 picture agencies in Europe from almost 20 countries and the picture selling by Internet is transparent and the right holder have several opportunities to choose between big players who like the commission proposal clear the rights not only for EU but for the whole world. It is nothing new for the picture market. Today the picture market world wide exceeds more than 5 billion euro and is growing. Cepic represent more than 75 percent of the EU market in picture business. There is no problem today for a user to get rights for a country, several countries, Europe or worldwide. There is also a big competition between the bigger picture agencies so the user has options in money and quality. The market is effective and a news picture can be received today by the buyer in seconds. Cepic members make the market price to the advantage to the rightsholders.
In the working document the picture industry is not mentioned but it is important to point out that there are markets, big markets that are functioning to the best for the customer.
As we pointed out it is more important in the field of photo industry to really safeguard that the money from collecting societies reaches the rightsholders and that the rightsholders can exercise their individual rights when they so wish.

However, we believe that the existing individualised system of rights and fees management has proven itself to be efficient and reward rights-holders precisely and appropriately for their work. This system should be retained, and used preferentially where a use can be traced back to an individual rights-holder who can be remunerated in full. Collective management should remain the last resort and be limited to mass usages that are difficult to control; where the individual rights-holder cannot be identified and where such small payments are difficult to collect individually.

Although a rationalisation of rights management is welcomed, we believe that any collective administration systems created should not be mandatory, and that rights-holders participation should be voluntary. Indeed, ensuring that there is not a monopoly in a particular area of collective management will allow rights-holders a choice, and transparency of action and freely available information on societies, will permit the rights-holder to make an informed choice. We welcome the steps that have been taken in the working document in that area.

We are also in favour of uniform coding standards for work and as CEPIC represent 75 percent of the image trading in Europe we are willing to participate in developing such standards suitable for the picture business together with EU.

27th of July 2005

Staffan Teste
CEPIC
Chairman Picture agency/collecting society committee