Relationship Between Collective Management Organisations & Users of Music

Part 9 of 13 Reasons Why Kenyan Music Creators need a New CMO Law

We discuss why CMOs play a critical role in determining what kind of information music users need to take up the right kind of licences.

We discuss why CMOs play a critical role in determining what kind of information music users need to take up the right kind of licences.

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In this ninth installment of 13 Reasons Why Kenyan Music Creators Need a New CMO Legal Framework we discuss yet another important subject in music.

We delve into the Role of Music Users and Explain why CMOs should have a clear communication strategy in regard to licences they offer so that music users have accurate reliable information to guide licensing.

CMO INFORMATION TO MUSIC USERS LEGALLY kNOWN AS LICENCEES

With a view to enabling all potential Users/ and Licensees to take an informed decision about the benefits of an appropriate license, a CMO should make available to Users/and Licensee’s information which explains the key aspects of its licensing policies.

LEGISLATIVE PROPOSALS

HOW OTHER COUNTRIES HAVE IMPLEMENTED THIS PROPOSAL

In Brazil: Article 98(6) and (7), Law on Copyright and Neighboring Rights  provides that “CMOs are required to maintain a centralized register of all contracts, declarations or documents of any nature that prove authorship and ownership of works and phonograms, as well as individual participations in each work and in each phonogram, preventing the falsification of data and fraud and promoting the disambiguation of similar titles of works.”

“The information mentioned in section 6 is of public interest and access to it shall be made available by electronic means to any interested party, free of charge, and the Ministry of Culture shall also be granted continued and integral access to such information.”

In China: Article 27, Regulations on Copyright Collective Administration provides that “A user shall, when paying licensing fees to a copyright collective administration organization, provide with that organization the information on specific use, such as the titles of the used works, sound, or video recordings, etc., the names or titles of the right owners, as well as the manner, amount and time of the use; except otherwise stipulated in the licensing contract. Where the information provided by the user involves his trade secrets, the copyright collective administration organization shall have the obligation to maintain secrecy.”

In Ecuador, Article 250, Organic Code on the Social Economy of Knowledge, Creativity, and Innovation provides that “CMOs shall have an updated and publicly accessible database with clear and precise information on the works, performances, broadcasts or phonograms whose copyright or related rights manage, as well as the names of their members and national and foreign represented persons, indicating:

(1) each individual work, performance, broadcast or phonogram that they represent with respect to each rightsholder;

(2) the tariffs for each type of use and user category;

(3) the reported uses for each work;

(4) the methodology applied to the distribution.”

PRINCIPLES GOVERNING LICENSING OF MUSIC USERS

Experience shows that an open and professional approach makes it easier for Users and Licensees to understand a CMO’s licensing policies and allows a CMO to market itself in a more effective and productive manner.

CMOs should therefore treat all potential Users and Licensees in a fair, professional, and non-discriminatory manner.

Competition laws or other legal mechanisms often impose special obligations of fair and reasonable behavior on CMOs, given their common status as dominant market players.

Such obligations might include non-discriminatory and fair pricing and prohibition of unreasonable contractual terms. CMOs may voluntarily decide to cooperate with other CMOs, with a view to increasing efficiency, reducing costs and to simplify the acquisition of licenses.

LEGISLATIVE PROPOSALS

• A CMO should treat Users and Licensees fairly, in accordance with its Statute and in accordance with the terms of any relevant license agreement.

• A CMO should license rights to Users on the basis of objective, fair and non-discriminatory criteria, considering national copyright law, including applicable limitations and exceptions.

• If prior approval of a Rightsholder is required for the licensing, a CMO should use reasonable endeavors to expedite the approval process.

• Best practices of acting impartially, fairly and on the basis of objective criteria, nonetheless permit a CMO to refuse to grant a license to a User for objective reasons, such as if that User or Licensee has repeatedly failed to meet its contractual obligations with that CMO, or repeatedly breached any statutory obligations with respect to rights managed by that CMO, subject to any requirements of national legislation to the contrary.

• If a CMO refuses to grant a license, it should provide a written statement explaining the reason and appeal procedure, within a reasonable period of time.

• Users and Licensees are expected to act in a responsible manner, provide accurate and timely information, and negotiate in good faith. Where the signatory to a license is someone other than the department responsible for the day-to-day management of the license, that department should be closely involved in the license negotiations.

• A CMO also fulfills an important role towards Users and Licensees, by offering licensing solutions for rights managed collectively.

A key principle when a CMO sets tariffs (sometimes known as “licensing schemes”) is that their criteria should be clear, objective, and reasonable. The price of the license issued should be fair and equitable.

A CMO could, for instance, consider backing up its tariff proposals with independent economic research concerning the economic value of the rights in question in the relevant markets.

When assessing the fair value of a CMO’s license, all aspects of the transaction should be considered, including the value of the rights and the benefit that collective licensing generates to Users by reducing the number of licensing transactions they have to make.

LEGISLATIVE PROPOSALS

1. A CMO should establish tariffs which may be based on cross-sectoral tariff comparisons, economic research, the commercial value of the rights in use, the benefits to Licensees, or other relevant criteria.
2. Benefits for a Licensee should be assessed having regard to the CMO’s rights used considering, for example:

(a) the purpose for which such rights are used;

(b) the context in which such rights are used;

(c) the manner or kind of use for which such rights are used; and

(d) the benefit to the Licensee of having to deal with a CMO, rather than each Rightsholder individually.

Both CMOs and Users/Licensees must act in a responsible manner and conduct negotiations in good faith and a transparent manner.

Users/Licensees should provide CMOs with the information required for the purposes of licensing rights, as well as collection and timely and accurate Distribution of the revenues for the use of rights represented by the CMO.

A CMO should, in turn, always treat Users/Licensees fairly and equally.

Users/Licensees must, in particular, report the works and other protected subject matter they use in a timely and accurate manner, as well as any data or information allowing the CMOs to calculate the license fee, which is essential to enable the CMOs to operate efficiently and distribute collected revenues timely to the correct right holders.