EC to mull complaints about online music royalties

[RuffRyders]

[b]EC to mull complaints about online music royalties[/b]
[i]The organizations that collect royalties for songwriters in Europe are preparing to defend themselves at a hearing on Tuesday against accusations by the European Commission that they are restricting competition in the field of music distribution over the Internet.[/i]

The commission alleges that the 16 so-called collecting societies are illegally forcing online music retailers to buy rights to songs only from the collecting society in their own country.

Companies that sell music online, including the French retailer Fnac and the British record store Virgin, complain that this prevents them from shopping around for cheaper access to music from other collecting societies in other countries.

Failure to fix clear, fair rules for online music licensing has "been the main obstacle in Europe" blocking faster development of online music services, said Lucy Cronin, executive director of the European Digital Media Association.

The 16 collecting societies agreed in 2001 to grant each other licensing rights to their musical repertoires so that online music retailers could buy rights to a range of artists from all over Europe through a single licensing agreement, but they could deal only with the society in their own country. This accord, dubbed the Santiago agreement, was sent to the European Commission for antitrust approval, and in May the commission said in a statement of objections that the deal could lead to an effective carve-up of the European market.

By extending national boundaries into the online world, the collecting societies are preventing retailers from taking advantage of the single European market, said Cronin of the European Digital Media Association, whose members include Yahoo, Amazon.com, Fnac, Virgin and Apple Computer.

Digital agenda
The association will participate in the hearing on Tuesday in Brussels. Members want collecting societies to delete the insistence in the Santiago agreement that online retailers buy music rights only from their local society.

Record companies have separate collecting societies. These groups have also signed an accord, called the simulcasting agreement, which permits retailers to buy music rights from any collecting society in Europe. "Adapting the Santiago agreement to make it like the simulcasting agreement would be a workable solution for us," Cronin said.

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