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Brussels, 17 August 2005

Competition: Commission consults on BUMA and SABAM’s commitments for the licensing of online music

The European Commission has opened a public consultation on commitments submitted by BUMA and SABAM, the Dutch and Belgian collecting societies that manage music copyrights for authors. These companies have proposed commitments that aim to end the restrictions, as far as these two collecting societies are concerned, in the cross-licensing arrangements for online music that they have between themselves and with other societies . The Commission issued a Statement of Objections in 29 April 2004[1] raising concerns that these restrictions unjustifiably transposed into the Internet world the national monopolies that the societies have traditionally held in the offline world. The Commission sees modernising the licensing of music for online services as highly important and it will now consult third parties on the proposed commitments.

Competition Commissioner Neelie Kroes commented: “Online distribution brings many benefits to artists and to consumers. I am committed to ensuring that the licensing system does not hamper the development of a genuine European single market between collecting societies to the benefit of these artists and consumers.”

Copyrights ensure that writers, composers, performers or record producers get a share of the money earned from the commercial use of their works. As right-holders are not able to individually monitor all use made of their works, they entrust this task to collecting societies that provide the following services: (1) the grant of licences to users; (2) enforcement of rights; (3) collection of royalties; (4) distribution of royalties to rights-holders.

The Commission strongly supports the "one-stop shop" EEA-wide copyright licensing for legitimate online Internet music services and which include the music repertoires of all societies as foreseen in the so-called Santiago Agreement. It fully acknowledges the need to ensure adequate copyright protection and enforcement against piracy. However, it considers that the restrictions created by the “economic residency clause”, which implies that users can only obtain EEA-wide licences for the online use of music from their national collecting society, may infringe Article 81 of the EC Treaty, as the territorial exclusivity afforded to each of the participating collecting societies is not justified by technical reasons and is irreconcilable with the reach of the Internet.

BUMA and SABAM commit not to be party to any agreement containing an “economic residency clause”. The commitments are published in the Official Journal, so that interested third parties may submit observations prior to the Commission making, by decision, the commitments binding on these two collecting societies.

The Commission is continuing the formal proceedings as regards the other collecting societies that received the statement of objections with a view to adopt a formal negative decision. However, it will examine carefully any proposal on commitments that other collecting societies may submit to lift the restrictions, so that the procedure in respect of them could likewise be terminated with a commitments decision.

[1] See IP/04/586.

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