Collection Agencies and Competition

Competition in the royalty collection arena arises again and again as an issue in many jurisdictions.

In the United States there are two main publishing collection agencies with respect to compositions. ASCAP and BMI compete with each other to attract composers and users of music. As more the one collection agency operates in this area there is commercial pressure to ensure composers are given the best services available.

Some suggest however, that having more than one agency with the repertoire of songs split between them, leads to complications for businesses and other organisations seeking to use tracks, often needing to deal with both agencies in order to have access to all the music they seek to use.

In Australia only one collection agency operates in the area of performing rights. In March 2006 the Australian Competition and Consumer Commission re-authorised APRA to act as the sole collection agency in this country. In doing so a number of issues were raised in considering whether more competition is required in this area.

Concerns were raised regarding the ability for creators to negotiate directly with users. This includes the ability for individual composers to license works, for example by use of a creative commons license, at the same time as having the song in the APRA repertoire. APRA undertook to make this process easier but the expectation of the ACCC was that such licensing would remain minimal.

In dismissing the need to establish additional collection agencies, the ACCC noted the inconvenience of having to deal with more than one collection agency. The costs associated with establishing and running additional services was of further concern, as was the enforcement of breaches on behalf of creators. The ACCC concluded that no additional collection agency was warranted at that stage. This will be reviewed again in 2010.

In the EU at present each country has its own royalty collection agency. The European Commission has been conducting an anti-trust investigation into whether there should be an amalgamation of these agencies and a regional licensing structure adopted.

The move toward regional licensing arrangements has been met with criticism and resistance from a number of composers and musicians who argue that this would result in lower royalty payments across the region, impacting on their ability to produce creative works into the future as they will be unable to sustain themselves financially:

More than 220 singers, musicians and composers - including Charles Aznavour, Sade, David Gilmour, Julio Iglesias, Maurice Jarre, Mark Knopfler and Michel Legrand - already have signed an appeal to the EU saying pan-European music licensing will stifle creativity.

For businesses, particularly large organisations needing to deal with individual agencies in each country, present arrangements raise administrative difficulties with some creative works being available for use in one country but not in another.

Competition in the collection of music royalties is of fundamental importance. The experience in Australia shows that when one agency is allowed monopolistic power there can be difficulties for artists wishing to negotiate alternative arrangements.

While there is undoubtedly a need for some integration of the licensing arrangements in Europe there must be more than one licensing body to ensure that composers and the users of music are serviced in an effective and efficient way.

In the end, as with much of the arrangements made with respect to copyright and musical compositions, the question of the number and services of collection agencies remains one of balance. Without multiple collection agencies there is the ever danger of monopolistic control and yet with too many, complexities arise leading to inefficiencies, ultimately impeding the ability of users to access creative works.

Further Reading
ASCAP: http://www.ascap.com/
BMI: http://www.bmi.com/
APRA: http://www.apra.com.au/

ACCC, ACCC re-authorises collective administration of music performing rights by APRA (9 March 2006) <http://www.accc.gov.au/content/index.phtml/itemId/726809/fromItemId/2332> at 10 March 2006

SiliconValley/Associated Press, EU musicians oppose Europe-wide online royalties; outcome could affect iTunes (3 July 2008) <http://www.siliconvalley.com/news/ci_9776215?nclick_check=1> 9 July 2008

Digital Music News, The Push for Pan-Licensing: Not Everyone Agrees (7 July 2008)<http://www.digitalmusicnews.com/stories/070608eu> at 9 July 2008