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European court says American performers should be getting their share of Irish radio royalties

By | Published on Wednesday 9 September 2020


US collecting society SoundExchange has welcomed a ruling in the European Court Of Justice about music royalties collected in Ireland. SoundExchange hopes that the judgement made in a court nearly 4000 miles away from its Washington base could provide an income boost to its performer members.

This all relates to how copyright systems around the world are connected through global treaties and how monies flow through the collective licensing system when music from one country is played on the radio or in public in another country.

On a basic level, the copyright laws of any one country usually directly protect works created in and by citizens and businesses of that country. However, as a result of various global treaties, those laws will also protect works that have direct protection under the copyright system of any other country that has also signed said treaties.

Meanwhile, when it comes to music rights and those scenarios where the music industry licenses through the collective licensing system, separate collecting societies are set up in each country. Each society mainly signs up members and issues licences in its home country.

However, all the societies around the world are joined up through reciprocal agreements, so that each society can issue licences covering something nearing a global catalogue of music.

Artists, songwriters, record labels and music publishers can then join every society in the world, or just their local society which will collect their royalties from other societies in other countries via those reciprocal agreements. Simple.

The dispute here relates to monies collected by the record industry’s Irish collecting society – PPI – and what happens when recordings played on the radio or in public in Ireland are from US artists. Because in this scenario a complication kicks in.

The complication begins with a quirk of US copyright law, which doesn’t provide all the usual controls as part of the sound recording copyright.

As a result, in the US, AM/FM radio stations and businesses playing recorded music in public don’t need a licence from or to pay any royalties to the record industry. Only online and satellite radio need to pay royalties to artists and labels, which they do so via the aforementioned SoundExchange.

Because of this quirk, in some countries when local collecting societies collect money for the broadcast or public performance of recordings, if those recordings are American it doesn’t pass any of the money over to the US record industry, on the basis that no money is flowing in the other direction.

This approach to international royalties is sometimes called the “reciprocity” approach or the “mirror test” – ie a country looks at whether its record industry earns royalties in another country and then reciprocates.

Recording royalties collected through the collective licensing system are usually shared between labels and performers. Depending on the country, this restriction over US recordings sometimes affects both labels and performers or – as in Ireland and, as it happens, the UK – only performers.

The US record industry – via SoundExchange – has become increasingly vocal about this limitation in recent years, arguing that it’s unfair and an incorrect interpretation of the global copyright treaties.

Rather than taking a “reciprocity” approach, countries should apply a principle known as “national treatment”, which basically says that if domestic labels or performers earn royalties under any one copyright system, so should the labels and performers of other countries that are signatories of the same treaties.

In Ireland the whole thing came up as part of a wider dispute between PPI, the country’s collecting society for labels, and RAAP, the society for performers – Ireland having separate societies for labels and performers, unlike in the UK where PPL represents both.

As part of that dispute the Irish courts sought clarification from the European Union courts on what European law says about all this.

They wanted clarity on whether the “reciprocity” approach could be applied at all according to a 1996 copyright treaty to which the EU is a signatory, and also whether that approach could be adopted for US performer royalties but not US label royalties.

In a preliminary ruling, the ECJ has said that the current Irish approach is not in line with European law and the way the EU has chosen to interpret the global copyright treaties. Meaning that US performers, as well as labels, should be earning royalties from radio play and public performance in Ireland.

SoundExchange says that that ruling “has broad implications for music creators around the world. By adopting the principle of ‘national treatment’ – that a country should provide foreign entities the same benefits and protections as it would its own citizens – the ECJ is setting the stage for all artists to be paid royalties when their music is played on EU radio broadcasts and public performances”.

Meanwhile, the society’s boss Michael Huppe said: “Today’s decision by the European Court Of Justice reflects a growing global recognition that countries should treat all music creators the same, regardless of their nationality. The ECJ reaffirmed equal treatment as a fundamental principle of how nations engage with one another”.

“We appreciate the leadership of Ireland’s RAAP in advancing the cause of fairness within the global community of music creators”, he went on. “We urge EU member states to quickly follow suit so that all musicians and labels, from whatever territory, can be properly respected for the benefits they provide beyond their home country”.

A key priority for SoundExchange in this whole matter is actually a former EU member state – that being the UK, of course. Whether or not the British government will pay any attention to this ruling and seek to voluntarily amend UK law to bring it in line with the rest of the EU remains to be seen.

If not, SoundExchange and a bunch of other US music industry groups are already lobbying hard to have enforced ‘national treatment’ included in any post-Brexit US/UK trade deal. So it’ll probably happen anyway, even if UK ministers would like to adopt a policy of ‘screw those meddling European judges’.