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Equitable Remuneration in Italy


AUTHORS' VICTORY IMPACTS BROADCASTERS IN ITALY



Introduction

Italy is one European country where the final distributor, usually the broadcaster, is considered by law to be responsible for payments of remuneration to audio-visual authors for the transmission of their works. This has important considerations for all broadcasters, which operate, or are going to operate, in the Italian TV market, including those whose signal originates outside Italy.

In Italy, audio-visual authors benefit from unwaiveable and inalienable remuneration rights called “Equitable Remuneration” (in Italian, “Equo Compenso”). This system is favourable to authors, as the law provides that, notwithstanding the contract with the producer, the final distributor is obliged to a) pay the authors for each use of their work and b) do this through a collecting management society. This ensures that, irrespective of nationality, audio-visual authors are remunerated in line with the success of their works.

Although part of Italian Copyright Law, Equitable Remuneration has been at the centre of many debates between broadcasters and the SIAE (Italian Collecting Society for Authors and Publishers) over the last few years. It became a sensitive subject with the development of new technologies, the increase in number of multiple platforms, DTT channels and last, but not least, the significant interests involved.

In order to understand the Italian scenario of Equitable Remuneration, click here to examine what it is and how it works.


What is Equitable Remuneration?

Article 46 bis of the Italian Copyright Law n. 633 of 22nd April 1941, governs the Equitable Remuneration of the Authors of cinematographic and assimilated works.

It was introduced in the Italian Copyright Law by the Legislative Decree 154/97, and provides that:

a) when the distribution rights are assigned to the producer, the authors of cinematographic or assimilated works are entitled to equitable remuneration from the TV broadcasters for every use of the work that takes the form of communication to the public by air, cable or satellite;

b) for every use of cinematographic or assimilated works of which the original language is not Italian, the authors of the derived works, constituted by the translation or adaptation of the dialogues in Italian, shall likewise be entitled to equitable remuneration;

c) any remuneration provided may not be waived and, in the absence of agreement between the SIAE and relevant trade union body, it shall be set according to the Arbitration procedure.

Who has the right to receive Equitable Remuneration?

The Authors of cinematographic and assimilated works who have the right to receive Equitable Remuneration are screenwriters, directors, script translators and adaptors. "Assimilated works" means films, television, fiction, documentaries and cartoons. Therefore, not only the Authors of cinematographic works are entitled to receive the Equitable Remuneration but also the Authors of the assimilated works as defined above. According to the Law any broadcaster that transmits cinematographic and assimilated works must enter into the Equitable Remuneration Agreement with SIAE.

Equitable Remuneration regulated in article 46 bis is not to be confused with “equitable remuneration for private copying”, which is the right set out in favour of authors, producers and artists, to receive a percentage on the selling price of any device with storage memory (computer, smartphone, hard disks, DVD recorder, CD or DVD, tablet etc.) for sale in the market.

SIAE pays each Author according to the use of each transmitted work, after deducting their commission fee. In Italy SIAE holds the monopoly in collecting Equitable Remuneration, in contrast to the "equitable remuneration for the private copy" and the "equitable remuneration for performers", which can be collected by other representative associations.

What is the intention of the Legislator?

Equitable Remuneration compensates the Authors for having contractually transferred the distribution rights of their works to producers. Therefore, the Authors have the right to receive equitable remuneration, which is seen by the Legislator as the benefit for the success of their works. If the number of transmissions of the work is high, it means that the popularity of the works is high; more audience equals more value and consequently the Authors should receive a compensation for that success.

The victory of the Authors and SIAE and the impact on Broadcasters

Over the last few years Equitable Remuneration has been at the centre of many debates, with millions of Euros at stake and considerable interests involved. The agreement between RAI, the Italian public broadcaster, and SIAE expired in 2008. After nine months of unsuccessful negotiation for the renewal of the agreement, SIAE requested, for the first time in its history, an Arbitration Procedure to decide on the dispute regarding the amount of Equitable Remuneration due. At the same time agreements with other broadcasters also expired, including the agreement with Sky Italia (2012) and with Mediaset (2008). Moreover, new DTT channels were launched and new agreements were on the SIAE's table.

The dispute over Equitable Remuneration became more inflamed when Sky Italia, worried that the Arbitrator Decision on the dispute between RAI and SIAE could set a precedent, decided to take a legal action against SIAE, claiming Article 46 bis of the Italian Copyright Law to be unconstitutional.

On 16th June 2013, SIAE scored the first victory. The arbitration panel of the dispute between SIAE and RAI, ruled that the amount that RAI offered to pay to SIAE, as Equitable Remuneration, for the period 2009-2011 was too low and awarded SIAE a higher figure. For future RAI agreements the terms and conditions of the calculation of the Equitable Remuneration are now dictated in SIAE's agreements.

In April 2014, SIAE scored another significant victory, this time coming from a court judgment. Sky Italia took legal action against SIAE, claiming the same article was unconstitutional, and refused to pay Equitable Remuneration to the Authors for the transmission of their works on their free, pay TV channels and video websites. Sky Italia claimed that the Equitable Remuneration had to be paid by the producers and not by the broadcasters.

The Milan Court issued its judgment in the case Sky Italia vs SIAE and upheld the provision of Article 46 bis that Equitable Remuneration payment is a legal obligation for broadcasters and not for producers. Regarding the unpaid Equitable Remuneration, the Court referred to the article that provides that it shall be agreed by SIAE and the relevant trade union body and that in the absence of agreement it is set by the Arbitration Procedure.

The victory of Equitable Remuneration also positively affected the “Performers” of cinematographic and assimilated works. Like Authors, Performers also have the right to receive Equitable Remuneration for the transmission of their performance. The Equitable Remuneration in favour of Performers is regulated in Article 84 of the Italian copyright law. This could be a topic for a future edition of Footnotes, but for now it is important to know that Performers also have the right to receive remuneration for each use of their works. Therefore, broadcasters that transmit cinematographic and assimilated works, must not only enter into an agreement with SIAE but also with the major representative organisation of Performers in Italy: NUOVO IMAIE.

If you're interested in understanding how Equitable Remuneration might affect your business in Italy, or if you would like to discuss any other rights licensing issues and solutions in that market, please contact Barbara Graham in the first instance.


Opening Pandora's Box


Background

During the last 18 months the world of collective rights management for music performing rights in the USA has been in a spin caused by the attempts of major publishers to withdraw certain digital use rights from ASCAP and BMI, the two largest (by repertoire size) of the three established performing right organisations ('PRO's) in the USA.¹


ASCAP and BMI's licensing activities are regulated by Consent Decrees² which require them to automatically issue a licence on request from a licensee. Each PRO has a supervisory Rate Court in which either the licensee or the PRO can initiate proceedings if they cannot agree fees.

The concern of the majors was that, in this highly regulated environment, they would not be able to achieve what they regarded as 'proper market rates' for their rights in the digital world. In other words, the main driver was the generation of higher royalties.


The catalyst for these commercial concerns was Pandora, the USA streaming and automated music recommendation service. The majors wanted to be able to license Pandora directly but, in proceedings relating to Pandora, both Rate Courts held that the Consent Decrees disallowed the partial withdrawal of rights.

These decisions presented the PROs with an 'all in or all out scenario' and, faced with this, the majors opted to remain - the benefits to them of the PROs' back-office infrastructure and the nightmare prospect of having to deal with thousands of licensees making the 'all out' option an unviable one. To be fair to the withdrawing publishers, they had never wanted anything other than a limited withdrawal.

In March this year, the ASCAP Rate Court decided that Pandora should pay ASCAP a royalty of 1.85% of annual revenue. Martin Bandier, Sony/ATV's CEO reacted by saying that the rate was “woefully inadequate” and that songwriters “can't live in a world where streaming services only pay 1.85% of their revenue”. The BMI Rate Court has yet to make a ruling but it's a reasonable assumption that it will be similar.

What Next?

Both the PROs and the major publishers have reached out to the US Department of Justice, which is responsible for overseeing the Consent Decrees and is currently carrying out what will be a wide-ranging review of the operation and effectiveness of the Consent Decrees. The aim of this to consider what modifications could be made “to account for changes in how music is delivered to and experienced by listeners” that ASCAP, BMI and the majors have told them necessitate this review.

An interesting new development

Whilst all this has been going on a new PRO, Global Rights Management, was founded in 2013 as an “alternative to current performance licensing models”. Their marketing informs us that their intention is to represent “a smaller client base with similar needs” and this allows them “to avoid the logistic and financial burdens associated with thousands of disparate writers and publishers”. Their aim is to create a stable of 30-60 selected songwriters and, having previously signed up Ryan Tedder, last month, added Pharrell Williams (currently an ASCAP member) to their roster .

Maximising licence fees will, of course, be one of the main objectives of GRM, who will not be subject to the same regulation as ASCAP and BMI, and this will also impact on the digital world.

It is a development well worth keeping an eye on… and we will.

¹ The third being SESAC.
² The Consent Decrees, originally entered in 1941, are instruments that seek to address competitive concerns arising from the market power that ASCAP and BMI acquired through the aggregation of public performance rights held by their member songwriters and music publishers.




Television without frontiers? - Part One




Part One – Satellite and Cable

The Background

One of the biggest challenges facing creators and distributors of music in audio-visual content is the fragmented licensing process, which, to the untrained eye, can be totally baffling and fraught with practical problems.

Fragmentation has been a central feature in the nascent development of licensing in the ‘online” space (more on that in a future “Footnotes”), but there have also been developments in the licensing of cross-border linear broadcast services that have created some fragmentation in that process too. Whilst the focus of rights owners and collective rights management organisations is predominantly on the “digital world”, these “old world” issues don't appear to draw such widespread attention, so we want to use this edition of “Footnotes” to shine a light on some of them.



Why the Satellite and Cable Directive was introduced

The aim of the Satellite and Cable Directive¹ was to facilitate the cross border transmission of audio-visual programmes, particularly broadcasting via satellite and retransmission by cable.

It established that “communication to the public by satellite” meant:

“the act of introducing, under the control and responsibility of the broadcasting organization, the programme-carrying signals intended for reception by the public into an uninterrupted chain of communication leading to the satellite and down towards the earth”; and

that the act of communication to the public by satellite occurred:

“solely in the Member State where, under the control and responsibility of the broadcasting organization, the programme-carrying signals are introduced into an uninterrupted chain of communication leading to the satellite and down towards the earth.”

These principles were enshrined into national legislation, but this has not necessarily led to their application in a uniform way. Neither the Directive nor local legislation defined who “the public” were or what constituted an “interruption²” and there have been a number of different interpretations made by local collecting societies, either to suit the structures that they have developed to manage rights or as a result of case law (especially on the issue of who constitutes “the public”). These distinctions are then used to determine where the first communication – i.e. the broadcast – actually takes place, with the result that the extent of territorial coverage of the initial broadcast licence may not be as wide as the broadcaster would expect or hope.

The Directive and cable retransmission

The Directive also addressed cable retransmission. The receipt and simultaneous distribution by a cable operator of a TV channel broadcast by one EU Member State to another has long been regarded as a new distribution (i.e. in addition to the broadcast) that is then licensable locally in the cable operator's country. This regime throws up a number of challenges for a broadcaster who has otherwise acquired all the cable distribution rights in his production or acquisition agreements. In the cable mature countries, such as the Nordic countries and Benelux, there is often pressure put on broadcasters either to obtain these rights direct from the relevant local society or, at least, foot the bill on behalf of the cable operator.

In our opinion, the cable retransmission right has become an anachronism in the world of trans-frontier broadcasting where technology allows TV channels to be distributed simultaneously across a number of different platforms (“simulcasting”). Here the US model of “through-to-viewer” licensing (which is technologically neutral) seems to be the most logical solution.

However, the structure fostered by the European collecting societies mitigates against the “through-to-viewer” approach by underpinning a network of territorial licensing obligations, with the effect that a broadcaster can only expect to enter into distribution agreements with DTH and (arguably) DTT platforms in the knowledge that they can deliver a “rights clean feed”. This leaves other licences having to be sought for platforms such as cable and IPTV, where their involvement in the delivery process to the consumer is regarded as a “retransmission” and therefore requires a further clearance.

What has the Satellite and Cable Directive achieved for rights users?

Looking back at some of the key objectives of the Directive (as set out in its recitals) the establishment of “an ever closer union among the peoples of Europe… ensuring the economic and social progress of the Community countries by common action to eliminate the barriers which divide Europe” and that “broadcasts transmitted across frontiers within the Community, in particular by satellite and cable, are one of the most important ways of pursuing these Community objectives…”, point towards television without frontiers, when what has transpired has been a pulling in the opposite direction as far as broadcasters are concerned. So, far from “television without frontiers” we have a system in which has, albeit unintentionally, facilitated the creation of new “frontiers” taking the place of the “old” ones that the Directive sought to bring down. This has made life far more complex for rights users as the vision of the “one stop shop” disappears further into the distance.

The Future

We've certainly found it hard to explain to our broadcaster clients over the years why the technological involvement of one type of platform should be treated as different to another when exactly the same activity is being carried out. To most of them, even if they have accepted that “it is what it is” and factored this different treatment into their business development, it makes no sense technologically or commercially.

All is not lost though, as there have been signs in recent cases that have come before the courts that this structure of broadcast and retransmission is being challenged. If you're interested in learning more about these cases, or would like to discuss potential solutions to any problems that this structure is causing you, then please feel free to contact me at paul.kempton@footprintmusic.com.

You can find “Television without Frontiers? Part Two” in the links below.

¹ Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission
² The Directive does, however, state “normal technical procedures relating to the programme-carrying signals should not be considered as interruptions to the chain of broadcasting”.




Television without frontiers? - Part Two

Part Two

In this edition, we focus on two of the fundamentals in the concept of the 'uninterrupted chain of communication to the public' that have been open to interpretation, i.e. who constitutes 'the public' and what constitutes 'an interruption'.


When is a satellite-delivered broadcast not a broadcast?

Where the signal is not intended for receipt by the public

On the face of it this would seem quite a simple concept except that, without a clear definition of who 'the public' are, there have been a number of cases (not all directly related to broadcast) in which its meaning has been construed not to include the first part of the journey of an encrypted signal, from play-out to platform, with the result that the platform's distribution of channels is then regarded as a primary transmission (broadcast) rather than a re-transmission.

This distinction will often have commercial consequences for the broadcaster and cable operator alike. For instance, in Germany the collecting societies do not regard the incoming 'broadcast' of an encrypted channel signal as part of the communication to the public and in the Netherlands, at least for domestic channels, any part of the journey prior to the arrival of the channel carrying signals at Media Gateway is not treated as part of the communication to the public. In these cases the fact that, for instance, PRS might regard the UK play-out of a channel/feed as a 'broadcast' under UK law, doesn't mean that they will be regarded as such under local laws in the territory for the intended audience, with the result that PRS will have to review its ability to license that channel/feed in the UK.

Where the communication to public is interrupted

Cable re-transmission of broadcast signals, even if simultaneous and unaltered, has for many years been treated as a new activity that is locally licensable in the country of retransmission. This is the most obvious example of an 'interruption' although, as we said in Part One, we see the cable retransmission right as something of an anachronism in the modern world of trans-frontier broadcasting and we are starting to see certain challenges to that model.

For direct-to-home (DTH) reception (or other non-retransmission scenarios), the clearest example of what would constitute an 'interruption' is if other material, e.g. different programming, is added locally in the country of receipt of the signal before the channel is communicated to the public in that country.

It is also becoming the norm in the collecting society world to regard advertising that is inserted locally as an 'interruption'.

In both examples, the onward communication to the public would have to be regarded as a new primary transmission for which the relevant local collecting societies would require the platform to acquire a licence from them.

Even in the case of DTH reception, which is regarded as indivisible from the initial broadcast provided that it's simultaneous and unaltered there has been a lobby over the years to have the DTH distribution, when enabled by a DTH platform, classified as a re-transmission. However, this classification did not get endorsed in the Airfield cases¹ in 2011, where the court agreed that there could only be one communication to the public, originating where the signal was injected into the chain of communication by the broadcaster. Whilst that was a helpful confirmation of the principle, the court then went on to say

“the fact that this communication is indivisible doesn't mean that the intervention of a satellite package provider in the communication can occur without the authorisation of the rights holders“;

and that a satellite package provider would be intervening where it

“makes protected works accessible to a new public, that is to say, a public which was not taken into account by the authors of the protected works within the framework of the authorisation given to another person”.

So, who is this 'new public'? The Court felt that this was

“a public which was not taken into account by the authors of those works when they authorised the use of the latter by the broadcasting organisation. In such a situation, the intervention of those operators is thus not covered by the authorisation granted to the broadcasting organisation.”

It is our view that a satellite broadcaster who has obtained the necessary authorisations at source to broadcast their channel(s) in defined territories is deliberately targeting the public in those territories and so has most certainly taken them into account. It is not possible, we suggest, that in a business model based on the acquisition of all necessary rights for a particular type (or types) of distribution aimed at a particular territory (or territories), there can be different categories of “public”. Therefore, if there is no “new public”, the actions of the intervening party do not require any further authorisation.

What happens when there is no element of satellite delivery in the chain?

The issue of fibre-only delivery is creating some interesting new challenges. Where there is no satellite in the chain of communication the local laws that have as their origin the Satellite and Cable Directive do not cover this type of delivery.

One pragmatic approach would be to treat a communication to the public that is effected via fibre-only delivery as analogous to one where a satellite forms part of the chain.

Another approach would be to treat the fibre-only delivery from play-out through to viewer as one unbroken chain. This approach in the world of cable distribution would certainly shake up some of the norms that have developed over the last few decades, especially as it would break the established 'dual act' broadcast and re-transmission model for music copyright licensing to create a single licensable activity. The question then is which society would license it: logically, it should be the society in the country of play-out but that would create some frictions between the society there and the societies in the countries of distribution.

Of course, in those territories where the local societies already treat incoming satellite-delivered encrypted signals as not part of the chain of communication, fibre-only delivery will almost certainly be treated in the same way.

If you're interested in understanding how your transmission path might affect your liabilities for music rights, or if you would generally like to discuss potential solutions to any problems that these considerations might create for you, then please feel free to contact Paul Kempton.

There will be more articles addressing “Television without Frontiers” in future editions of Footnotes.

¹ Airfield NV, Canal Digitaal BV v Belgische Vereniging van Auteurs, Componisten en Uitgevers CVBA (Sabam) and Airfield NV v Agicoa Belgium BVBA




Training is the key

Training is The Key to Understanding Music Rights


It's no secret!

Music rights is a minefield. If you've ever tried to navigate your way through this maze, you'll know that trying to keep up with an ever changing landscape is both difficult and time consuming.

That's where music rights training steps in.

Like a mirage in the desert, it can provide clarity where there would otherwise be a distant haze.

After all, knowledge is power and that's the key. By being equipped with the tools that can help when you need to make important business decisions, it puts you one step ahead of
the game and let's face it, can make you look good in front of those you'd like to impress.


Not wishing to blow one's own trumpet, as it were!

We think this one deserves a fanfare - Footprint Music can offer different tailored training packages that will suit many different requirements and can be developed to focus on whichever area is most important to you.

Be it the need to understand the many different international licensing tariffs, enabling you to be able to make informed decisions in areas such as playout locations and budgeting, to a basic knowledge of copyright, we aim to unlock the secrets so that you understand what you need to do to be as creative as possible.

If you want to be confident in this complex area, a bit of training might be all you need.


Click here to find out how we can help you, or call us on 01344 887 887 for more information.



Clearances in 2014




Which direction will they take?

With appreciation continuing to grow for the powerful influence of music in partnership with visuals, what are we likely to see this year in relation to this trend?

Over the past year we have seen a rise in partnerships whether they be between artists or between brands and labels, using tracks prior to their full commercial release. The latter has worked well for the brands, but can sometimes lead to contrasting results for the artists. For instance, Lily Allen's cover of Keane's “Somewhere Only We Know”, used in the John Lewis Christmas campaign, outshone her come back single “Hard Out Here” by some distance. On the other hand, John Newman is a good example of both types of partnership, having achieved multiple successes with Rudimental to launch his career and then with big brand names, such as EA Games, with “Love Me Again”.

We believe for those involved in the world of content provision and broadcasting, the attraction of commercial tracks will continue to rise in 2014 but, with rising demand comes rising costs, so it will be more important to source and negotiate new ways to keep the composers, publishers, labels and creatives happy whilst keeping within the budget, which is often restricted.

What we can take from 2013 is that the commercial sound is becoming more of a focus point and this pattern should push through
2014 with the desire and opportunity for sync increasing. Therefore we expect to be even busier this year helping content creators with innovative solutions. During the year we will also be studying the clearance trends for TV promos and how demand for commercial sound is going to affect budgets, genres of music and even the artists that are being used.

If you require any assistance or advice with individual clearances, please contact our clearance team on clearances@footprintmusic.com and don't forget the age-old creative saying:

“When it comes to emotional bonds it’s 80% music / 20% visual”.

Happy synching!



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