• Consumer Focus is the statutory consumer watchdog for consumers in England, Wales and Scotland, and for postal consumers in Northern Ireland
• We work on copyright exceptions, licensing and enforcement to achieve competitive markets in copyright protected content which meet consumer demand and respond to technological developments in a timely manner
77 percent of consumers expect that a fair share of the money they pay for music, films and e-books goes to the artists who created the work
• Collective rights management is critical in enabling the cost effective mass licensing/use of copyright protected works, but the collecting societies need to be prevented from abusing their dominant position

• Our submission to the Hargreaves Review of IP and Growth
2011 focused substantially on copyright licensing and collecting societies, and we support Prof Hargreaves recommendation for the 20+ UK collecting societies to adopt minimum standards
• The British Government recognised in 1956 that collecting societies needed to be prevented from abusing their dominant position vis-a-vis licensees, and to this end established a
Copyright Tribunal
• However, the UK is only one of three EU member states which does not regulate collecting societies at all
• In 1988 and 1996 the UK competition authority investigated PPL and PRS respectively and found that they abused their dominant position vis-a-vis licensees as well as members, and failed in their governance

• Collecting societies’ relationship with artists is established through contract, and artists commonly do not have a choice of collecting society
• There are a number of misconceptions about collecting societies:
– They are not trade unions, they do not exclusively represent artists, they may ask artists to assign their copyright or related rights, they are not run by artists for artists, and they cannot be assumed to ensure that artists get fairly remunerated for domestic, EU or international use of their work
• In the UK, lack of trust means that some artists, such as photographers, refuse to form collecting societies and thus collective rights management remains limited

• There is no feasible alternative to the efficiencies the dominant position of collecting societies offers to the market
• However, existing collecting societies, who in some cases own copyright or related rights, need to be effectively prevented from abusing their dominant position, otherwise collective rights management will further fragment
• Developments over the past 10 years with regards to collecting societies maintaining territorial monopolies within the EU, and the repertoire fragmentation that occurred following European
Commission intervention, led to the recognition that a Directive is needed
– Collecting societies, because they are in a dominant position, are not subject to the “invisible hand” of the market

• Varying approaches to regulation of collecting societies in the
EU exist - mostly intermediate and some strict supervision
– More regulation is not necessarily better (Germany)
– Often the collecting society/member relationship is not regulated, especially on a cross border level
• The draft Directive will go some way in harmonising regulation of collecting societies, by imposing common minimum standards for the treatment of members and users
• The UK’s current leading position when it comes to digital music, film and e-book services was achieved despite the failure of UK collecting societies to effectively licence new services
• But the UK digital services, and UK creators, can only effectively take advantage of the EU market, if the draft Directive facilitates cost effective collective rights management across borders

Saskia Walzel – policy manager saskia.walzel@consumerfocus.org.uk
Consumer Focus
Victoria House,
Southampton Row
London WC1B 4AD t 020 7799 7900 f 020 7799 7901 www.consumerfocus.org.uk