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Leonardo de TerlizziLegal advisorCISAC

The role of collective management organisations and the importance of good governance

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Agenda

• Overview

• CISAC: who we are and what we do

• Our members

• Global royalty collections

• Role and importance of collective management

• For rightsholders

• For users

• Good governance

• Importance

• CISAC activities in this area

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1. OVERVIEW

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CISAC - who we are

• International Confederation of Societies of Authors and Composers

• Founded in 1926

• Non-governmental, not-for-profit organisation

• The leading worldwide network of authors’ societies

• 239 societies

• 123 countries

• Over 4 million creators

• All artistic repertoires

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Repertoires managed by CISAC members

MUSIC DRAMA AUDIOVISUAL LITERATURE VISUAL ARTS

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CISAC – what we do

• Key goals:

• Promote the rights and protect the interests of creators

• Promote and strengthen the system of collective management of authors’ rights

• Support the network of collective management organisations

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CISAC – what we do

• Main activities:

• Government relations and lobbying: Advocate for favourable authors’ rights laws and policies

• Artist relations, building relationships between creative community and policymakers

• Technical and legal support to our members

• Establishing and maintaining information networks to support accurate collection and distribution of royalties

• Work on governance of members, to help ensure good governance and efficient collection and distribution of royalties

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CISAC - worldwide presence

Headquarters:• Paris, France

Regional Offices:• Hungary• Burkina Faso• Chile• China

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Global collections – headline figureGlobal collections 2015

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Global collections – by region

Global collections 2015

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Global collections – by repertoire

Global collections 2015

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Global collections – by type of use

Global collections 2015

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2. ROLE AND IMPORTANCE OF COLLECTIVE MANAGEMENT

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Collective management

• In most countries, copyright laws have been adopted to protect creators and creative works

• These laws allow creators to:• Control the use of their works

• Receive an income derived from the use of their works

• Creators get specific rights with respect to their works: • Moral rights

• Economic rights

• Only the creator can do the acts protected under the legal rights or authorise others to do these acts (i.e. give a license to another person): they are exclusive rights

Copyright Basics

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Collective management

• Moral rights:• Paternity: claim authorship or maintain anonymity

• Integrity: object to derogatory treatment such as distortion, mutilation or any other modification of the work

• Economic rights:• Reproduction: make a sound recording of the work - copy

• Broadcasting/communication to the public

• Public performance

• Making available online

• Rental and lending

• Translation

• Adaptation

Types of Authors’ Rights

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Collective management

• Private organisations

• Formed by creators who share common interests

• Usually owned by the members and managed on

their behalf

• Usually run on a not-for-profit basis • Some exceptions exist:

− For-profit entities

− State bodies

• Present in most countries

Authors’ societies - What Are They?

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Collective management

• Enter into agreement with copyright owners (usually of the same category) to administer certain rights on their behalf• The nature of these agreements differs by countries

assignment-mandate from the copyright owner

• Rights that the creator will prefer to have the society administer

• Core functions:• Negotiate tariffs, issue licenses, and collect royalties

• Monitor use

• Distribute collected royalties to its members

• Educational and cultural activities

• Enter into representation agreement with foreign societies

• Enforcement

Authors’ societies - What Do They Do?

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Collective management

• Authors represented: • Composers, lyricists and music publishers

• Repertoire managed: • All types of music

• Collecting royalties for:• Radio, TV, cable

• Online services

• Commercial establishments that use music (nightclubs, restaurants, bars, hotels, etc.)

• Mechanical rights licensing

Authors’ societies - music

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Collective Management

• Provides a solution where granting individual licenses is impractical or impossible

• Difficulties for individual creators:

• Identifying and contacting potential users

• Negotiating license fees

• Monitoring use

• Taking legal action against unauthorised use

• Collective management offers:

• Reduced administration costs - cheaper than negotiating with every user

• Better negotiating position and greater bargaining power

• Other functions: educating users, public awareness campaigns, lobbying and public activities, social and cultural functions

The benefit for Copyright Owners

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Collective Management

• Provides a solution where obtaining individual licenses is impractical or impossible

• Broadcasters, online services, operators of commercial establishments where music is played in public - use a large number of works

• Impossible for these users to contact rights holders and negotiate separate licenses

• Easier and cheaper to obtain a broad license from on entity

• Collective management offers:

• One point of contact

• No need to negotiate with many individual rights owners

• Access to wide repertoire, through blanket licensing

• Saves costs of securing individual licenses

The benefit for Users

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Collective Management

• Ensures legal access to the works

• Ensures that creators are remunerated for the use of their works

• Makes authors’ rights work in practice

• Fosters national creativity and cultural diversity by promoting local creators and increasing their bargaining power

• Ensure the future of culture and creativity, and the prosperity of right owners and commercial users

• Creative industries contribute to the economic wealth and the social well-being of a nation

• Creative industries revenues represent 3% of the world’s GDP and employ more people than the car industry of Europe, Japan and the USA combined (29.5 million vs. 25 million)

The benefit to society at large

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3. GOOD GOVERNANCE

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CISAC Membership criteria

• Art. 8 Statutes - A society will qualify as a member if it:

• Effectively ensures the advancement of creators’ interests

• Has at its disposal effective machinery for the collection and distribution of royalties

• Assumes full responsibility for the administration of the rights entrusted to it

• Carries out its activities for the common good of creators and not for any specific segment or group of creators

• Carries out its activities in accordance with the Professional Rules

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CISAC Professional Rules: Overview

• Professional Rules (together with Binding Resolutions) = our code of conduct for societies

• Reflects our members’ long-standing commitment to the highest standards of collective administration of rights:

− governance

− business activities

− financial management

− transparency and reporting

• Unique to CISAC

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CISAC Professional Rules:Overarching Principles (Preamble)

• Ensure the advancement of creators’ interests

• Conduct operations with integrity, transparency and efficiency

• Effectively collect and distribute income to creators, publishers and sister societies on a fair and non-discriminatory basis

• Encourage the lawful dissemination of works by facilitating the licensing of rights in return for equitable payment

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CISAC Professional Rules: Areas Covered

• Deal with issues including:

• Corporate governance • Licensing

• Membership • Collection

• Documentation • Distribution

• Complaints dispute resolution • Transparency

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CISAC Professional Rules

Corporate Governance

Transparency and Accountability

Licensing and Collections

Documentation

Distribution

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CISAC Professional Rules

• Rule 5

• – each CISAC member shall at all times:

− be open to creators & publishers of all nationalities

− permit a creator & publisher to terminate their membership

− maintain a fair balance between creators and publishers

• Purpose

− Non discrimination is a key element

− There should be equal treatment of• Creators

• Publishers

• Sister societies

− Examples: voting power, distribution rules, deductions, frequency of distributions…

Corporate Governance

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CISAC Professional Rules

Corporate Governance

Transparency and Accountability

Licensing and Collections

Documentation

Distribution

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CISAC Professional Rules

• Rules 7-12

A CISAC member must provide certain information to:

• CISAC

• online declaration stating that it has complied with all applicable laws and regulations

• audited accounts

• annual report

• information on its Sister Societies and mandated territories

• Its Affiliates

• Annual report, licensing income, explanation of deductions, explanation of distribution rules…

• Its Sister Societies

• Annual report, licensing income, explanation of deductions…

Transparency & Accountability

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CISAC Professional Rules

Corporate Governance

Transparency and Accountability

Licensing and Collections

Documentation

Distribution

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CISAC Professional Rules

• Rules 15-16

A CISAC Member must:

− license only in accordance with scope of mandates

− use its reasonable endeavors to license all uses of its repertoire

− grant licences on the basis of objective criteria

− not unjustifiably discriminate between users

− promptly collect all income due under the licences which it issues

− take all appropriate steps to collect unpaid income

Licensing & Collection

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CISAC Professional Rules

Corporate Governance

Transparency and Accountability

Licensing and Collections

Documentation

Distribution

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CISAC Professional Rules

• Rule 17

Each CISAC member must shall, in accordance with the Binding Resolutions, keep accurate and up to date documentation relating to the scope of:

a) its repertoire;b) the rights which it is mandated to administer c) the territory in which it is mandated to administer

• Binding resolutions:• dealing with documentation and distribution technical rules • dealing with use of identifiers and industry standards • defined by the community of CMOs • Regularly updated

Documentation

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CISAC Professional Rules

Corporate Governance

Transparency and Accountability

Licensing and Collections

Documentation

Distribution

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CISAC Professional Rules

• Rule 18A

• Each Member shall:

a) base its distributions on actual usage of Works or, if not practicable, on the basis of a statistically valid sample of actual usage of Works;

b) apply the same level of diligence and fairness to all distributions(…)

c) provide, and keep current, accurate documentation of its distribution methods in the CISAC Distribution Methods Database; and

d) distribute any Royalties due to its Sister Societies or to its Affiliates in accordance with the Binding Resolutions.

Distribution

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CISAC Professional RulesMonitoring and Enforcement

• Declarations by members

• Compliance reviews

• By the CISAC Secretariat

• On a random basis

• And in addition: on the basis of identified priorities

• Procedure for hearing complaints from other societies

• Support from Secretariat in helping societies meet the rules

• Sanctions for non-compliance

• Possible expulsion from CISAC

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CISAC’s work on good goverance

• Increases efficiency of overall system

• Guarantees a professional approach to the management of the creators rights among CISAC members

• Instill confidence between the society and:• Sister Societies

• Affiliates - creators and publishers

• Users

• Governments and state agencies

• Reinforce the legitimacy of collective management of rights

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THANK YOUleonardo.de.terlizzi@cisac.org