Collecting societies act as intermediaries between right holders in the music industry but also in other art forms like books or films, and the service providers intending to use their works. They license rights, collect royalties, and redistribute revenue to the right holders in circumstances where individually negotiating licences with individual creators would be impractical and entail high transaction costs.
However, some collecting societies struggle to adapt to the requirements of the management of rights for online use of musical works, in particular in a cross-border context. As a result of today’s proposal, those collecting societies willing to engage in the multi-territorial licensing of their repertoire would therefore have to comply with European standards. This would make it easier for service providers to obtain the necessary licences for music to be distributed online across the EU and to ensure that revenue is correctly collected and fairly distributed to composers and lyricists.
The need for a change of certain practices was highlighted by recent cases where royalties collected on behalf of right holders were lost due to poor investment policies, but also by evidence of long-delayed payments of royalties to right holders.