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The exclusive rights of PROs to license questioned in Spanish direct licensing case

By | Published on Tuesday 21 February 2017

SGAE

There was an interesting ruling in the Spanish courts last week regarding the rights of songwriters to negotiate royalties direct with concert promoters for the performing rights in their own songs, rather than leaving the licensing of those song rights to a collecting society.

The case centred on a dispute between Spanish collecting society SGAE and a small venue in the city of Badajoz called Sala Mercantil, which in turn related to two shows that took place there all the way back in 2010. When SGAE tried to collect its royalties from those shows, which featured Spanish rock group Asfalto, the venue said it had reached a private agreement with the band over the right to stage a public performance of their songs.

Performing right royalties are usually collected from venues and concert promoters via the local collecting society, even if an artist is performing all their own songs, and therefore will ultimately receive that money.

Indeed, with a few notable exceptions, mainly in the US, when a songwriter joins a performing rights organisation, they basically assign the performing rights in their songs to the society, granting said society exclusive rights to license. It’s generally accepted that once that has occurred, the songwriter can no longer strike up direct deals with venues or promoters, which must then get their licences via the collective licensing system.

Of course, a songwriter can always pull their works out of their society to do direct deals, and some PROs offer the flexibility to opt out of the collective licensing system in certain scenarios while allowing the society to continue to represent their songs in other scenarios. So, for example, a songwriter can choose to licence live performance directly – on a temporary or permanent basis – while allowing their society to continue to license their performing rights in all other scenarios.

And as previously reported, of late there has been an increase in the number of artists doing just that. Acts might shift to direct licensing in live in order to get their live performance royalties faster, or to avoid paying the PRO their commission, or because of the ambiguities that can occur when monies move between societies (eg you’re a PRS member, but SGAE licenses your Spanish shows, and monies then have to move from one society to the other).

The move to direct licensing in live by an increasing number of artists is not without its critics, especially within the collecting society movement. Those critics mainly focus on the complications that occur when you have artists who are direct licensing and artists still in the collective performing at the same show, or especially at the same festival. That means the PRO needs to collect in addition to any direct deals.

However, the Spanish case is slightly different in that Asfalto didn’t pull their live performance rights out of SGAE ahead of the 2010 gigs. Nevertheless, the venue did a direct deal with the band and that – its lawyers argued – meant that it did not require an SGAE licence for the shows. The judge hearing the case concurred, which basically casts doubt on the generally held consensus that – outside the US – a PRO has the exclusive rights to license its members’ performing rights unless an opt-out is employed by the writer.

Or in the words of Andrés Marín from the legal firm representing the venue, OpenLaw, who spoke about the case to IQ: “The owners of these rights are the authors, so they are the ones who should be able decide what to do with them. If a composer and performer negotiate directly with a third party and agree to give away or even collect their copyrights directly, the SGAE has no right to try to collect, or recover, the rights the artist has not claimed. This ruling, therefore, opens a door that, until now, was closed to artists represented by SGAE: to be able to decide whether to collect their own royalties”.

A spokesperson for SGAE, also speaking to IQ, insisted that the judge in this case had misunderstood the law, partly by confusing performer rights and author rights, the band in this scenario being both the performer and the writers of the songs being performed.

Pointing out that members of the Spanish PRO can always opt-out of certain licences, but that Asfalto had not in this case, the SGAE spokesperson added: “If any of our members want to withdraw certain rights, there’s a procedure for it. But what we can’t do is have both systems: If they have a blanket licence, they can’t then administer their rights directly as well – it would be chaos for us”.



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