Hearings are due to take place in the European Union courts next month to consider a 2022 change to Belgian copyright law which provides performers with an equitable remuneration right in relation to streaming, a change that is strongly opposed by many streaming services and record labels.
Prior to those hearings, the European Copyright Society - which describes itself as a “platform for critical and independent scholarly thinking on European Copyright law and policy” - has published a paper on the arguments made by the streamers and labels against the new performer ER right.
It basically rejects those arguments and concludes that a performer ER right in relation to streaming is a “lawful mechanism under EU copyright law”.
Which would mean Belgium, as a member state of the EU and therefore bound by European copyright law, can still introduce a performer ER right on streams “as a means of ensuring that performers receive a fair share of the economic value generated by the exploitation of their performances”.
In most countries, streaming services access recorded music by agreeing licensing deals with record labels and music distributors, which in turn share any money they receive with the artists who made each recording based on royalty or revenue share terms in any one artist’s record or distribution contract. Session musicians on a track usually earn nothing from streams.
However, many organisations representing artists and musicians have long argued that performers should also receive additional direct payments when their recordings are streamed via their collecting societies in addition to anything they receive via a label or distributor.
Such direct payments already happen when recordings are broadcast or played in public, because copyright law forces such payments to be made by providing performers with a right to equitable remuneration, or ER for short. In the UK, PPL manages these payments.
In practical terms, if there was an ER payment also due on streams, streaming services would ultimately deduct those payments from whatever they currently pay to the relevant labels or distributors.
But it means artists paying back an advance to a label or distributor, meaning they currently receive no royalties from those business partners, would start receiving some streaming royalties via their collecting society. Plus session musicians would share in this income stream.
ER is already paid on streams in a small number of countries, including Spain and Hungary. Belgium introduced a performer ER right on streams in 2022 when implementing the 2019 EU Copyright Directive, which said that “performers are entitled to appropriate and proportionate remuneration” when their recordings are exploited.
Different EU countries interpreted that obligation in different ways, but Belgium decided it should be achieved via streaming ER.
Both major and indie labels oppose ER on streams, reckoning it interferes with their deals, with both artists and streaming services. The streaming services themselves also oppose ER, even though ultimately they’d look to deduct ER payments from whatever they pay to labels and distributors.
That’s because, in the short term, they might end up having to pay more out to the music industry in total, plus it means dealing with additional entities when it comes to paying royalties.
In Belgium, the labels and services have tried to block the introduction of ER through the courts. As that legal action has progressed, the Belgian Constitutional Court asked a number of questions of the EU courts. Next month’s hearings relate to those questions, with the EU courts likely to provide answers by the start of next year.
In its paper, the European Copyright Society considers some of the objections raised against performer ER on streams. Among other things, it notes that - with streaming ER - copyright law provides both ‘exclusive rights’ and ‘remuneration rights’ in relation to the same use of music.
With exclusive rights, a user must get permission from the copyright owner to use their music, usually paying a licence fee to get that permission. With remuneration rights, the user of music doesn’t need to get explicit permission from the copyright owner but must still make a payment.
In some copyright systems some uses of music - like copying a recording - are covered by exclusive rights, while other uses of music - such as a broadcast - are covered by remuneration rights.
But with streaming ER, the copyright owner - either the main artist or a label - still has the exclusive right to license their music. However, if and when they do issue a licence, the performer then has a remuneration right in relation to that use of the music.
But that’s fine, according to the ECS, which writes that streaming ER as proposed in Belgium does not “unduly interfere with exclusive rights”. Artists still “benefit from full exclusive rights” if they are the copyright owner, but also “retain a right to remuneration” if they allow another party to own the copyright.
“This legal technique dissociates the exclusive right, necessary to authorise the reproduction, communication or making available to the public, from a right to get remunerated for such exploitation”.
The ECS also rejects the claim that streaming ER means streaming services end up having to pay twice for the same use of any one recording. It says that, “legally speaking”, the obligation to pay labels and distributors and the separate obligation to remunerate performers “arise from different legal bases”.
So, “rather than requiring platforms to pay twice for the same use”, the streaming ER mechanism simply “reallocates part of the overall revenue stream” to performers.
The paper does acknowledge that a streaming ER system does require streaming services to deal with collecting societies in addition to any labels or distributors they have already agreed licensing deals with.
But it says that extra requirement is justified, because it is put in place to meet “legitimate public-interest objectives, namely correcting structural bargaining imbalances and ensuring fair remuneration for performers, in a proportionate manner”.
We now await to see if EU judges reach similar conclusions to the ECS.