IViR-Study: Renumeration of authors and performers for the use of works and fixations of performances

L. Guibault , O.M. Salamanca , S.J. van Gompel, Remuneration of authors and performers for the use of their works and the fixations of their performances, IViR, carried out for the European Commission.
This study analyses the current situation regarding the level of remuneration paid to authors and performers in the music and audio-visual sectors. We compare, from both a legal and economic perspective, the existing national systems of remuneration for authors and performers and identify the relative advantages and disadvantages of those systems for them. We also explore the need to harmonise mechanisms affecting the remuneration of authors and performers, and to identify which ones are the best suited to achieve this. Their potential impact on distribution models and on the functioning of the Internal Market is also examined. Finally, the study outlines a series of policy recommendations based on the analysis conducted.

(...) Executive Summary
Europe Economics and the Institute for Information Law at the University of Amsterdam were commissioned by DG Internal Market to undertake a study of the remuneration of authors and performers (or the “creators”) for the use of their works and the fixations of their performances.

The overarching objectives of this study are to analyse the current situation regarding the level of remuneration paid to authors and performers in the music and audiovisual (AV) sectors in order to compare the existing national systems of remuneration for authors and performers and identify the relative advantages and disadvantages of those systems for them. We also aim to assess the need to harmonise mechanisms affecting the remuneration of authors and performers, and to identify which ones are the best suited to achieve this. Their potential impact on distribution models and on the functioning of the Internal Market is also examined.
In doing this we focus specifically on:
 Music:
 Authors — lyricists, composers, songwriters (lyricist and composer).
 Performers — featured artists, session musicians.
 AV:
 Authors — principal directors, screenwriters, composers of music for film or television.
 Performers — TV actors, film actors.

The current legal framework
To conduct our legal analysis, we approached correspondents, a mix of scholars and practising lawyers, in each of the ten countries under study.1  These countries were chosen to reflect differences in regulatory approaches and existing regional idiosyncrasies. The questionnaire we prepared for our correspondents focused on legal framework of each country from both a contract law (lex generalis) and copyright law (lex specialis) perspective. It also focused on the actual contractual practice in their country and whether this practice was aligned or not with the law. Further, the law and contractual practice in the United States was also examined, for the purpose of acomparative analysis.

Copyright and related rights have been fairly well harmonised in European law. All ten Member States considered in this study grant authors an exclusive, transferable right of reproduction, a right of communication to the public, including the right of making available, and a distribution right in conformity with the Information Society Directive (Directive 2001/29/EC). Some differences can be observed in the national implementation of the EU acquis, particularly with respect to the existence or the exercise of the rights conferred on authors and performers under the Rental and Lending Rights Directive (Directive 2006/115/EC), the Satellite and Cable Directive (Directive 1993/83/EEC), as well as with respect to certain performers’ rights under the Information Society Directive. Variations in legislation have occurred primarily as a result of the options left in the acquis for the implementation of European norms by the Member States but some differences are the result of conscious decisions on the part of the national legislator to go beyond the minimum harmonisation in the acquis. Further, we provided some insight into the nature and implications of exclusive rights versus the so-called remuneration rights. In addition to these differences in implementation, we also analysed the different interpretations given in the Member States to particular uses (e.g. webcasting) that may fall in a different category of rights, or cover more than a single right, depending on the Member State.

On the basis of the answers provided by the correspondents in the ten jurisdictions, it appears that the general provisions of contract law play a very limited role in granting support to authors and performers in the negotiation of exploitation agreements and the determination of the level of remuneration. General contract law may affect the way a contract is interpreted or executed, but in general it does not influence the outcome of the negotiation on the transfer of rights or on the remuneration to be paid. But because authors and performers are traditionally seen as the weaker party to contractual negotiations, some Member States, like France, Germany and Spain have implemented in their copyright legislation a number of imperative rules on the formation, execution and interpretation of authors’ and performers’ contracts. Between these solutions and contractual freedom many variations exist in the laws of the Member States.

Furthermore, authors and performers often organise themselves into unions (wherever permitted) or freelance associations. Many of these unions and associations negotiate model exploitation contracts with representatives of the industry. Nevertheless, trade unions and associations of authors and performers have not been set up in all Member States. Where they have, the type and the extent of collective action vary, both as regards the unions’ and associations’ role in the negotiation and in the enforcement of contracts.

Collective rights management organisations (CRMOs) also play a role in establishing the level of remuneration received by authors and performers, although the importance of this role differs by right holder, sector and Member State. Contrary to other exploiters, CRMOs are often not bound by the general or specific rules on authors’ and performers’ contracts found in the legislation of a number of Member States, on the ground that CRMOs are deemed to operate in the interest of their members, e.g. authors, performers or other rights owners.

Even though several mechanisms offered by contract or copyright law provide support to authors and performers, some show a more direct impact on the level of remuneration paid to authors and performers than others. The principal legal elements we have identified in this respect are:
 the structure of the rights conferred by the law (i.e. the ownership and the nature of the rights – exclusive or remuneration rights);
 the existence of statutory provisions to protect authors and performers as weaker parties to a contract; and
 the use of collective bargaining and role of trade unions and associations

Key findings
The key findings of our analysis are:
 Transparency — there is a lack of transparency of the remuneration arrangements in the contracts of authors and performers in relation to the rights transferred. The payment flows in the music industry are particularly complex. Moreover, the differences in the national implementation of the cable retransmission right, the right of making available and the rental right pose noticeable cross-border transparency problems. The absence of information on which to base an estimate of likely earnings in different Member States undermines the ability of authors and performers to effectively exercise their freedom of movement across jurisdictions (non-tariff trade barrier) and has an adverse effect on the functioning of the Internal Market.
 Scope of transfer — certain groups of authors and performers, such as those new to the industry, are in a weaker bargaining position than others. Problems however arise if they get locked into long contracts with relatively unfavourable terms, in particular if they become successful. This issue is also pertinent with respect to the development of new modes of exploitation. To alleviate this problem, the laws of a number of Member States, in different ways, expressly regulate the transfer of rights relating to forms of exploitation that are unknown or unforeseeable at the time the copyright contract was concluded, as well as the transfer of rights relating to future works and performances.
 Role of trade unions and freelance associations — in some Member States collective action by trade unions and associations (and CRMOs that that fulfil similar functions) play an important role, especially for authors and performers in the audio-visual sector. Besides providing support at the time of negotiating remuneration agreements (including both direct support and the assistance provided through the union’s involvement in preparing and promoting model contracts), unions and associations can also be effective at the moment of enforcing agreements. Nevertheless, unions and associations of authors and performers have not been set up in all Member States or, where they have, for all categories of authors and performers.

Policy recommendations: (...)
 Policy 1: Specify remuneration for individual modes of exploitation in the contracts of authors and performers.
 Policy 2: Improve the cross-border transparency of the national systems.
 Policy 3: Limit the scope for transferring rights for future works and performances and future modes of exploitation.
 Policy 4: Create a more conducive environment to support the role of trade unions, freelance associations and CRMOs when they fulfil similar functions.
 Policy 5: Facilitate the exercise of the right of making available. This policy option effectively represents a fall-back in the event that the other policies fail to protect authors and performers sufficiently and is broken down into three possibilities:
 Voluntary collective management of the right of making available.
 Unwaivable right to obtain equitable remuneration from the producer/publisher.
 Unwaivable right to equitable remuneration administered by a CRMO.

A full impact assessment should be conducted on any policies considered to properly assess the costs and benefits of different options and the potential for unintended consequences that may distort the market. Based on our initial high-level review we recommend the following policies should be considered in more detail:
 Harmonised requirement for the specification of remuneration for individual modes of exploitation in the contracts of authors and performers — policy option one relating to the provision of written contracts with remuneration for individual rights broken down by mode of exploitation.
 Improve the cross-border transparency of the national systems — policy option two relating to the ability of authors and performers to understand whether or not they are likely to be better off by working in a different country.
 Harmonised limits on the scope for transferring rights for future works and performances and future modes of exploitation — policy option three relating to the ability of authors and performers to limit the scope of any rights transfer so as to prevent them being locked into less beneficial contracts for long periods.
With respect to options four and five we recommend conducting more detailed research to understand more fully the impact these options would have on the remuneration of authors and performers. In each case it is important to consider the relevance of any policy proposal for the different types of authors and performers and the different industries. Furthermore, consideration must be given to countries where similar practices are already in place so that the design of the policy does not entail unnecessary and potentially costly changes.

The information and views set out in this report are those of the author(s) and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this report. Neither the Commission nor any person acting on the Commission’s behalf may be held responsible for the use which may be made of the information contained therein.

This study was carried out for the European Commission by Europe Economics and Lucie Guibault, Olivia Salamanca and Stef van Gompel of the University of Amsterdam (IViR).  ISBN 9789279471629
DOI: 10.2759/834167

See also: https://ec.europa.eu/