New Licensing Models for Online Music Services in the European Union: From Collective to Customized Management

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Anyone that has the opportunity to access online music or film services in both the United States and in Europe (or even in distinct E.U. countries) can easily realize how undeveloped, or more restricted territorially, the E.U. online content sector is. In the United States, the recent launch of innovative online services – e.g., Apple's iTunes, Microsoft's Zune, Rhapsody, Beatport, Pandora – has revolutionized the landscape of legitimate access to and use of online content and created a credible alternative to digital piracy. Contrastingly, in the European Union, online music services and music stores – e.g., LastFm, Spotify, iTunes – have not taken off, at least not fully. This is not only due to the still rampant phenomenon of music and film piracy on illegal file sharing platforms. The unbearable complexity of online rights clearance processes is a major problem for commercial users wishing to develop and launch pan-European online content services and to take advantage of the E.U. cultural sector as a whole.This Article examines the restructuring of online rights management that the E.U. Commission recently imposed upon collecting societies and copyright holders in the online music sector in order to foster the adoption of multi-territorial collective licences covering the whole territory of the European Union. The Article examines the responses of major international music publishers and national collecting societies to the European Commission's action by focusing on the emergence of distinct types of new licensing models and on the legal problems and questions that these new models have posed so far. The scenarios which have materialized in the wake of the restructuring of online music rights management show how the pan-European monorepertoire licensing models of the major multinational music groups impacts the economic sustainability of national collecting societies and the online rights clearance solutions made available to commercial users. The Article also examines whether the above restructuring is of any help to rights holders and rights managers who find it suitable or commercially convenient to combine commercial collective licences and noncommercial individual licences (e.g., Creative Commons) in the management of online rights over their works. The Article takes the conclusion that the radical modification of the structure of online music rights management recently pursued by the E.U. Commission has mainly failed its policy objectives while making online music rights clearance even more complicated, legally uncertain and discouraging. The Article also indicates what legislative amendments the Commission might consider proposing in order to rationalize and greatly simplify collective rights management in the digital environment and what the easiest and most productive model for the development of E.U.-wide music rights management could be.