TONO has submitted an additional note to the Storting's Family and Culture Committee following last week's hearing on the new collective management act.
/ 28/01/2021 / Kristian DugstadOn Thursday, January 21, the Storting held an open videoconference hearing on Prop. 53 L (2020-2021) Act on Collective Management of Copyright, etc. Managing Director Cato Strøm presented TONO's input on the bill.
Following the hearing, TONO has submitted an additional comment to its submission.
The comment concerns a statement from the Ministry of Culture regarding the bill, which TONO perceives as an intervention and position in the free negotiations between the parties. TONO believes that the ministry's words will be used against all types of rights holders, both in negotiations and in litigation.
Read additional notes below, and see TONO CEO Cato Strøm speak during the parliamentary hearing at the bottom of the case.
Read more about the new law on collective management here: TONO on "Act on Collective Management of Copyright, etc."
We refer to the committee hearing on January 21 and the invitation from the committee chair to submit our input regarding TONO's and others' serious concerns about a comment the ministry has made in section 9.4.5 of the proposal in connection with section 28 of the proposal:
«For example, remuneration models based on general turnover could be considered to be in breach of the provision if other more accurate methods of recording the use of works and audiences are available and can be used without entailing a disproportionate increase in administrative costs.”
TONO cannot see that this statement from the Ministry has any basis in the Directive. It is particularly the Directive's Art. 16 that is the relevant provision here. We perceive the Ministry's statement in the proposition as an intervention and position in the free negotiations between the parties, and the Ministry's words will certainly be used towards all types of rights holders, both in negotiations and in litigation. (Note in parentheses: TONO's negotiators actually experienced this in current negotiations with one of our largest counterparts last Friday, the day after the hearing.)
During the hearing, spokesperson Marianne Haukland asked the undersigned to elaborate on how the ministry's statements affect the free negotiations.
Firstly, revenue-based remuneration models are the common remuneration model in most European countries. A significant part of the justification for the revenue-based remuneration principle is that other methods – such as actual use – would result in a disproportionate increase in the costs of rights management.
Turnover-based remuneration was most recently established and confirmed as a principle in the Danish Copyright Licensing Board's decision of 30 September 2020 in case no. 121 between KODA (TONO's Danish sister society) and DR (Danmarks Radio). It was assumed that a TV channel's turnover is a measure of the value of the broadcast, where music constitutes a not insignificant element, and it must be assumed that turnover reflects actual viewing to a certain extent. It was therefore neither unreasonable nor contrary to competition law rules that KODA applied such a remuneration model.
It is also not correct that the remuneration models are only “based on general turnover”, as the ministry’s statement gives the impression. The turnover-based remuneration models used by TONO, which are common in the copyright area, use a model where the size of the remuneration corresponds to a percentage of the user company’s revenues, which is calculated proportionally in relation to the amount of copyrighted works. The remuneration is thus calculated proportionally based on the use of music in the area in question.
In the STIM judgment, which we assume is the background for the Ministry's statement, it was accepted that TONO's sister society STIM did not abuse a dominant position when, as remuneration for the television broadcast of copyright-protected musical works in relation to commercial television channels, it applied a remuneration model in which the size of the remuneration corresponds to a share of the television channels' revenues, as long as this share is overall proportional to the amount of copyright-protected musical works that are actually the subject of television broadcast or can be assumed to be. In other words, a model in which the remuneration constitutes a share of turnover, which is calculated proportionally based on the use of the music. The Ministry's statement ignores this very central point.
When TONO meets large users in negotiations - everything from the large, international distribution platforms to various national broadcasting companies – there are various parameters that the parties can take into account. Of these, turnover and music usage are the most relevant and objective parameters. Turnover-based tariffs contribute to equal treatment, and help both small and large users to enter the market on equal terms of competition, while providing a high degree of stability and predictability. The method also entails lower costs for managing the contracts and controlling the use of the works. This is also the usual remuneration model in most countries we know of.
The Ministry's statement has an unreasonable bias in favor of users, on an incomplete and flawed basis, and is likely to weaken the rights holders in negotiations with both large and small players in the market. When we are confronted with such statements from counterparties in the legislative process, this in practice damages the free negotiations that should take place between the parties, and the statement will obviously have the potential to reduce the possibilities of obtaining reasonable remuneration for the use of intellectual property.
We therefore propose the following note:
The Committee believes that the Ministry's statement on turnover-based remuneration models is likely to weaken the position of rights holders in negotiations with users. The Committee cannot see that there is a basis in the Directive for such a clarification of the requirement for objective conditions. In the music sector in particular and for audiovisual services, turnover provides a good indication of the value of the rights, and remuneration models based on the turnover of the services are therefore used throughout the copyright world.
TONO is happy to assist the committee with more information if this is desired.
Sincerely
TONO SA
Cato Strom /s/
Adm. Manager