As from 2017, there will be an important change in the collection of royalties in the online area in other countries, which follows from the European collective rights management directive. This directive also regulates how we can collect royalties on behalf of our copyright owners directly for online music use in several countries.
Our copyright owners are then no longer dependent on our sister organisations for this. On the one hand, this stimulates European CMOs to collaborate and to achieve economies of scale and thus to collect the royalties for their members as efficiently as possible. On the other hand, it also stimulates competition among the CMOs to offer the best possible proposition to copyright owners and the users of music.
This new situation is in keeping with a world in which online music services form an increasingly larger share of the market. Copyright owners would also like to receive the revenues from international use in an efficient manner in this segment of the market. At the same time, there will probably also continue to be a certain degree of fragmentation in the collection and distribution of royalties. For instance, users such as Spotify are not ready by concluding one contract with a CMO because, in addition to other CMOs, (Anglo-American) music publishers also enter into contracts directly with such platforms
Preparing for internationalisation
Already for a number of years, our strategy has been directed at entering into international collaborations because we are convinced that this is the best strategy to realise and secure fair revenues for our copyright owners. In this context, our affiliation with the ICE database is essential. Buma/Stemra became ICE’s first client in 2014, and transferred the active part of its own database with 1.5 million works of music in March 2015. The collaboration with ICE Online/NMP cannot be viewed separately for this development: this organisation provides for the registration and administrative processing of billions of downloads and streams on online platforms also as of mid-March. With these collaborations, we are among the frontrunners of CMOs in the manner in which we are responding to the internationalisation.
This ultimately results in cost efficiency for us – and therefore also for the copyright owners – because it is much more expensive to set up our own back office for these online platforms with huge volumes. This step is also essential to be able to comply with the requirements of the new European Collective Rights Management Directive. A not to be underestimated change in this pertains to the pan-European licensing of online use which will be implemented further in the coming years. We will then enter into agreements directly with the online music platforms that offer entertainment in several countries (such as iTunes or Spotify) for the repertoire of the copyright owners who are affiliated with us and we no longer have to rely on other European rights management organisations. As a result of the aforementioned collaborations, we are able to do this effectively and efficiently.
In this context, we concluded our first agreement with iTunes in 2015 and our plan is that more parties will follow. We regard pan-European licensing of online use not only as an obligation resulting from European laws and regulations but also as an opportunity, also in collaboration with strong international sister organisations, in order to strengthen our effectiveness and thus to maintain a strong position. Here again, it is the case that this is directly in the interests of our copyright owners: as a strong Buma/Stemra that can compete successfully with other CMOs translates into maximum revenues for their works of music.