MMF France – Research from The Minister of Culture commissioned Patrick Zelnick (President of Impala)

1. Meeting expectations of internet users:

• Make all catalogs available on legal  platforms  as soon as possible.

• On subscriptions (streaming / webcasting): Adopt a pricing policy that does not encourage the user to download illegally

• Develop value-added services (premium content, recommendation).

2. Constraints and emerging issues for circulation on the Internet:

• access to catalogs of producers particularly costly and complex for emerging companies, which spend a large share of their resources to access the catalog at the expense of building technology.

• Territoriality licenses granted by authors’ societies, which hinders the development of international digital distribution companies: This constraint requires distributors to enter into separate agreements with each company to exploit its author services outside its home territory.

3. How to favour the development of legal offers:

• Creating pan-European licenses (or worldwide) for the payment of copyright. With no further delay, we need to adopt an agreement for general corporate authors (such as the European Commission’s recommendation) to grant permission to use repertoire of all European copyright societies, based on rates per type of operation, taking care to avoid competition between authors’ societies which would be prejudicial to authors.

• Facilitate access to catalogs of producers for the platforms to enable them to benefit from expanded offers on equal terms to all distributors, by type of service. The civil societies of producers would be responsible for negotiating rates with their members and respond to requests from distributors.

• Finance technological innovation in the field of software applications in all areas that create value-added services for digital distribution.

4. How to ensure the diversity of offers and the emergence of new talent:

• Prohibit  producers from taking participation in distribution platforms to ensure the rules of fair competition between all services; the major’s shares of  Spotifty creates a distortion of competition rules to the detriment of the incoming Streaming sector, and penalizes the other income of authors and performers.

• Facilitate production by individual artists and small production units that do not have measures of tax credits or subsidies from the music industry.

• Simplify measures with regard to minimum wages under the Collective Agreement of the Phonographic Edition for self-production and small production companies  (1 to 5 employees eg CA Capped …) .

5. Government incentives:

• Create an innovation plan funded by public authorities for value added services.

• Reduce VAT on music like all cultural products,and replace by a contribution of ISPs to create music.

• Campaign to promote legal tender backed by the government and the music industry, focusing on the availability of catalogs and quality of services.

• Actions to enforce the rules of competition in the market for digital music (including: banning content providers from equity of digital distribution companies).

6.Possibilities  for financing cultural industries:

• Harmonize  the rules for fund support applications , and extend the right of access in order to enable self-produced artists easier access.It is also necessary to simplify administrative procedures.

• Create a fund modeled on that of CNC (using selective or automatic) funded by contributions from ISP and Majors of the Phonographic Industry. This fund could be managed by an existing organization (eg FCM), bringing together all industry representatives, including artist managers.

• The contribution of ISPs offset inevitable piracy works, whatever the law enforcement system in place. This contribution should be a small amount and percentage, and scalable depending on the level of trade illegal files.

• The contribution of the majors as a fund constituted by the share of transactional benefits received  in the settlement of disputes with operators of digital distribution services, which includes compensation for damage suffered by producers and artists; however artists did not receive their rightful share of the transactional benefits, especially because of the inability to apportion equitably among all those entitled. We propose that a proportion representing the share of French artists is calculated and paid to the fund.

• Extend the tax credit enjoyed by producers and reduce constraints on self-produced artists and independent producers of small (1 to 5 employees);

• provide for a tax exemption for amounts invested by individuals and businesses in phonographic production (cultural sponsorship).

7. How to ensure fair compensation for artists:

• The remuneration of artists depends on contractual terms that bind them to  producers 1) Clarify calculation basis on digital compensation so that all payments received by producers in return for the provision of catalogs are taken into account: minimum guarantees,  access fees to catalogs … 2) Improve transparency of royalty statements in order to allow for better control. These points need to be  negotiated by representatives of producers, artists and managers as part of a code of “good practice” (and not imposed by law)

• Extend the collective management by civil societies to include web radios and webcasting services (offering playlists tailored to the tastes of the listener) to supply content.

Good Practices for Reference:

• Access to catalogs: established by  independants united via Impala within a single platform (Merlin)

• On the transparency of royalty statements: follow the example of some aggregators that present statements by platform, available online in real time.