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This overview is not intended to be comprehensive or a substitute for fee-based information and/or legal advice.
Pan European Online Licensing refers to the mechanism by which one or more societies or entities, selected by a publisher and/or a songwriter, are allowed to grant European-wide licenses (rather than through separate licenses per country), and collect royalties for compositions that are digitally distributed (online or via mobile phones).
To begin, we will contrast the system in place for US writers and publishers with the system that exists in Europe. In the US, performance income is collected by the PROs (ASCAP, BMI, SESAC) and distributed to rights holders, while mechanical income (from the sale of music) is licensed and collected from music distributors either by agreement with the Harry Fox Agency (or other selected agents) or licensed and collected directly by music publishers themselves. In Europe, each country (or collection of countries) maintains a society whose purpose is to collect both mechanical and performance income and to then distribute same to songwriters, composers and music publishers.
This scheme worked adequately for music distributed country by country, but did not work well for music digitally distributed across Europe on one platform (e.g. iTunes®). Companies engaged in distributing music digitally across Europe [e.g. iTunes® (online - downloads), Nokia (Phone - downloads), and Rhapsody (streaming)] were finding it difficult to obtain licenses country by country. Broadcaster RTL and Music Choice formally complained to the European Commission. This problem was partially addressed by recommending that rights owners be permitted to select one or more societies or entities to issue one license for European-wide use.
Unfortunately, this system only works well for the reproduction right in Anglo-American repertoire (because mechanical rights are controlled per contract by publishers rather than societies). It has not yet worked well for performance rights or for compositions by songwriters outside Anglo-American countries.
The four major publishers; Sony/ATV, EMI, Universal and Warner/Chappell (see list below), have already picked their designated societies, leaving independent music publishers with a choice to designate a collection society, find themselves with complicated royalty tracking, or risk not collecting these royalties at all.
Following is a simple example to help your understanding; Let's say you, an Indie publisher, publish the song, "Believe." The song is written by your writer and a writer signed to Sony/ATV Music. You administer for your 50% publisher's share while Sony/ATV controls and administers for its 50% share. Now, Nokia requests a license for "Believe" to sell as a digital download offered on their mobile phones in Europe. Sony/ATV would license its share through GEMA (the German mechanical rights organization), their designated Pan European Online Licensor, but what about your share? You would need to designate a society to handle your similar license or find that it will be extremely complicated to find your share of royalties.
Although this scheme only applies to digital distribution, some experts believe the system will significantly impact your other agreements with foreign collection societies in other territories and with your sub-publishers. This is a very simple example - so beware that there are many other details we did not discuss that would require further investigation on your part.
SOCIETIES OFFERING PAN EUROPEAN LICENSING SOLUTIONS
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