Article 8(2) of the Rental and Lending Right Directive (2006/115/EC) provides for a remuneration right for performers and record producers, irrespective of nationality (the so called “single equitable remuneration right”). Article 15(1) of the WIPO Performances and Phonograms Treaty (WPPT), from which the Directive is derived, provides the same.

Article 4 of the (WPPT) provides that Contracting Parties should accord to nationals of other contracting parties the treatment they accord to their own nationals regarding the exclusive rights granted in the Treaty (the principle of “reciprocity”).

However, Article 4(2) of the 2006 Directive provides that a Contracting Party may, under Article 15(3) of the WPPT, declare that it will apply the provisions of Article 15(1) only in respect of certain uses, or that it will limit their application in some other way, or that it will not apply those provisions at all.

IMPALA notes that it is two and a half years since the decision in Case C-265/19 Recorded Artists Actors Performers Ltd v Attorney General EU:C:2020:677, in which the CJEU found, inter alia, that Member States do not have discretion to legislate on the equitable remuneration of performers and producers from sound recordings and that it is for the EU and not Member States to limit the single equitable remuneration right of third country nationals, should it choose to do so.

The CJEU’s decision highlighted the potential consequences of the EU not having exercised its options on reciprocity as provided in Article 4(2) of the WPPT. In some cases, the fact that Article 8(2) applies to the use of sound recordings by third country nationals, where no remuneration right applies in those third countries, might prevent some EU performers and producers from being involved in the recorded music business in those third countries on equal terms. The refusal of certain third countries to grant a right to single equitable remuneration might result in nationals of Member States who operate in the international recorded music business not receiving an adequate income and experiencing greater difficulty in recouping their investments.

IMPALA says that the CJEU decision means that the principle of reciprocity, as enshrined under international copyright law, has essentially been suspended. If allowed to stand, IMPALA says, the decision will have “a massive impact on the livelihoods of thousands of European music artists and independent music businesses and on cultural diversity” and it calls on the European Commission to address the issue.

IMPALA says that the biggest impact of the decision will be on those that rely most heavily on performance and broadcast income to make a living and run their businesses, European music performers and micro, small and medium sized record labels. Their income will drop significantly and, as they account for most new music releases, these losses will result in a substantial decrease in investment in local music and artists and have a damaging impact on cultural diversity.

If not addressed, it also means that Member States will lose any trade leverage with countries like the USA, which still (except in certain circumstances) denies protection to its own artists and labels when their music is played on terrestrial radio and in public.

IMPALA says that most music markets have signed up to international copyright conventions, meaning they all employ the principle of reciprocity. It says that reciprocity stops countries who do not sign up, like the USA, from gaming the international copyright system and encourages everyone to raise their level of protection.

IMPALA says that the European Commission is aware of the problem and has spent the last two and a half years consulting and studying the impact of the CJEU’s decision. It has also indicated how it would fix the anomaly, but there is still no proposal in sight, despite the CJEU itself saying that legislation could fix it.

IMPALA says that it is time to clarify the meaning of the original legislation to reflect the basic principles of international copyright, as relied upon by both Member States and collection societies for decades. That means confirming the principle of reciprocity across the EU, while also accommodating those Member States that take a different approach (such as paying third-party countries under the national treatment principle, without reciprocity in return).

IMPALA’s Executive Chair, Helen Smith, said: “Europe uses harmonisation with carve outs in many areas, let’s see it here. It’s a perfectly proportionate response to what is a huge anomaly. More delay (or worse, inaction) is not a solution. The current situation simply creates uncertainty for everyone: artists, record labels, collection societies, venue operators, broadcasters, shops and ultimately of course, music fans and diversity. … We are sleep-walking our way into a financial and cultural disaster for the thousands of small European music companies and their artists who account for 80% of all new releases in Europe today”. To read IMPALA’s press release in full, click here.