Polish Copyright Collection Societies and Their Financial Data

Fruits de l'Industrie et de l'Economie
Royalties: years may pass from collection to distribution
Licentie

Copyright Collection Societies (CCSs) are organisations traditionally set up by authors, performers, and other kinds of rightholders to collectively manage their rights. Nowadays, there are more than 250 CCSs in the EU. Copyright Collection Societies collect around €6 billion in royalties in the EU every year. The vast majority of this income feeds into the approximately 70 EU CCSs managing authors’ rights, representing over one million authors. Most of this income is derived from musical creations — more than 80% in the case of authors’ societies.

Since the role of CCSs in collective rights management and shaping of copyrights is crucial, the European Union adopted the Directive 2014/26/EU on collective rights management and multi-territorial licensing of rights in musical works for online uses in February 2012 (see our previous coverage here). The transposition date for Member States was April 2014. The directive sets up a common framework for financial reporting. CCSs have to draw up and publish an annual transparency report including detailed accounts, financial information, and a special report on the use of the amounts deducted for purposes of social, cultural, and educational services.

Poland is an example of member state that introduced the obligation of disclosing the CCS financial data long before the directive implementation deadline: the first reports were submitted in 2011. Centrum Cyfrowe, a member organization of COMMUNIA, conducted the analysis of the financial and narrative reports of Polish CCSs for the years of 2010-2013. The CCSs were obliged to disclose these reports for the study.

The authors of the report attempted to answer the question of whether the existing mechanism of operation of copyright collection societies is efficient, as these entities are of high social importance. The report also addresses the question of whether the current activities of CCSs fulfill their statutory obligations. An additional task for the authors of the report was to determine the extent to which the widely available information regarding CCSs allows the public to understand the principles of their functioning.

The key findings of the report are as following:

  • years may pass from collection until distribution of royalties – the period between the collection of funds and their transfer to rightsholders may take up to 6 years;
  • capital income and economic profitability weaken the motivation for repartition since CCSs derive financial income (interest on the capital) from due funds which have not been distributed to copyright holders;
  • the costs of collective copyright management are higher than it appears from their presentation in the financial statements;
  • only CCSs members influence the principles of repartition.

Authors of the report claim that the key issue is to assure is that in the process of exercising statutory authorizations there is no conflict of interest between economic profitability and efficient repartition. Moreover, they recommend that the Ministry of Culture and National Heritage act as the authority supervising societies and should oblige CCSs to:

  1. implement a clear-cut and comprehensive manner of reporting on the costs of servicing copyright collection so that there are no doubts as to how expensive that system is and in order to make it possible to optimize collective copyrights management in the future;
  2. apply any instruments available (taking into account new technologies) in order to make the system of redistribution of the funds collected from the market by CCSs clear and transparent.

The last point is in line with one of COMMUNIA’s key demands during the discussion of the Directive on collective rights management: Copyright Collection Societies should be required to publish information about their membership and the repertoire that they represent through open,  machine readable interfaces.
You can read more about the conclusions of the report in the abstract (in English).

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