Competition and Creativity: A Draft Good Practice Checklist for Collecting Society Governance

A strong sign of a flourishing creative society is when there are lots of active authors, artists, musicians, performers and others. New ideas and expressions appear, giving people an ever-greater range of works that can inform and inspire them.

However, this can pose a challenge in terms of how to help users of works, when carrying out activities not covered by exceptions and limitations to copyright, find the right person to pay.

For institutions like libraries, the necessity to find every single author or publisher whose books or articles, for example, may be copied to create course-packs (at least where the portion copied is long enough to justify payment) would impose major administrative costs, over and above the remumeration to rightholders.

In these situations, collective management organisations (CMOs) can provide a valuable role, acting as an intermediary between the users of works and their creators. When they work correctly, they provide an efficient means of making copyright function.

In many countries, there is only one such collecting society per sector (such as books, films, or visual arts), often enjoying the exclusive possibility to licence rights. While this may bring simplicity, it also effectively creates a monopoly.

Just as with major internet platforms, it is therefore important to ensure that this situation really does work best both for creators and users of works. There have indeed been a number of competition (anti-trust) cases where collecting societies have been found at fault.

In these cases, there is a risk that uses of works are curtailed by excessively high pricing. Meanwhile, internal structures that allow more power for bigger actors (better established creators, bigger publishers) may risk leaving less resources for others than might otherwise be the case.

There are tools available to promote good practice, not least the Code of Conduct prepared by the International Federation of Reprographic Rights Organisations and the Good Practice Toolkit for the Management of CMOs created by the World Intellectual Property Organization (WIPO).

The below list, based primarily on the WIPO document, provides a draft framework for thinking through whether the collecting societies with which libraries are working are complying with good practices. It has benefitted from input from Ben White (University of Bournemouth) and Teresa Hackett (EIFL).

We welcome views, and of course invite libraries and library associations around the world to use it to judge whether the CMOs with which they are working are displaying good practice.

A. Transparent Rules

  1. Does the CMO regularly publish and keep up to date information on its membership rules and governance (including the possibilities for all members and representatives of the sectors they operate in to be represented on governing structures, and to influence decision-making)?
  2. Does the CMO regularly publish and keep up to date information on its tariff structure, the markets they offer licences in / collect monies from and policies on distribution (or non-distribution) of royalties, deductions and investments?
  3. Does the CMO regularly publish and keep up to date information on its complaint and dispute resolution procedures?
  4. Does the CMO regularly publish and keep up to date information on the members of its management and board, which categories of rightholder they represent, the sectors which they operate in (including the legal basis), their remuneration, and statements of potential conflicts of interest?
  5. Does the CMO have a policy on conflict of interest / require statements of potential conflict of interest from members?

B. Fair Membership

  1. Are the criteria for membership clear, transparent and non-discriminatory?
  2. Can a member terminate or change the mandates they give within a reasonable time-period?
  3. Can a member participate in the General Meeting?
  4. Can a member be eligible for positions in the decision-making or oversight bodies of the CMO, subject to fulfilling fair and proportionate requirements.
  5. Can representatives of the sectors from which the CMO collect monies be members?

C. Fair Operation

  1. Does the CMO guarantee a fair balance – including equal voting rights – between the interests of different types of rightholder (i.e. authors, publishers), including on the Board?
  2. Does the CMO have explicit authorisation from its General Meeting for all spending of revenues on things other than redistribution?
  3. Does the CMO produce and publish an annual report and audited accounts including information on incomes, collections at a general and sectoral level, operating expenses, and deductions, and inform its members of this?
  4. Does the CMO produce a summary, for each individual member or category of member earning royalties, of the amounts received for their works, the operating expenses and deductions applied, outstanding payments, and a breakdown by category of rights, types of use, and whether money comes domestically or through a reciprocal agreement?
  5. Does the CMO provide users with information about rights and categories of rightholders administered, a list of works managed (and relevant rights), a summary of tariffs, a description of licence terms / the legal basis under which they operate, the sectors and purposes for which they collect payment in line with statutory requirements, and details of how a licensee can cancel licences where appropriate?
  6. Does the CMO use objective, fair and non-discriminatory criteria in licensing works to users, taking account of statutory limitations and exceptions, and using tariffs based on cross-sectoral analysis, economic evidence, the commercial value of rights, and benefits to licensees?
  7. Does the CMO make available on the website a complete list of all the standard licences they offer, including the terms and conditions of those licences?
  8. Does the CMO assume liability for all uses carried out under the licences offered?

D. Strong Governance

  1. Is the CMO independent of government, i.e. protecting CMOs from potential abuse, but also avoiding the interests of CMOs steering those of governments?
  2. If the CMO regulates itself, does it have an oversight board with representatives of users and government?
  3. If the CMO is not self-regulated, is there a rigorous mechanism for ensuring its correct operation?
  4. Is there a means of ensuring that the interests of licensees and users are represented or at least protected?

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