Tag Archives: licensing

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?

Costs Cost: Key Considerations when Making Choices about Remuneration for Uses of Copyrighted Works

Modern creative industries have, to a large extent, built themselves on the basis of copyright. Their business models depend on having – or acquiring – rights to sell or use content, which they can then sell in exchange for remuneration.

These rights are what lies behind the need to pay for initial access to a work. They are also the reason why, once a library or other user has legitimately bought or licensed a work, they may also need to pay extra in order to make certain uses of it.

For example, restaurants often need to get a licence in order to play music which they have already bought, schools and universities may have to pay to be able to copy legitimately acquired works for students, and libraries can be asked for money to put copies of works in their collections on the internet.

These payments can represent a source of revenues for creators and publishers. However, they also represent a cost to users.

As such, when thinking about whether obliging such payments is a good idea – for example in the context of a copyright reform – it is important to think about whether they are really desirable from a public policy perspective. This blog sets out some of the key questions that policy-makers need to bear in mind.


How High are the Transaction Costs? Making a payment isn’t necessarily free – ‘transaction costs’ refer to the costs that are linked to how a seller and buyer (or in our case, rightholder and licensee) are connected.

For example, a library may incur costs simply to count the number of times a certain use was made, or how much was used. This will almost always require an investment in people’s time and may require financial investment in technical infrastructure to do the monitoring. Administering the sourcing and distribution of payments also costs money, both in terms of staff and operational costs. All of this represents an inefficiency that reduces the overall sum of money that goes to authors and publishers.

Clearly in many cases, it is possible to limit the costs of collecting information – for example by using simpler tools – and by reducing the costs of administering the scheme it will make it fairer . However it is also possible that the costs of running a licensing system are too high be worth it.

Recommendation 1: Governments need to ensure that, when designing copyright systems, the relative costs of administering payments are not so high as to make it pointless.


Is there a Way of Controlling Moral Hazard? Collecting societies and other intermediaries like publishers who are responsible for distributing money collected for the uses of in-copyright work have a duty to work hard to identify and pay out revenues to authors.

When the rightholders are stronger – for example publishers who are members of such collecting societies – they can work to ensure that they receive payments. However, where rightholders – such as authors – have fewer resources, they may find this more difficult.

Strong regulation can help ensure that collecting societies and publishers pay out royalties to authors where these are due. However, where such regulation is lacking, there is a risk that money will be used for other purposes, for example lobbying or payments only to the more influential or famous members, there is a risk to the legitimacy of the system as a whole.

Recommendation 2: Governments need to ensure that there is effective regulation to ensure that the distribution of royalties and fees is efficient and legitimate.


What is the Impact on Users’ Decision-Making? When anyone makes conscious choices, they are carrying out a form of cost-benefit analysis – i.e. is it worthwhile to do something, or at least more worthwhile than doing something else.

In digitisation projects, for example, it is rare that there are sufficient resources to do all that you might want to, and so a project manager will need to select what to prioritise. Questions such as the importance of a work, or the risk of it being lost will favour digitisation, but the need to pay for a licence can undermine this.

Indeed, this may lead to project managers choosing to spend resources on digitising works which are less important, or less vulnerable, simply because this is cheaper. Effectively, mis-judged licencing obligations can skew priorities. It is important to ensure that imposing costs does not lead to sub-optimal decision-making in heritage institutions.

Recommendation 3: Governments need to ensure that the introduction and design of remuneration systems do not lead to distortions in decision-making which harm the public interest.


Does it Even Make Sense? Ordinarily, it would make sense to impose costs on a user – such as a heritage institution – when their actions in turn impose costs on a rightholder. This can happen, for example, if library copies substitute for sales of works, and so reduce income.

This is why, for example, the ‘Three-Step Test’ in international law underlines that exceptions should only apply where there is no conflict with normal market uses, and where there is no unreasonable impact on the legitimate interests of rightholders.

The key question then, in deciding whether to impose costs on users, is whether there is an unreasonable  impact on rightsholders. This is keenly debated of course, as we have seen in Canada, where a Parliamentary Committee dismissed claims that an expanded education exception had led to a sharp decline in sales, and instead suggested that more credible research was needed.

But there are other areas, such as preservation, where the actions of heritage institutions do not harm markets, but rather provide a valuable service by ensuring the survival of works into the future. This is essential if works are to be available in the medium to long term.

In this case, it can seem absurd to want to impose costs, when in fact it is the heritage institution taking on a responsibility on behalf of rightholders.

Recommendation 4: Governments need to ensure that they do not introduce remuneration obligations for uses where there is no clear impact on markets, and indeed where this may end up working against the interests of rightholders. 


As highlighted at the beginning, copyright lies at the heart of the dominant business model for today’s creative industries. Beyond payments for access in the first place, there are ongoing discussions about where and whether to ask for further payments for use.

In trying to draw the line between where such payments are desirable or not, policy makers need to take considered decisions, based on the reality of the situation they are in. Transaction costs, managing moral hazard, the potential to skew decision-making, and simply good sense should all be borne in mind.