Regulatory Impact Analysis
Term of Protection of Copyright and Certain
Related Rights Directive
September 2013
Intellectual Property Unit
Department of Jobs, Enterprise and Innovation
Summary of Regulatory Impact Analysis (RIA)
Department/Office:
Title of Legislation:
Department of Jobs,
Enterprise and Innovation
Directive 2011/77/EU of the European Parliament and of the
Council of 27 September 2011 amending Directive
2006/116/EC on the term of protection of copyright and
related rights
Stage:
Drafting of Statutory Instrument implementing
the Directive
Related Publications:
Date:
28 August 2013
Directive 2011/77/EU of the European Parliament and of the Council of 27 September 2011
amending Directive 2006/116/EC on the term of protection of copyright and certain related
rights.
Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on
the term of protection of copyright and certain related rights (codified version).
Council Directive 93/98/EEC of 29 October 1993 harmonizing the term of protection of copyright
and certain related rights.
Available to view or download at:
http://ec.europa.eu/internal_market/copyright/term-protection/index_en.htm
Contact for enquiries: Síona Ryan
Telephone: 01 6382591
What are the policy objectives being pursued?
Extension of the copyright term of protection in sound recordings and performers’ rights
in sound recordings from 50 to 70 years and harmonization of the copyright term for cowritten musical compositions with that for words, by transposing Directive 2011/77/EU of
the European Parliament and of the Council into Irish law by the transposition deadline date of
1 November 2013. This will also entail : providing certain specific provisions for
performers: a session fund for artists; a “clean slate” provision whereby the obligation
on an artist to repay an advance of royalties is removed after 50 years; and a “use-it-orlose-it” provision whereby the rights in the performance may revert to the performer if
the record company does not exploit the music track in the extended period.
What policy options have been considered?
Option 1: Do Nothing/No Policy Change.
Option 2: Transpose the Directive into Irish law by amending the existing legislation by means of
Ministerial regulations under section 3 of the European Communities Act 1972 (No. 27 of 1972).
Preferred Option:
Option 2.
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OPTIONS
Option
COSTS
No.
1
- No direct costs but
would result in
significant risk of EU
fines and court actions.
2
BENEFITS
- None
- Failure to comply with EU
obligations and would incur
infringement proceedings
by the European
Commission.
- Licensing costs for use
of sound recordings
extended for 20 years
will impact
broadcasters and public
venues in particular.
- Compliance with EU law.
-Minor increase in costs
for businesses.
- The rights of co-authors on
a musical work extended to
begin upon the death of the
last remaining co-author.
- Increase in
administration costs for
collecting societies to
put in place new
schemes.
- Record producers
could lose some income
during the extended
period of protection
from the ‘use it or lose
it’ clause and the ‘clean
slate’ provision.
IMPACTS
- The term of protection of
the rights of performers and
in sound recordings will be
extended.
- The extension of moral
rights to correspond with the
economic rights in the
recordings.
- The introduction of a ‘use it
or lose it clause’ to allow for
the expiration of a
producer’s rights to revert to
a performer or performers,
where the fixation of a sound
recording has not been made
appropriately available to
the public.
- The introduction of a 20%
of revenue fund for session
musicians on a sound
recording after 50 years.
- Enhanced role for Collecting
Societies to administer the
new 20% of revenue fund.
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- The State would be
vulnerable to legal
proceedings by affected
parties.
- Enhanced income
prospects for musicians in
retirement.
- Licensing costs for use of
sound recordings extended
for 20 years.
- A further 20 years before
rights of producers and
performers enter the public
domain allowing unlicensed
use.
- No impact on
competitiveness.
Table of Contents
Description of Policy Context and Objectives ............................................................... 5
Introduction .................................................................................................................... 5
Context ........................................................................................................................... 5
Objective ......................................................................................................................... 6
Identification and Description of Options .................................................................. 7
Option 1 .......................................................................................................................... 7
Option 2 ........................................................................................................................... 7
Chosen Option ................................................................................................................. 7
Means of Transposition ................................................................................................... 7
Analysis of Costs, Benefits and Impacts for all Options ................................................ 8
Costs ............................................................................................................................... 8
Benefits ........................................................................................................................... 9
Impacts .......................................................................................................................... 10
Consultation ............................................................................................................. 11
Enforcement and Compliance ................................................................................... 11
Review...................................................................................................................... 11
Publication ............................................................................................................... 11
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Description of Policy Context and Objectives
Introduction
The purpose of this document is to analysis the impact of transposing Directive
2011/77/EU of the European Parliament and of the Council of 27 September 2011
amending Directive 2006/116/EC on the term of protection of copyright and certain
related rights (the Directive). The Directive was adopted on 12 September 2011 and
must be transposed into Irish law by 1 November 2013.
Context
Performers
The amendment of the 2006 Directive1 was triggered by the imminent fall into the
public domain of performances recorded and released in the 1950s and 1960s, whose
performers were facing an income gap as they approached retirement. The income from
copyright remuneration is important for performers, as they often do not have other
regular salaried income.
Usually musicians or singers start their career in their teens or twenties. That means
that when the current 50 year term of protection of their performances ends, they will
probably be in their 70's. As a result, performers face an income gap at the end of their
lifetimes, as they lose royalty payments from record companies as well as remuneration
due for the broadcasting or public performance of their sound recordings. The latter
income streams are paid to performers directly through their collecting societies and are
not affected by their contractual arrangements with the record companies.
For session musicians who play background music, and lesser known artists, this means
that broadcasting and public performance income decreases and may eventually cease
when performers are approaching or are in retirement. Once copyright protection
expires, they will also lose out on potential revenue when their early performances are
sold on the internet. Moreover, when their rights expire, performers are exposed to
potentially objectionable uses of their performance which are harmful to their name or
reputation. Performers are also at a disadvantage compared to authors whose works
are protected until 70 years after their death.
Record Producers
Record (phonogram) producers create sound recordings (i.e. the "fixation" of a
performance) and ensure their subsequent promotion and marketing, distribution to
retail outlets and sale to consumers/end users. Record producers provide the financial
investment necessary to produce and sell music records. They also invest in discovering
and developing performers both commercially and artistically. The investments of
record producers in the music industry can be risky and in recent years internet piracy
1
Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection
of copyright and certain related rights (codified version)
5
and the changing ways of accessing recordings has had a negative effect on revenue for
producers. A longer term of protection would generate additional income to help
finance new talent and would allow record companies to spread the risk in developing
new talent.
Musical Composition with words
At present, in some EU countries including Ireland, the lyricist and composer of
contributions specifically created for a co-written musical work are each considered
author and owner of their respective copyright, each with its own term of protection.
Consequently, the lyrics and music can fall out of copyright at varying times. The time
gap may be substantial and the discrepancies in the term of protection cause problems
in relation to the administration of copyright across the EU which leads to legal
uncertainty.
Objective
Implementation of the Directive will extend the term of protection for performers and
producers and in sound recordings. It will also contribute towards harmonising the gap
between the copyright term of protection for authors and composers (currently life
plus a further 70 years, and the term for performers and record producers (currently 50
years after the performance or its publication), by increasing the current 50 year term to
70 years.
It will also introduce a set of accompanying measures to benefit performers and give
them more control over their work:
• A 20% fund for session musicians, paid by the record companies: this
remuneration will ensure that performers who sell their rights against a one-off
flat fee obtain additional payments during the extended term. The fund will
apply to all recordings which benefit from the term extension.
• A 'use it or lose it' clause, which means the record company will have to cede
control over its copyright to performers if it does not market the sound
recording containing the performance. If a record company does not market a
recording despite the performers' request, the performers will get their rights
back and can market the recording themselves.
• A 'clean slate' provision, which means that producers will not be entitled to
make any deductions from the contractual royalties due to featured performers
during the extended term. Non-featured performers, for instance, session
musicians, will be given a right to the information from record producers which
may be required to secure payment.
The Directive also harmonises the rules governing the term of protection of copyright in
co-written musical works (“musical compositions with words”), i.e. where the lyricist
and composer are different persons. Under the new provisions, copyright in such works
shall last for 70 years after the death of the last of the following persons to survive,
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regardless of whether they are designated as co-authors under national law: the author
of the lyrics and the composer of the musical composition, provided that both
contributions were specifically created for the co-written musical work. This will
harmonise the copyright term for co-written musical compositions with words across all
EU Member States.
Identification and Description of Options
Option 1: Do Nothing/No Policy Change
This option would result in a failure to comply with our EU obligations and would in all
likelihood result in prosecution by the European Commission and imposition of
sanctions by the European Court, as well as leaving the State vulnerable to legal
proceedings by affected parties.
Option 2: Transpose the Directive by Statutory Instrument under the European
Communities Act 1972.
This option would involve the transposition of the Directive into Irish law by Statutory
Instrument. The exercise of this option will confer the benefits of an extended term of
protection for performers and sound recordings in Ireland and harmonise the term of
protection across all EU Member States. The extended term will also benefit record
producers who will generate additional revenue from the sale of records in shops and
on the internet. This should allow producers to adapt to the rapidly changing business
environment and help them maintain their investment levels in new talent.
The new legislation will also introduce measures which aim specifically to help
performers. The “use it or lose it” clauses, which will now have to be included in the
contracts linking performers to their record companies, will allow performers to get
their rights back if the record producer does not market the sound recording during the
extended period. In this way the performer will be able to either find another record
producer willing to sell his music or do it himself, something that is possible easily via
the internet. Finally, record companies will have to set up a fund into which they will
have to pay 20% of their revenues earned during the extended period. The money from
this fund will be destined for distribution to non-featured performers (session
musicians) in sound recordings.
Chosen Option
The chosen option is Option 2, the transposition of the Directive by means of Statutory
Instrument.
Means of Transposition
The transposition of the Directive into Irish law by amending the existing Irish legislation
by means of Ministerial regulations under section 3 of the European Communities Act
1972 (No. 27 of 1972).
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Analysis of Costs, Benefits and Impacts for all Options
Costs:
Option 1: Do Nothing/No Policy Change
There are no direct costs associated with Option 1. However, Ireland would face a
substantial risk of significant lump sum and daily fines imposed by the Court of Justice of
the European Union for the non-transposition of the Directive and the risk also of court
damages and costs arising from affected parties taking proceedings against the State.
Option 2: Transpose the Directive by Statutory Instrument under the European
Communities Act 1972.
Exchequer: There are no direct costs to the Exchequer.
Record Producers: Record producers will continue to benefit from their rights
(reproduction, sales, online and public performance) in the recordings for a further
period of 20 years. 20% of the gross revenue accruing from their rights of distribution,
reproduction and making available (internet) is to be paid by the record producers to a
special fund for distribution to non-featured performers in the record. The “use it or
lose it” and “clean slate” provisions described above will impact financially to some
extent on record producers. However any such cost implications will arise only in
relation to the extended period of protection.
Performers: There are no costs associated with Option 2.
Broadcasters and Public Venues where music is played, depending on the basis on
which tariffs are set by collecting societies, there may be a financial impact due to the
extension of the term of protection on the repertoire on offer.
Consumers: The EU Commission in its original impact analysis2 on this issue was of the
opinion that there is no clear empirical evidence that price difference between sound
recordings that are in- or out-of copyright would be significant. This would imply that
public domain companies would not necessarily sell sound recordings at prices lower
than those applied to protected recordings marketed by recording companies. It should
be remembered that even after expiry of the record producers’ and performers’ rights
in a sound recording, the rights of the author/s of the musical compositions are still
protected during the life of the author plus seventy years thereafter.
Collecting Societies: There are potential new costs associated with the administration of
the new funds as set out in the Directive for collecting societies. It is estimated that any
increase in operating costs should be eventually offset by an increase in revenue from
administration fees accrued as a result of these changes.
2
Impact Assessment on the Legal and Economic Situation of Performers and Record Producers in the European Union
8
Business: It is estimated the cost to business in Ireland will be minor. The impact
assessment carried out by the UK Intellectual Property Office3 based on figures from
2009, shows a projected net cost to business of approximately £1.2 million per year in
the UK. On a proportionate basis this would equate to a possible equivalent net cost to
Irish business in the region of €134,000 per annum in Ireland.
Benefits
Option 1
There are no benefits associated with Option 1.
Option 2
Use of option 2 would ensure Ireland’s compliance with its obligations under EU law.
Record Producers: Record producers will gain from the measure as they will continue
to benefit from their rights for a further 20 years. While costs will be incurred in setting
up the supplementary payment fund and in administration generally, these costs are
payable only from revenue received in the extended period. Record Producers will also
benefit from an extension of moral rights for a period of 20 years.
Performers: Performers will also gain from the measure as they will benefit from
receiving remuneration for a further 20 years when their sound recording or
performance is played or communicated to the public. Featured performers, i.e. those
in receipt of royalties, will profit most. They will benefit from the “clean slate” provision
(royalties unencumbered by advance payments or contractually defined deductions).
The amounts which will be payable to non-featured performers, e.g. session musicians,
will probably be more modest. These non-featured performers, who are not in receipt
of royalties, will be able to obtain an annual supplementary remuneration from the
special 20% fund. The extension reflects the important role performers play in the
success of sound recordings. Performers also stand to benefit from the possibility to
renegotiate original contracts, provision for where there is a plurality of performers,
rules on non-distributable funds and the extension of moral rights for a period of 20
years.
Moral Rights: Moral rights will be extended to correspond with the economic rights in
the recordings. Moral rights consist of:
(a) the paternity right, where the author/performer has the right to be identified as
the author/performer of the work or performance;
(b) the integrity right, where the author/performer has the right to object to any
distortion, mutilation or other modifications of, or other derogatory action in
relation to the work or performance and
(c) the right not to have a work falsely attributed to the author/performer
3
Consultation on the Implementation of Directive 2011/77/EU Amending Directive 2006/116/EC on the Term of
Protection of Copyright and Certain Related right: Annex C
9
Collecting Societies: Collecting societies, especially those who deal with the rights of
performers in sound recordings will benefit from the right to the supplementary fund is
to be administered by collecting societies.
Consumers: In the EU impact analysis4 it is stated that “the extended term should have
a positive impact on consumer choice and cultural diversity. In the long run, this is
because a term extension will benefit cultural diversity by ensuring the availability of
resources to fund and develop new talent. In the short to medium term, a term
extension provides record companies with an incentive to digitise and market their back
catalogue of old recordings. It is already clear that internet distribution offers unique
opportunities to market an unprecedented quantity of sound recordings.”
Composers/Lyricists: The continuation of the copyright term until the death of the last
surviving author will benefit the estate/s of the deceased contributing author/s.
Impacts
Option 1
There is a substantial risk of significant fines imposed by the Court of Justice of the
European Union for the non-transposition of the Directive and the risk of court damages
and costs arising from affected parties taking proceedings against the State.
Option 2
National Competitiveness: As the Directive is required to be implemented in all
Member States, there should not be any impact on competitiveness as all will be in a
similar position.
Consumers/Users: While the extended term of rights in sound recordings and
performances may not impact on the price of CDs or online music offerings, there may
be an impact on information professionals (including libraries etc.) and innovators such
as musicians, film makers and public domain record labels. They will incur costs in
obtaining licences for the use of recordings in the extended term and in seeking
permission to use works which may have been affected by the "use it or lose it" clause.
Micro-enterprises: The Directive allows for the possible exclusion of micro-enterprises
from the obligation to contribute to the special fund. It is not intended to implement
this provision by Statutory Instrument at this stage. The possible inclusion of an
exemption for micro-enterprises under the terms of this Directive will remain under
review for possible inclusion in primary legislation at a later date.
There are no adverse impacts for North-South / East-West relations / gender balance /
poverty proofing / rural communities.
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Impact Assessment on the Legal and Economic Situation of Performers and Record Producers in the European Union
10
Consultation
Following publication of the EU Commission proposal in July 2008, a public consultation
by the Department was launched in mid-July 2008 on the publication of the original
proposed Directive. Views were sought on any or all aspects of the proposals,
particularly in relation to any difficulties or problems in its implementation or any
consequences especially in the Irish context.
A consultation paper with links to
relevant documents was posted onto the Department’s website on the Copyright pages
of the Intellectual Property section. Approximately 14 organisations were directly
consulted by letter. 7 responses were received. There was general support for the
extension from the recorded music sector and on behalf of performers while arguments
against the extension, especially on cultural grounds, were made by others interested
parties.
Any additional submissions in relation to the proposed transposition of the Directive can
be addressed to Síona Ryan at:
siona.ryan@djei and [email protected]
Or
Copyright Section
Intellectual Property Unit
23 Kildare Street
Dublin 2.
Enforcement and Compliance
Enforcement and compliance issues are dealt with in the Copyright and Related Rights
Act 2000.
Review
Under the terms of the Directive, the European Commission has committed that by 1
November 2016, it shall submit to the European Parliament, the Council and the
European Economic and Social Committee a report on the application of the Directive in
the light of the development of the digital market, accompanied, where appropriate, by
a proposal for the further amendment of Directive.
Publication
This Regulatory Impact Assessment will be made available on the Department’s website.
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