Collective Management Organizations 101

Written by Achille Forler

A copyright is foremost an economic right, because an author must eat, pay the bills and, possibly, create wealth. From the discussion on Copyrights, it should be clear that the author has no hope of getting paid unless he is a member of the IPRS. So let us understand what is the role of a CMO, how does it function and how best can I benefit from it.

Because it is impractical for individual rights holders to negotiate a rate, license every user and collect royalties for every use of their works, they have set up collective management organizations (CMOs) to undertake those tasks on behalf of themselves.

Conversely, it would be an impossible task for users, such as broadcasters or restaurants, to establish the identity and location of every author, music publisher and record label to negotiate a fee playing music.

These difficulties grow exponentially when music is used on a global scale.

Collective licensing has proved to be the best solution for safeguarding exclusive rights. In such a system, exclusive rights holders authorize the CMO, controlled by them, to administer those rights which they cannot administer individually. It allows authors to devote time to creation, with the guarantee that even the most modest use of their work, anywhere in the world, will be tracked and fairly remunerated for the whole duration of its copyright.

Collective management is also efficient for users because it facilitates their access to tens of millions of works through a single license. We see such ‘collective licensing’ everywhere: payment of the road tax gives you the right to use any road in the country; subscription to a streaming service enables you to consume any kind and amount of music. Etc.

A BRIEF HISTORY OF CMOs

Copyright would have had no future without the concept of collective rights management. The idea of a not-for-profit organization owned by authors and tasked to collect their royalties, dates back to the French playwright Beaumarchais, who founded in 1791 the Bureau de Législation Dramatique, a CMO that exists to this day under the name SACD.

The first CMO for music was set up as the result of an incident. In 1847, two composers, Paul Henrion and Victor Parizot, and a lyricist, Ernest Bourget, brought a lawsuit against the famous restaurant “Les Ambassadeurs”, situated on the Avenue des Champs-Elysées in Paris. While they had dinner, the orchestra played several of their compositions. They objected to the bill: “We consumed your food, you consumed our music, we are quits!” The court and the appeal court ruled that the restaurant had infringed the authors’ exclusive right to perform their works and awarded them substantial damages. In 1850, they set up the world’s first CMO for music rights: Society of Authors, Composers and Music Publishers (SACEM).

The technological revolutions in the first half of the twentieth century brought a gradual expansion of the classes of works protected by copyright: cinematographic works in 1913, radio works in 1923 and finally works of television fiction in 1950. It was not until 1987 that the film director was recognized as an author in some countries. Indian copyright law does not recognize the film director as an author.

Under the international legal framework defined by the Berne Convention, the CMOs implemented the principle of reciprocity by signing reciprocal agreements with similar CMOs in other countries.

The International Confederation of Societies of Authors and Composers (CISAC) was founded in France in 1926 “to improve national and international copyright law, to foster the diffusion of creative works and, in general, to attend to all common problems of creation in its widest sense”. Its objective was to unite authors and composers from around the world and coordinate the work of their collective management societies. CISAC is a non-governmental, not-for-profit organization and does not have political affiliations.

Over the years, CISAC has become the natural global governing body for all CMOs in the world, laying down the Professional Rules governing the conduct of different types of CMOs, and the Distribution Rules governing the global distribution of royalties. These rules are strict and thorough, and its members are regularly subjected to compliance reviews.

Non-compliance can result in a warning, a censure, a fine or temporary or permanent expulsion from CISAC. These rules set out very high standards; consequently, membership of CISAC is regarded as a badge of approval for a CMO.

In 2018, CISAC had 232 member CMOs in 120 countries. Collectively, they collected a cool €9.65 bn, about INR 80,000 cr.

Status of CMOs

CMOs come under different status: not-for-profit organization owned by its members, owned by music users, or privately owned by shareholders for-profit. The US, where antitrust law applies, is an exception and has all three:

  • The American Society of Composers, Authors and Publishers (ASCAP) is a “voluntary association” of its members;
  • Broadcast Music Inc (BMI) was founded by the National Association of Broadcasters as an alternative to ASCAP;
  • The Society of European Stage Authors and Composers (SESAC) is a private profit-making company, controlled currently by BlackRock, the world’s largest asset management company.

However, this competitive environment is not typical of the rest of the world where CMOs are strictly regulated. The preferred structure is a not-for-profit organization owned by its members and managed on their behalf.

The Indian Legislator has always indicated its preference for a legal monopoly for copyright societies: “The Central Government shall not ordinarily register more than one copyright society to do business in respect of the same class of works.” (Art. 33.3) The 2012 Amendments added the caveat that each Society must obtain a renewal of its license from the Central Government every five years.

To date, only two organizations have been licensed by the Government to operate as a copyright society under Section 33 of the Copyright Act: The Indian Performing Right Society (IPRS) and the Indian Singers’ Rights Association (ISRA).

MANDATES TO CMOs

Before a CMO can do any licensing, it must have bargaining power with the users. No music user will take a license if it thinks the CMO cannot grant it the rights it needs, or that it can get one cheaper elsewhere. To be successful in the market, a CMO must receive a mandate from as many rights holders as possible.

A CMO controls the rights of its members. But by signing reciprocal agreements with overseas CMOs, it ensures that: 1) the rights of its members are represented in those territories and, 2) that it represents the rights owners from those countries.

A CMO typically controls millions of works, which gives it real bargaining power when negotiating with any potential users of those works – public performance venues, record companies, broadcasters, internet services, etc. – to issue a license against a fair remuneration.

THE INDIAN PERFORMING RIGHT SOCIETY (IPRS)

IPRS is the CMO for literary and musical works, representing lyricists, composers (or their heirs) and music publishers.

Although it has not changed its name, since 2012 IPRS administers, in addition to the performing right, the mechanical and the sync right of its author members. In other words, it has the right to collect the authors’ share even when the publisher is not a member of IPRS.

IPRS licenses the “performing right” and the reproduction or “mechanical right” –.

MEMBERSHIP OF IPRS

After becoming a member of IPRS, every author and publisher is assigned a unique international identification number or IPI which stands for Interested Parties Information. The original CAE is still in use; it stands for Auteur-Compositeur-Editeur, reflecting the French origin of CMOs. This IPI is what distinguishes you from your homonym. We will see its importance later but keep it always at hand (in your contact details, for example).

REGISTRATION OF YOUR WORKS

It is important that you notify IPRS of all the musical works you have written or co-written. You do not need to submit sheet music, lyrics, audio files etc. when notifying the Society of new original works.

Before you register a work, you need to agree to the splits with your co-authors. We strongly advise you to read the rules that govern splits in this document on the IPRS website (see Section 2.6):

https://www.iprs.org/wp-content/uploads/2019/05/IPRS-Distribution-Rules.pdf

Memory fails, even among best friends. It is advisable to secure the splits on a document as soon as the song is completed, even before it is recorded. It can be done on a simple handwritten piece of paper, call it a “Work Notification Form”, and contain the following information:

  • Name of the song
  • Date and place
  • Name of contributor
  • IPI number
  • Role (A, C or E)
  • Percentage share

i.e.:

Tina Sharma
00110100010
A
25%

The total percentage should be 100, even if the publisher is not yet known; once a publisher comes on board, the splits will be automatically divided equally. Each contributor should sign next to his share percentage. Make a copy for each contributor.

Once your work is registered with IPRS, the Society will generate a unique identifier code called ISWC, which stands for International Standard Work Code. ISWC is the CISAC industry-wide identifier of musical works and a cornerstone in data exchanges between societies, right holders and digital music providers. The global registry of ISWC codes is maintained by the Swiss CMO, SUISA.

OTHER IMPORTANT IDENTIFIERS

ISRC

Every master (sound recording) or music video that you release needs an ISRC (International Standard Recording Code), which will be its unique international identifier. This ISRC is linked to that particular master, even if you use that master in a compilation. A different ISRC must be issued only when you modify the master, by editing it or remixing it. For more information, see https://isrc.ifpi.org/en/ In India, the Indian Music Industry is the agency authorised to issue your ISRC Registrant Code.

UPC

Every album or single that you release requires a unique Universal Product Code (UPC). Most digital distributors can generate a UPC with their own for their clients, but you can also register with www.gs1india.org to obtain your own Company Prefix at an annual cost.