Summary Report: The Business of Music and Complexity of Copyrights

 

Background

According to the UAE government’s portal on Intellectual Property Rights, it states, “Under the Federal Law No. 7 of 2002 on Copyrights and related rights, an intellectual work is any original work in the areas of literature, arts or science, whatever its description, form of expression, significance or purpose. The following intellectual works are protected under copyrights law”1

Regarding music, the protection extends to plays, musicals and pantomimes; musicals accompanied by dialogues and musicals which are not accompanied by dialogue; audio and video works or audio-visual works. The Ministry of Economy is the competent authority to register intellectual works in the UAE.

And regarding performance, production and broadcasting, the law explains, “Performers are defined in the Copyright Law as the actors, singers, musicians, dancers and other persons who recite, chant, play or perform – by any way – literary, artistic or other works protected according to the provisions of this law or inclusive within the public property. A producer of sound recording is defined as the natural or legal person who records the sounds of a performer or other sounds for the first time. Broadcasting Organisations are defined as any authorities that practice sound, visual or audio-visual and wireless broadcasting transmission.”2

In 2016, the UAE announced that under the directive of the Ministerial Decision No. 133 of 2004, it was considering establishing a committee for the purpose of providing licenses to music performers and acquiring royalties on behalf of composers.3 However, this has not yet taken place and does present an obstacle to the adequate enforcement of Intellectual Property Rights (IPR).

The Capital Club Dubai hosted panel discussions around the issue of intellectual property rights in the music industry, and this report highlights some challenges and possible solutions that emerged from the conversation.


Some Challenges

    • It is a complicated and difficult process to license for music usage, and often people tend not to go through the challenges. But this is becoming problematic for the region, because the reputational value is at stake and needs to be addressed. Furthermore, with everything becoming more online, the audio-fingerprinting identifies rights and informs the rights-holders, making the UAE also more visible.

 

    • Another challenge is that the UAE courts aren’t experienced in dealing with intellectual property disputes; and don’t often understand the complexity of copyrights in a music dispute case.

 

    • Another confusion in this region is understanding the difference between publishing-rights and master-rights. They are different rights. and both can be monetised under the UAE copyright act. Furthermore, there is an added layer of complexity in the way the music industry operates in the Middle East, Asia and Africa compared to more mature Western markets.

 

    • In the West, there are independent publishers. For example, Sony Music Publishing and Sony Music that create recordings are two separate businesses. The roster of recording artists in Sony Music has nothing to do with the roster of published songwriters. Songwriters might be signed with one song for publishing, and then they might be signed to Universal as recording artists. And so, there’s no connection between rosters. The companies often compete. It is not uncommon for one of the major publishers to sue their sister company for unpaid royalties. This has happened many times over the years.

 

    • However, here in the UAE, these two entities are not separated which has caused the confusion when trying to license international music copyrights. The faulty assumption is, “I’m dealing with the record company, so they can give me all rights.”
    • Historically, often the artist wasn’t the songwriter. For example, Frank Sinatra never wrote his own songs. Even today, the average song, in the Top 20, could typically have four or five songwriters for one song. (Not performers are like Coldplay who write all their own songs)

 

    • The UN’s World Intellectual Property Organisation (WIPO) specialises in intellectual property, including copyrights. According to WIPO, the Collective Rights Management Act is imperative for the music industry’s ability to deal with the various issues of copyrights, obtaining licensing and collecting royalties. They are closely involved with the UAE government regarding the formation of a Collective Management Organisation (CMO). The plan is to first address the issue of copyrights for text for the publishing industry. And if this works well, music will follow.

 

    • Every country needs to find its own approach. WIPO, as such, doesn’t take any position. There is the civil and the common law tradition, and the WIPO provide a point of reference that will assist in line with their copyright treaties.

 

    • The UK example: The law protects the rights of a performance. It says that if you’re going to use music, you need to have a license from every rights holder. However, whether you are a barber shop or an Indian restaurant in London, there is no practical way for you to know every single piece of music that you’re going to play over the air, because you’ve put on a CD or a Spotify playlist. In practice, it’s nearly impossible to follow the law.

 

    • Therefore, the concept of collective management organisation (CMO) was born out of this challenge. The basic idea being that everybody works together, assigns their rights to a CMO and that organisation now gathers all the rights and can issue licenses.

 

    • In the UK, all the various publishers and performers become a member of the local society. And they will exclusively assign their performance rights to that society (CMO). Now that society in the UK controls those rights. And as owners of performance rights, the CMO will need to collect on these, so they have reciprocal agreements with the different CMOs around the world – the Canadian society, the American, the French, the German, the Japanese, etc. And performance rights are collected through a of web of deals between 200 plus societies around the world.

 

  • If you are a broadcaster here in the UAE, you may not know where the music you are using in your production is coming from. So, the only way to license performance rights is to do deals with hundreds of societies., but this is not practical. And even if a local broadcaster thinks that it would be easier to deal with a foreign society and ask them to put licenses in place, it is illegal for a foreign society to practice collective management in the UAE, without a trade license. However, they can’t get a trade license because it’s a restricted activity, and so there is no way to get a license. And that’s the conundrum!

Some Solutions

User Generated Content (UGC): The music industry has found some compromising solutions in this digital world to deal with the high user created content and complexity of copyrights. For example, on YouTube, there are lots of individuals, from five-year-old kids to ninety-year-old grannies, posting funny videos with cats and using songs without permission. The audio fingerprinting software tells publishers within minutes that their music is being used in any video.

The music rights community has two choices – either they allow the video or pull it down. It is an infringement of the law, but the industry’s taken a view that suing a five-year-old doesn’t really look good. So, most of the time, they will allow the content but find a way to monetise it through advertising. This is the working model that seems in practice at present, with individual users creating lots of content and music rights holders making lots of money.

But there is an exception. If you are a corporate entity, and not an individual user, then you do not fall under the UGC category and are considered in breach of the law. So, if you are CEO of an organisation and decides to post a video of employees dancing to the song ‘Happy’, it is considered illegal and will be sued.

Independent Management Entities (IME) or Rights Management Entities (RME): The music industry, globally, has recently witnessed an emergence of IMEs and RMEs as an alternative solution to Collective Management Organisations (CMOs). With the advent of technology, streaming platforms and services entering the markets, these entities can manage the same set of rights as CMOs but have a different legal structure. CMOs are often owned by membership or are government mandated, but IMEs and RMEs are private, for-profit organisations. In this region, since there is no CMO to manage the music rights issues, some private enterprises with trade licenses are emerging.


Concluding thoughts

The 2019-2020 Global Competitiveness Report issued by the World Economic Forum ranked the UAE 19th globally on IPR protection, up from 26th in 2018-2019.4 The UAE’s legal framework for IPR is generally considered compliant with international obligations. “Emirate-level authorities such as economic development authorities, police forces, and customs authorities enforce IPR-related issues, while federal authorities manage IPR policy. However, many of these laws are inconsistently implemented or enforced at federal and emirate-levels, criminal sentences are often non-deterrent, and enforcement actions require specific written complaints from right holders.”5

In today’s digital world, most businesses and the creative world will intersect at some point. And the UAE is still catching up with the more developed mature markets regarding the complex world of copyrights and all its nuances in the music industry.

 


 

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