On 16 November 2020, Spanish Member of the European Parliament (MEP) Ibán García Del Blanco of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament posed a written parliamentary question to the European Commission:
“In recent years, some platforms dedicated to the management and sale of audio tracks for use by third parties have been using buy-out contracts as a subterfuge, thereby requiring authors and performers to surrender their entire copyright in exchange for a single payment. In doing so, these platforms keep all future income generated from the use of these creations and circumvent the systems in place for collective management of copyright, which is an essential part of a creator’s income.
Under Article 18 of the Copyright Directive, Member States shall ensure that where authors and performers license or transfer their exclusive rights for the exploitation of their works or other subject matter, they are entitled to receive appropriate and proportionate remuneration.
1. Does the Commission consider that buy-out contracts ensure appropriate and proportionate remuneration for authors and performers?
2. Does the Commission intend to limit this type of contract by which platforms abuse their dominant position vis-à-vis authors and performers, who individually negotiate contracts which basically lead to the expropriation of their rights and legitimate income?”
On 29 January 2021, Internal Market Commissioner Thierry Breton responded on behalf of the European Commission stating: “Member States must implement Directive (EU) 2019/790 on copyright in the digital single market (the DSM Directive) by 7 June 2021.
Once it is implemented, the answer to whether buy-out contracts ensure appropriate and proportionate remuneration for authors and performers under Article 18 will depend on a case-by-case assessment, taking into account the margins of manoeuvre left to Member States.
In particular, as mentioned by the Honourable Member, the Commission understands that one of the distinctive features of buy-out contracts is that such contracts remunerate authors and performers based on so-called lump sums, i.e., single payments.
Recital 73 of the directive indicates in this respect that lump sum payments may constitute appropriate and proportionate remuneration but they should not be the rule. Member States should have the freedom to define specific cases for the application of lump sums, taking into account the specificities of each sectors.
The practice described by the Honourable Member was also highlighted in the recently adopted Media and Audiovisual Action Plan, where the Commission notes that the application by platforms of a model whereby all intellectual property rights are acquired from producers and/or individual creators since the start, worldwide and in perpetuity, may have the effect of ‘locking-in’ producers and talents with the platforms in question.
The Commission will continue discussing this matter with interested parties in the context of the implementation of the DSM Directive as well as in the follow up to the Media and Audiovisual Action Plan.”
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