Proposal for EU-wide online license.

The European Commission has started the process to overhaul the European Union's complex rules on collective licensing for online music.

EU internal market commissioner Charlie McCreevy outlined today (Oct. 7) the main points of his plan for making the licensing of music online easier and more efficient. After several delays, the plan will be presented officially in the week starting Oct. 10, according to sources at the Commission.

"Our proposal sets forth a credible system to achieve an EU-wide license in line with the ubiquity of the Internet," said McCreevy who was expected to deliver a speech at the Creative Economy Conference held today in London, but had to cancel his participation. However, his prepared statement was read by one of his aides.

In his speech, McCreevy said he believed the market for online music had "enormous potential that has yet to be realized," but also acknowledged that Europe did not appear to be making "the most of these new opportunities."

"Unless it is better equipped to exploit this potential fully, it will continue to lag behind," said McCreevy.

He added, "For some time we in the Commission have been looking at the way that copyright has been managed and cleared. We have come to the clear conclusion that the current situation can be improved."

At the moment, music online services must secure licenses from collecting societies in each country where they operate. Europe, he said, has to address "inefficiencies" in the system and one of these is the Europe's model of copyright clearance "belongs more to the nineteenth century than to the 21st."

"The internet does not recognize borders. While technology has advanced, the way we license music has not kept pace."

The system McCreevy wants to see in place should be working "openly and transparently."

The plan will provide that rights-holders should have the right to entrust the management of their online rights to a rights manager of their choice, irrespective of the Member State of residence or the nationality of the manager or the rights-holder.

Equally, users should have the right to equality of treatment. Collective managers should "grant commercial licences on the basis of objective criteria and without discrimination among users."

"The way I see it," said McCreevy, "the obvious way forward is that rights are gathered into attractive packages -- repertoire -- and then licensed to online service providers on an EU-wide basis in a single transaction. There is a single contract, easy accessibility of attractive repertoire, and little overhead."

The recommendation also includes provisions aimed at ensuring equitable distribution of royalties; non-discrimination of representation; accountability; and effective dispute resolution.

The commissioner said he favored a "light touch" approach to regulation, as he preferred to see market forces at work. Hence the choice of a ecommendation "recommendation" which will set out a set of ground rules.

He expected these rules providing more effective models for cross-border licensing and introducing better governance in collective management to be adopted "in the next few days" by the Commission.

If what he called a "soft-law instrument" did not deliver results, he warned that would be monitoring matters very carefully, and evaluate if "a more binding legislative approach might be called for."

Bernard Miyet, president of French authors rights society Sacem and president of European collecting societies body Gesac, says he is not surprised by the proposal, but will wait until the final draft is presented to make a final opinion.

"We want to find a solution," he tells Billboard.biz, adding that in its present form, the proposal does not address the issue that online services will still have to secures licenses from all the societies, if they want to present all the available repertoire.

"As an organization that has one of the most influential repertoire, there are concepts that have great appeal [in McCreevy's plan]," says Adam Singer, CEO of the British alliance MCPS-PRS. "We need the most vibrant online sector we can get."

McCreevy's plan was criticized by EDiMA, the European Digital Media Association, which represents on-line music providers. In a statement, it stresses that by issuing non-binding guidelines and "watered down" proposals, the Commission will maintain "the current monopolistic and territorial regulatory regime for rights management."

EDiMA said it has written to the Commission asking it to delay the adoption of its initiative in order to present a package that will "ensure that the measures it eventually proposes will tackle the regulatory obstacles and promote the development of the on-line music sector."