European Biz Hopeful Of Change At EC

José Manuel Barroso of Portugal, the EC's president designate, on Aug. 12 unveiled the names of the 24 nominated commissioners. Barroso has said that reform will be a central focus of his five-ye

LONDON -- The music industry has high expectations for the new European Commission, which comes into power this fall.

José Manuel Barroso of Portugal, the EC's president designate, on Aug. 12 unveiled the names of the 24 nominated commissioners. Barroso has said that reform will be a central focus of his five-year term.

The new EC will take office Nov. 1 after the European Parliament approves its makeup. Commissioners are also appointed to five-year terms.

The EC has a busy agenda for the creative industries with rulings required on a range of legislative, taxation and protection issues.

"There are many heavyweight people on the commission, [including] a lot of former prime ministers or finance ministers," says Brussels-based Philippe Kern, founder and managing director of KEA-Kern European Affairs and secretary-general of European independent labels body Impala.

From a political and economic perspective, Kern says the EC looks "very liberal, and we'll see what it bodes for the music sector."


The EC is the central executive structure of the European Union. It proposes legislation, coordinates EU policies and manages a yearly budget of 100 billion euros ($123 billion).

Since the EU was enlarged from 15 countries to 25 in May, the EC has consisted of one representative, including the president, appointed by each of the 25 member states.

Several of the new commissioners will be directly involved in issues of interest to the music industry. They include the new competition commissioner, Neelie Kroes of the Netherlands, who brings to the post a reputation as a free-market proponent.

The previous competition commissioner, Mario Monti of Italy, ruled twice on proposed mergers between major record companies during his tenure. The attempt at an EMI-Warner merger in 2001 faced strong opposition from the commission, but this year Monti approved the union of Sony Music and BMG.

Kroes' department will also rule on any proposed music mergers, should they materialize.

Impala's Kern says he does not anticipate major policy changes in the area of competition. The outgoing competition regulators "very much had an open-market philosophy," he says.

Former education and culture commissioner Viviane Reding of Luxembourg will head the new information society and media department. Media was previously under the umbrella of education and culture.

"It is an interesting situation," Kern says. He suggests that by restructuring various departments Barroso has "tried to build a convergence between the telecoms and the audiovisual sector."

However, he warns, "in simple economic terms, we have the risk of seeing the audiovisual sector marginalized. A key question will be-is [Reding] going to go take the side of the content or the conduit?"

The EC is expected to review the levels of criminal sanctions against pirates. Reding will be an integral contact for the industry, as she will oversee all Internet-related issues.

The new commissioner for education and culture is Jan Figel of Slovakia.

His department has developed a relationship with the music community during the past five years. Among its initiatives was the creation of the Border Breakers Awards, which recognize EU artists who sell outside their countries of origin. The awards debuted in January at the Midem trade show.

The commission does not yet have a specific action plan for music similar to the MEDIA plan for the audiovisual sector. MEDIA is a five-year, multimillion-euro initiative funded by the EC to support the film and TV industries in Europe.

Several organizations, notably Brussels-based lobbying body the European Music Office, have been pressing the EC in recent years to grant the music sector a larger allocation of EU funding.

"We are keenly following the changes in Brussels," EMO secretary-general Jean-François Michel says. Noting that the EC in 2005 will set out new cultural programs for the next five years, he adds, "we have a lot of hope and expectations."

On the legislative side, the EC and the European Parliament are reviewing and amending five existing directives concerning intellectual property rights, all initially published in the '90s. The review will be the responsibility of the internal market commissioner, Ireland's former finance minister Charlie McCreevy.

The Term of Protection Directive, which modernizes a text from 1993, is high on the music industry's agenda with the EC. The International Federation of the Phonographic Industry wants an extension of the duration of protection for sound recordings, currently set at 50 years after material is first recorded. Initial reaction from the outgoing EC has been lukewarm about changes in the legislation.

McCreevy and the commissioner in charge of taxation, Ingrida Udre of Latvia, will also deal with the thorny issue of whether value-added tax rates should be reduced on recorded music.

Representatives of the IFPI were not available for comment.

Kern says the way Barroso has set up his team signals that he intends to be a hands-on EC president.

"So far I must say I have been impressed by the way Barroso has been operating," Kern says.