As Greek Royalty Collector Fails, Rights Holders Weigh Whether Government Can Find Their Money
The crisis at SGAE, the Spanish performance rights organization, involves a telenovela's worth of plot twists -- including royalties for inaudible music and the court-ordered dismissal of a WIPO arbitration. But the situation at its Greek counterpart AEPI (the Hellenic Society for the Protection of Intellectual Property) is downright epic.
Like all performance rights organizations, AEPI collects money for publishers and composers when their songs play in public -- on radio or television, and at stores, restaurants, and music venues. Unlike most, however, AEPI was set up as a for-profit company.
Over the last several years, an investigation of AEPI -- complete with a 2017 police raid of its office -- revealed extensive, systemic corruption. AEPI had failed to distribute 42.5 million Euros ($49.5 million) in royalties, according to an Ernst & Young audit of its finances from the years 2011 to 2014 that was ordered by the Greek Ministry of Culture -- more than the total amount the organization distributed in some years. Nevertheless, the company was 19.9 million Euros ($23.2 million) in debt. (This is remarkable for an organization that essentially exists to collect fees on behalf of its members and foreign counterparts.) AEPI's biggest expense during this time was salaries, including 635,000 Euros ($740,000) a year for managing director Petros Xanthopoulos, whose family controlled the company. (Messages to AEPI were not returned by press time.) Prosecutors are now preparing to charge the executives responsible for AEPI's problems with fraud, embezzlement, money laundering, tax evasion, and other crimes.
Earlier this year, the Greek government passed a law that revokes AEPI's license to operate and sets up a government-controlled legal successor to the company that will license all of the rights AEPI previously controlled for a period of up to two years. (It's not clear what would happen after that.) But given the complexity of running a public performance organization, as well as the level of public-sector corruption in Greece -- which ranked 59th on Transparency International's Corruption Perceptions Index, well behind most other European Union countries -- many rightsholders and other performance rights organizations are wary of the plan.
CISAC (the International Confederation of Societies of Authors and Composers), which suspended AEPI for a year in June 2017 and expelled it earlier this month, is working to support Autodia, its only remaining music society member in Greece. (Like most performance rights organizations, Autodia -- the name comes from the Greek work "autodiahirisi," or self-managed -- is a nonprofit entity governed by its members.) In April, CISAC sent the Greek government a letter expressing concern with its plan to take over AEPI, and clarifying its commitment to Autodia.
"It's a very serious situation and we are totally committed to helping fix it," said CISAC Director General Gadi Oron in a statement. "CISAC is working with our only member in Greece, Autodia, to help find a long term solution, fill the vacuum in the market and get money into the hands of creators. We are also in regular contact with the Greek government to gain a better understanding of their plans."
In late June, CISAC signed a Memorandum of Understanding with Autodia that committed it to conform to international standards, and sent a memo to its member societies reminding them that they could opt out of the process that transfers the rights they gave AEPI to its government successor and instead do business with Autodia. Under the new Greek law, rightsholders have until August 6 to opt out of the process that transfers AEPI's rights to the new government entity, which they can do by sending a signed declaration to firstname.lastname@example.org.
Autodia, which began operating in 2007, had about 10 percent of the Greek public performance royalties market at the beginning of the year, but the demise of AEPI has brought that up to 30 percent, according to Autodia chief executive Yiannis Glezos. Autodia already has reciprocal agreements with SIAE (Italy), UBC (Brazil), and SACM (Mexico), and Glezos says more such deals are on the way.
"It was an anomaly worldwide to have a family company administer intellectual property rights and the same goes for a government entity -- it's another anomaly," Glezos says, referring to AEPI and its government successor. "It's important for any interested party to realize that this is the right moment to seize the day and sign with Autodia as the only real alternative to the chaos in Greece in the field of intellectual rights."
Several music publishing executives said they were concerned about the idea of a performance rights organization run by the Greek government but had not yet decided how to handle the situation.
Additional reporting by Anastasio Mitropoulos