Spanish Rights Society SGAE Fails to Make Crucial Reforms to Statutes

Madrid, Spain
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Madrid, Spain 

The struggling collection society lacked member votes to meet demands by CISAC and Spain's Ministry of Culture, and conform to current EU intellectual property law.

Spanish collection society Sociedad General de Autores y Editores (SGAE) failed to make reforms to its statutes during a general assembly of the organization on Monday (June 24).

Crucially, SGAE members did not supply the two-thirds of votes necessary to make changes complying with the July 2018 intellectual property law dictated by the European Union -- an offense that Spain’s Minister of Culture José Guirao had previously said could result in the entity’s administrative license being revoked. In March, Guirao motioned that the organization be taken over by the Spanish government.    

The International Confederation of Authors' Societies (CISAC) temporarily expelled SGAE in May, following an investigation that cited serious concerns about how it collects and distributes royalties and its governing body’s subsequent failure to answer to those concerns with changes to its practices.

Pilar Jurado, who at the end of February was elected president of SGAE -- for years a revolving door position -- told Billboard last week that she and her team had been working to make 17 changes recommended by CISAC after its initial investigation. Before the failed vote, Jurado expressed confidence she could lead a “new era” for SGAE that would have begun with the vote of approval for the new statutes.

“I believe in lawfulness and doing things as they should be done,” commented Jurado, a Spanish soprano who has held positions and served on boards of cultural institutions throughout her career. “If CISAC sees that we have complied and that the organization is functioning effectively, they could lift the sanctions.”

That seems unlikely after Monday’s vote, in which 62.78% voting members endorsed the changes put forth by Jurado, short of the 66.6% of votes that were needed. Only 1,356 members of the 18,000 with voting rights participated, according to Spanish press reports -- numbers that demonstrate of the toll of the continuing crisis at the Madrid organization, which celebrated its 120th anniversary earlier this month.

The most serious of the issues raised by CISAC concern the society’s royalty distribution and, particularly, SGAE's role in a long-running royalty scam known as La Rueda ("the wheel") where members that are also broadcasters played songs they owned rights to on late-night Spanish television -- sometimes as low-level background music. (In Spain, some music publishers are owned by TV stations, which pay a set annual fee to SGAE to license music from its catalog. Unlike most other societies, SGAE collects a fixed amount from television stations, so playing more music would not change the overall amount of money broadcasters owe but would increase SGAE payouts to the broadcasters' publishing entities.)

CISAC's investigation into SGAE's conduct, published last April, had found "serious concerns" about conflicts of interest, "distorted and inequitable distribution of royalties" and a "lack of regard for the common good.”

"It's a very regrettable step, but the board of directors felt there was no choice," CISAC director general Gadi Oron told Billboard when the entity’s board voted to oust the Spanish society for a provisional one-year period.

A Supreme Court judge halted the Spanish Ministry of Culture’s intervention of SGAE last week on technical grounds; the Minister could now weigh reviving the case in front of another judge or revoking SGAE’s license.

An announcement on the SGAE website posted after Moday’s vote states the modification in the statutes was “essential to adapt the society to current laws, fulfill one the principal requitements of the Ministry of Culture and take an important step for to be readmitted as a member of CISAC.”

The statement added that the distribution of royalties for 2018 had been approved by members. Last year, 314.4 million euros were collected, according to SGAE.