New rules for online collective licensing arrangements are due to be unveiled by the European Commission on Wednesday (Oct. 5). The Commission will demand a series of changes in the way collecting soc

New rules for online collective licensing arrangements are due to be unveiled by the European Commission on Wednesday (Oct. 5). The Commission will demand a series of changes in the way collecting societies operate within the European Union.

The main purpose of the plan is to create a system that ensures musical rights can be cleared efficiently on an EU-wide basis so that the European online market can catch up with that in the U.S.

The Commission -- EU's executive body -- was forced to rewrite key elements of its initial plans unveiled in July. The controversial paper was met with fierce
criticism
from a wide range of industry groups, and even from within the Commission administration, according to internal sources.

The plan were drafted by the services of EU internal market commissioner Charlier McCreevy. According to sources familiar with the plans, it foresees a single licensing contract, easy accessibility to repertoire and few overheads; and will call for a new rights management structure for the use of music online.

The Commission's view is that the complicated bureaucratic system involving national societies in all 25 EU countries is impeding the growth of Web-based music services such as Apple's iTunes Music Store, Napster and Yahoo! Music.

"With the music sector shifting towards the Internet, a new generation of copyright licensing models is needed that does not use a system of territorial licensing," said a Commission spokesperson. "Our plan sets forth a credible system through direct EU-wide licensing of repertoires."

Billboard.biz understands that the plan is a hybrid of two options originally suggested separately in the discussion paper published in July.

It assumes that the market -- driven by the music publishing community and the big collecting societies who hold an attractive repertory -- will move toward direct EU-wide licensing for online use of musical works.

But it also calls for parallel reform in the traditional reciprocal licensing arrangements for those works that stay in the reciprocal system. As a minimum it proposes to eliminate territorial restrictions and customer allocation provisions in these reciprocal representation agreements.

The plan would apply only to services provided on the Internet, such as simulcasting, webcasting, streaming, downloading or an online 'on-demand' service. It would also encompass wireless music services provided by mobile operators.

In order to ensure a smooth coexistence of these measures, the plan includes rules on governance, transparency, dispute settlement and accountability of collective rights managers, whether they manage rights according to a direct EU licensing or a reciprocal system.

The Commission says the governance rules outlining the obligations collective rights managers owe to both right-holders and users will ensure all relevant stakeholders can make an informed decision on the licensing model best suited to their needs -- in turn stimulating EU-wide licensing and the growth of legitimate online music services.