Going live on the right side of the law
The Covid-19 pandemic has caused the cancellation or postponement of the majority of concerts and live events, leading to an unprecedented crisis in the events and live music industry. In fact, although the streaming of music through dedicated platforms and apps has boosted the music industry in recent years, a great deal of an artist’s revenue still comes from live performances.
However, even during the months of lockdown, music did not stop, as the absence of live music events has stimulated artists and fans to reinvent the live concert experience by creating and supporting new platforms to discover, listen and share music while social distancing. The music industry has thus recently embraced new ways to encourage fan engagement by introducing the public to what could take the stage as the new normal for live events for a while: remote concerts and tours.
In this scenario, new legal challenges arise. Some of the most relevant issues concern the copyright protection of the works involved in streamed concerts, as well as the arrangement of the relevant compensations.
Firstly, the artist’s right to perform their copyrighted work in front of a public (whether in person or remotely) stands as one of the exclusive rights that a copyright owner is entitled to, along with the right to reproduce and distribute their work. But what if the concert is played by different artists, each from a different location and playing their own part and then synchronised to the moving images of each player or to different images? This is what happened, for instance, in the #Italiasuona flashmob recently organised by Filarmonica della Scala. The outcome of the performance will likely be considered a new audio-visual derivative work including a new live execution.
Thus, those who wish to share these kind of works with the public must check whether their new or existing agreements cover all the new normal rights (eg right of performance, right to communicate to the public through online means new executions of the same work, synchronisation rights over the concerned work). Not to mention the authorisation to use the image rights of each performer and share the content by each performer to maximise the audience.
The most important concern is making sure the livestreaming platforms involved only use authorised content
Further, such rights might run the risk of being infringed: the most important concern will be to make sure the livestreaming platforms involved only use authorised content in each online event. In this regard, some online music platforms and social networks have already been provided with algorithms which are able to automatically detect copyrighted music. Further, making the same performances of an artist available on demand, and thus on a continuous basis, would also involve the need to establish licences from right-holders, as well as licences related to synchronisation, in case videos are involved during the streamed events.
The compensation of artists and staff operating in the live industry is another crucial point of change for the future, which also needs to be taken into account in agreements. In this regard, although a different experience from the usual live concert atmosphere could justify a lower price for each single ticket sold, the online-based approach of such events will undoubtedly profit from a much wider and more diverse reach.
In this new era, the compensation of artists and staff has to be scrutinised under a different – and more digital – tax approach.
In principle, the OECD Model Tax Convention emphasises the need to assess the existence of a close connection between the income and the performance. Such a connection will generally be found to exist where it cannot be reasonably considered that the income would have been derived in the absence of a performance of these activities. The right to receive a remuneration for musicians and artists is strictly connected to their exhibitions.
These issues are high on the agenda of international music managers and artists, as well as tax professionals and authorities.
In this new era, the compensation of artists and staff has to be scrutinised under a different, more digital, tax approach
A recent case involved the analysis of tax treatment of income received by two musicians (tax residents of Germany and Switzerland) engaged by an Italian foundation to perform at two concerts outside of Italy.
According to the agreement concluded between the foundation and the international artists, though remuneration was due in connection with the participation in the concerts outside of Italy, all preparatory activities, such as concert rehearsals, had to be carried in Italy and no specific remuneration – nor a reimbursement of the expenses – was due.
The Italian tax authorities’ view can be summarised as follows: the income paid to the musicians is treated as income from artistic performance carried out entirely outside the Italian territory, regardless of the days present in Italy for concert rehearsals. Therefore, such income is not subject to Italian taxation in the hands of the non-resident musicians. As a matter of fact, concert rehearsals carried out in Italy should not be treated as separate activities from the concert (they are an essential part of it). The conclusion appears consistent with the clarifications provided in the OECD commentary on article 17 of the aforementioned model.
What about the legal and tax issues of compensation deriving from the streaming platforms? These issues might need to be explored more in detail, in light of the new key role of the digital tools for the live industry, especially in the case of concerts involving renowned international artists. Possible means to be considered to assess compensation include earnings calculators, which are unofficial tools already used by influencers, providing earning potential guidelines by taking into account the number of interactions, followers and reach of the shared content.
Antonio Longo and Elena Varese are lawyers in the Milan office of DLA Piper, a global legal firm. This article originally appeared on the DLA Piper website.
This article forms part of IQ’s Covid-19 resource centre – a knowledge hub of essential guidance and updating resources for uncertain times.
SGAE postpones upcoming reform vote
Spanish collection society SGAE (Sociedad General de Autores y Editores) has postponed its general assembly – due to take place in October – to January 2020, when a number of current members will have departed from the society.
Members of the controversial SGAE, which was expelled from international authors’ rights association Cisac in May, were due to vote on statute reforms at the assembly on 15 October.
The society has failed to obtain a member majority on changes to statutes on three separate occasions. The reforms are necessary in order for the society to comply with European Union intellectual property law and with demands made by Cisac and Spanish Minister of Culture, José Guirao.
The decision to postpone the vote comes after members including Julio Iglesias, José Luis Perales, Iván Ferreiro, Ramón Arcusa (Dúo Dinámico) and Jorge Ilegal asked to terminate their membership to the society. By moving the vote to January, the departing members will no longer be able to participate.
“SGAE is postponing its assembly to 2020 to guarantee legal certainty following the request from the Ministry of Culture,” reads a post on the society’s Facebook page.
“SGAE is postponing its assembly to 2020 to guarantee legal certainty following the request from the Ministry of Culture”
The Ministry of Culture had demanded that SGAE “respect” members that wanted to leave, after various members, including Southern Music Española SL, Peermusic and Lugar Music, complained that the society had attempted to limit their right to vote after they announced their intention to leave.
However, according to the society, the Ministry of Culture had also demanded it implement article 27 of it current statutes, “under which asking to leave SGAE constitutes the loss of the right to vote in the general assembly.”
According to the SGAE, the Ministry of Culture has created a “legal paradox”. By moving the assembly to 2020, reads the society’s statement, any doubts relating to legal rights, are dissipated.
SGAE is no stranger to controversy. The society recently received a €2.95 million fine for anti-competitive practices by the Spanish competition regulator and has been linked to a scandal known as ‘the wheel’ (la rueda).
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Govt reveals plans to scrap Sydney lock-out laws
The New South Wales (NSW) government has announced it plans on scrapping Sydney’s controversial lock-out laws at the end of the year, except in the King’s Cross precinct.
A parliamentary committee has been conducting an inquiry into the effects of the lock-out laws, which were introduced in 2014 in response to alcohol-fuelled violence, and the wider night time economy, which will be presented on 30 September.
“I’m more than happy to relax or even repeal the laws depending on the committee’s findings,” NSW premier Galdys Berejiklian announced on Sunday (8 September).
“Community safety will always be a major focus for my government, but we need a balanced approach. Sydney is Australia’s only global city and we need our night-life to reflect that,” said Berejiklian.
The lock-out laws mandate bars, pubs, clubs and music venues set last entry to 1.30 a.m. and stop serving drinks at 3 a.m. The restrictions apply to establishments in the city’s central business district (CBD) and King’s Cross precinct.
“Sydney is Australia’s only global city and we need our night-life to reflect that”
Many, including Live Nation Australasia boss Roger Field and Sydney lord mayor Clover Moore, have stated that the laws have exerted a strong negative impact on the city’s nightlife. The planned changes to the laws have been welcomed by live music professionals.
John Wardle, general manager of music policy advocate Live Music Office, called the potential axing “a milestone in the rebuilding of the cultural and economic nighttime future of the city of Sydney.”
Keep Sydney Open, a grassroots movement opposing the laws, celebrated the decision – “a huge moment” –, while demanding more details about the decision to exclude King’s Cross and on what the changes would entail for venues.
However, the move has been criticised by the president of the Australian Medical Association, along with other medical professionals, as a step backwards for public health.
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CMA suspends legal action as Viagogo addresses concerns
The UK’s Competition and Markets Authority (CMA) has suspended preparations for court action against Viagogo, in a move that comes as a surprise to anti-tout groups.
In July, the watchdog notified Viagogo that it would be moving forward with contempt of court action following several warnings that the site had failed to comply with a legally binding court order. The order instructed Viagogo adhere to CMA demands in relation to the way information was presented to ticket buyers.
Viagogo has now addressed the outstanding concerns, providing more accurate information on the number of tickets available, disclosing details of seat locations and sellers’ business addresses and indicating whether tickets guarantee entry.
The CMA’s decision comes as “a bolt from the blue”, for anti-tout group FanFair Alliance, the group’s campaign manager Adam Webb tells IQ.
The Viagogo website is “far more transparent than it was in December 2016”, when the CMA investigation began, states Webb. “However, even leaving aside its historic abuses of UK audiences, which are serious, extensive and well documented, we still hold serious concerns that Viagogo remains non-compliant with a range of consumer protection laws.
“We continue to share these concerns with the CMA on a regular basis,” continues Webb, “and there’s the rub. Having gone to the cost and effort of serving Viagogo with a court order, it certainly feels disappointing that our regulator is apparently relinquishing its considerable efforts and not finishing the job.”
“It feels disappointing that our regulator is relinquishing its considerable efforts and not finishing the job”
Sam Shemtob, director of continent-wide anti-tout group the Face-value European Alliance for Ticketing (FEAT), also notes the “damage” done to fans since the CMA’s review opened, which “underlines the importance of the government giving the CMA stronger powers in this area.”
Shemtob references the recent European-wide legislation outlawing the use of automated ticket-buying software, or ticket bots, which enables authorities such as the CMA “to jointly address breaches of consumer law.”
“Once in place, these powers will hold while the UK remains in Europe and during any transition period and will form the incumbent law post Brexit,” explains Shemtob. “We hope that will further strengthen the CMA’s hand.”
Although CMA chief executive Andrea Coscelli states the Viagogo website visited by UK customers today “is worlds apart” from what it used to be, he says the time taken to get to this stage “is clearly not acceptable”.
“Stronger consumer powers are required in the secondary ticketing sector and we will continue to work with the government on the most effective way to achieve this.” states Coscelli.
“A key part will be the government’s existing plans to give the CMA stronger consumer protection powers, so that it can rule on whether a company has broken the law and impose fines on those infringing companies.”
“What is clearly not acceptable is the time it’s taken to get to this stage”
Despite decision to halt action, the CMA boss does not rule out future action against the secondary site, declaring that “we will keep up the pressure on Viagogo to ensure that it continues to comply with UK consumer protection law.”
A further independent review of Viagogo’s compliance with the court order will be completed in October 2019. The CMA states it “will not hesitate to take further action – through the courts if necessary”, if the results of this review, or any other new information, suggest the company is not meeting its obligations.
A spokesperson for the secondary site comments: “Viagogo is pleased it has been able to work with the CMA to find solutions to the final few areas of discussion.
“We are grateful to the CMA for their engagement over the past few months and the ability of both parties to work collaboratively to reach this point. Looking ahead we will continue to work with them to ensure we are delivering the best possible service for our customers and challenging the wider ticketing market to raise its standards in the interests of all in the live event world.”
In response to pressure from industry organisations, anti-tout groups and politicians, Google barred Viagogo from advertising through its platform in July, in what one anti-touting group deemed a ‘landmark moment’. The suspension means the site can no longer pay to appear at the top of Google’s global search rankings.
This article is being updated with industry reactions as IQ receives them.
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Lessons from Viagogo v. the CMA
July 2019 saw two new developments in the ongoing dispute between the UK’s Competition and Markets Authority (CMA) and controversial secondary ticketing site Viagogo.
On 4 July, CMA announced that it intended to move forward with legal proceedings for contempt of court against Viagogo, alleging that it is failing to fully comply with a court order issued in November 2018.
Then, on 19 July, the High Court in England handed down its judgment in relation to separate proceedings under which Viagogo sought declarations from the court that it was complying with two separate provisions contained in November’s court order. The court ruled that Viagogo was complying with one of the provisions in the court order (in relation to its obligation to display information about ticket face values, as the court order specifically allowed Viagogo to display “through a suitable label or icon”) – but was not compliant with its obligation to disclose information relating to deadlines for refunds of claims in a way that did not force users to take action to access the information.
July’s action is the latest in a long line of developments stretching back to June 2016, when the CMA reopened the Office of Fair Trading (the CMA’s predecessor’s) investigation into the secondary ticketing market. Although the investigation focused on the practices of four secondary ticketing platforms (Get Me In!, Seatwave, StubHub and Viagogo) and whether they were compliant with consumer protection laws, Viagogo has faced the most CMA scrutiny. The CMA was able to secure a court order in November 2018, which forced Viagogo to “overhaul the way it does business” by mid-January 2019. At the end of January, CMA announced that it had serious concerns about Viagogo’s compliance with the court order (something it repeated in early March 2019).
As the 19 July judgment was fact-specific, it is difficult to determine whether this will have implications beyond the specific circumstances of the CMA’s dispute with Viagogo. However, the judgment did make clear that:
- Using icons and hover-over text does require a consumer to do something in order to access the information (and therefore would not comply with any obligation to provide information to a consumer without “consumer action”)
- When using an icon, it is important to ensure that its meaning is clear
- An email sent to a consumer after the contract has been completed cannot be used to provide pre-contractual information
“The CMA will no doubt continue to monitor compliance with consumer protection laws in the secondary ticketing market… but other industries are also in its crosshairs”
Despite being a partial victory for Viagogo, the judgment does not appear to put an end to the dispute, as the CMA made clear that it would still be moving forward with legal proceedings for contempt of court against Viagogo in relation to Viagogo’s compliance with other parts of the order.
Even if the CMA’s legal action is not successful, it has successfully secured real change from the main operators in the secondary ticketing market place (albeit the change is just to bring those operators in line with the current law) and brought the issue to the attention of the wider public. This wider attention – as well pressure put on it by stakeholders in the live events industry – is felt by many to be have been behind Google’s decision (on 17 July 2019) to remove Viagogo from its paid-for search results, which could result in a significant downturn in business for Viagogo.
The CMA will no doubt continue to monitor, and actively enforce, compliance with consumer protection laws in the secondary ticketing market, but other industries are also in its crosshairs. The CMA has recently announced two new actions; the first, in April 2019, is an investigation into Nintendo Switch, PlayStation and Xbox’s auto-renewal terms, and the second, in June 2019, is a programme of work aimed at tackling fake and misleading online reviews (initially focusing on Facebook and eBay).
While these investigations may not impact everyone directly, it is important for those working in consumer-facing industries to remember that, as competition authorities’ investigative eyes periodically shifts to new areas, the prudent approach is to ensure that you monitor your compliance with consumer laws and best practice.
Mike Jones is an associate at law firm Harbottle & Lewis.
Council to pay £15k as secondary sites evade fines
The North Yorkshire County Council (NYCC) has to foot £15,000 in legal costs, after losing a long running court battle against secondary ticketing sites.
The council had appealed a decision to annul fines it brought against secondary ticketing sites, sparking criticism of its conduct by the judge, who ruled that “a costs order would be appropriate to mark the strength of my concern”.
The judge concluded that the council had imposed excessive financial penalties on individuals and businesses breaching resale regulations by “adopting an unfair process and misrepresenting that process to the tribunal in its written submissions.”
Last year, the NYCC authorised a national cyber crime team to take action against secondary sites that failed to provide sufficient details about the face value of tickets, seat numbers and restrictions on usage.
“A costs order would be appropriate to mark the strength of my concern”
The NYCC requested a maximum fine of £5,000 for each tout that breached legislation. Although admitting fault, the resellers concerned challenged the decision, claiming the financial penalties were too high.
In April, a judge granted the secondary ticketers’ appeals, stating that the council had failed to act in a timely manner, serving notices of intent more than six months after gathering evidence.
A court order was also drawn up to oblige the NYCC to remove the £5,000 blanket fine on touts from its secondary ticketing enforcement policy. The council is yet to make the necessary changes.
A spokesperson for National Trading Standards said it was “disappointed” by the latest ruling.
TicketOne urges regulator to shutter secondary sites
CTS Eventim-owned TicketOne has threatened to refer Italian communications regulator AGCOM to the judiciary for its “failure” to tackle secondary ticketing sites.
Following a previous call-to-action in March, Italy’s largest primary ticketing provider has sent a formal letter to AGCOM (Autorità per le Garanzie nelle Comunicazioni) indicating its dissatisfaction with the regulator’s efforts to implement national laws against for-profit secondary ticketing.
“TicketOne notes that, despite the time elapsed since the presentation of the (March) complaint and AGCOM’s reported start of activities, illegal activities continue to be safely carried out in plain sight.
“The online platforms of three secondary ticketing sites – all referred to in the complaint – as well as individuals selling tickets, continue to operate in total disregard of the regulations.”
According to TicketOne chief executive Stefano Lionetti, so far “nothing has been done” by AGCOM to tackle secondary ticketing.
“We reserve the right to report the failure to implement these measures to the legal authorities”
“We reserve the right to report the failure to implement these measures to the legal authorities, avoiding further delay to the full exercising of AGCOM’s powers,” says the TicketOne chief.
The Italian government placed a ban on most for-profit secondary ticketing in March 2018, granting AGCOM the authority to punish offenders and shutter websites repeatedly infringing the law.
TicketOne’s renewed and reinforced appeal to AGCOM comes as the 1 July deadline for the introduction of named ticketing approaches. The move, which TicketOne deems “ineffective” and “highly disruptive”, sees the personalisation of all tickets for over 5,000-capacity shows.
“The punishing of sites and individuals dedicated to the illegal resale of tickets is the most important – and according to many operators, the only – needed to stop this harmful conduct for both the industry and the public,” reads the letter.
In March 2018, AGCM, Italy’s competition regulator, imposed a €1 million fine on TicketOne for allegedly facilitating illicit ticket resale. A court later rejected the claims, ordering the regulator to refund the fine and all legal costs.
New Zealand’s Commerce Commission prepares to sue Viagogo
New Zealand’s Commerce Commission has announced plans this week to begin civil proceedings against Viagogo in the country’s High Court. This will be the latest in a string of court cases for the Geneva-based ticket resale site, which is already facing action in Switzerland, Germany, France, Spain, the UK and Australia.
The Commission will seek a declaration from Viagogo that their actions have breached the Fair Trading Act and an injunction restraining it from doing so again. It will also seek corrective advertising orders for future sales.
The court case is a response to what the Commission believe to be a number of false and misleading representations made on the part of Viagogo. The falsehoods will be brought up in court, and echo many of the complaints made about Viagogo in its various other legal proceedings around the world.
“This has been a longstanding investigation, and in large measure that is because of the complexity of pursuing a case against an online trader based offshore.”
Namely, these include misleading the public into thinking it was an “official” ticket retailer; misleadingly claiming tickets were about to sell out; falsely “guaranteeing” valid tickets and deceptively advertising the wrong prices for tickets. Since the beginning of 2017, New Zealand’s Commerce Commission has received more than 400 complaints about the secondary ticketers, making it the most complained-about trader of the period.
For over two years, Viagogo has faced disputes, including a number of legal actions from the Spanish government in February 2017, a preliminary injunction from FIFA in January 2018 and a €1 million fine from Italy in April 2018. The latest in this line of controversy is an ongoing case with the UK’s Trading Standards authority.
Speaking on the forthcoming launch of proceedings, Stuart Wallace, head of consumer at the Commerce Commission says: “We acknowledge that this has been a longstanding investigation, and in large measure that is because of the complexity of pursuing a case against an online trader based offshore.
“We are pleased to have progressed matters to the point where we are now able to launch proceedings.”
Fellowes, Drape, Measham on the case for drug testing
The Loop director Fiona Measham, Broadwick Live’s Jon Drape and Secret Garden Party promoter Freddie Fellowes joined AFEM CEO Mark Lawrence at IMS Ibiza last month to discuss drug testing at festivals and clubs.
‘The Case for Drug Testing at Events, presented by The Loop’, on day two of IMS, saw the two festival bosses – both of whom have led the way in implementing the Loop’s multi-agency safety testing (MAST) at their events – talk with Measham and Lawrence about their experience of front-of-house pill testing, and its effectiveness in reducing the harm associated with drug use, with Fellowes describing the growth of MAST as “the first meaningful change in harm-reduction policy that I’ve seen in our industry” in 20 years.
Calling for change, Measham, also professor of criminology at Durham University, said in order to avoid future drug fatalities at festivals, “we need to is actually encourage a more healthy relationship with drugs”.
Watch the panel in full, exclusively on IQ, above.
New York adopts new ticket resale legislation
New York’s state assembly has passed a bill to protect consumers from what they have labelled ‘exploitative ticket reselling practices’. In an effort to promote transparent and fair ticket buying experiences for the public, several measures will be adopted, including a UK-style disclosure requirement for all secondary ticketing websites.
The legislation will address the ongoing practice of selling ‘speculative tickets‘ to consumers. Resellers often anticipate and sell tickets they have yet to actually acquire, on the basis that they will have access to them in the future. The practice has been condemned for confusing consumers and forcing primary ticket sellers to compete against secondary outlets. New changes will force resellers to disclose whether or not they have the ticket at the time of purchase and refund customers if they cannot deliver.
“These deceptive practices have become common practice and deny people access to live concerts and events. Everyone deserves a fair shot at fairly priced tickets,” says assembly speaker Carl Heastie.
The new bill follows in the footsteps of the UK market by also requiring websites to disclose their status as secondary ticketers. Since January 2018, stringent restrictions have been put in place for UK-based ticket resellers using Google AdWords.
“Everyone deserves a fair shot at fairly priced tickets.”
New York-based resellers will need to post a ‘clear and conspicuous’ notice stating they are a reseller and pointing out any fees and surcharges associated with tickets. There will also be a ban on misleading URLs which might trick consumers into thinking they are dealing with a primary seller.
There will also be a crack down on bot technology. New York has been at the forefront of the fight against touts using bots and since June 2016 the practice has been a criminal offence. Under new laws, any ticket seller that uses, controls or even owns ticket purchasing software could lose their licence and be banned from reselling for up to three years. The decision follows an investigation into ticket market malpractice by New York’s attorney general in 2016.
The adoption of these strict policies hopes to put an end to consumer exploitation. Around the world, governments are beginning to legislate against touts and resellers in an attempt to curb the power they have over fans and the wider industry. Governments like those in New South Wales and Hong Kong have both recently cracked down on secondary ticketing, with mixed reactions from resellers themselves. In response to tougher restrictions in the UK, ‘responsible’ touts formed the Fair Ticketing Alliance.