Legal victory for direct licensing in Spain

In what the winning party is calling a landmark victory for advocates of direct licensing, a Spanish court has ruled against SGAE in favour of a venue which had negotiated to pay performance royalties directly to artists.

The ruling – by Judge Pedro Macías, of the commercial court of Badajoz in Extremadura – centres on two shows by veteran Spanish rock group Asfalto and comedian Pablo Carbonell at Badajoz’s 325-cap. Sala Mercantil in 2010.

When SGAE (Sociedad General de Autores y Editores), the Spanish collection society and performance rights organisation (PRO), realised the venue had not paid its fees, it announced its intention to collect – only to be told in an email that “the artists had reached a private agreement between them” and the Mercantil, according to Juantxu Manzan of the venue’s lawyer, OpenLaw.

OpenLaw believes Macías’s ruling – in which he affirmed artists’ “exclusive rights to the exploitation of the work, without any limitations other than those established by law” – has the potential to set a precedent for other composers and performers wishing to follow Asfalto and and Carbonell’s lead.

“The owners of these rights are the authors, so they are the ones who should be able decide what to do with them,” comments OpenLaw’s Andrés Marín. “If a composer and performer negotiate directly with a third party and agree to give away or even collect their copyrights directly, the SGAE has no right to try to collect, or recover, the rights the artist has not claimed.

“This ruling, therefore, opens a door that, until now, was closed to artists represented by SGAE: to be able to decide whether to collect their own royalties.”

“The owners of these rights are the authors, so they are the ones who should be able decide what to do with them”

The growth of direct licensing – in which an increasing number of artists are choosing to bypass their local PROs in favour of collecting performance royalties directly – was one of the live music industry’s biggest stories of 2016. Most affected are festival promoters – the vast majority of which have one-stop, blanket licences – with many facing the prospect of paying multiple licensees: the PRO and the artist directly.

While reports in some Spanish papers, such as El País, appear to suggest SGAE’s dispute was with the artists themselves, Asfalto frontman Julio Castejón tells IQ that isn’t the case. “It is not Asfalto who had a lawsuit against SGAE,” he explains. The information that has circulated is wrong.”

While explaining that he has his “own ideas of how copyright [should be] collected at concerts”, he adds that “in no case did we want to act as copyright collectors to replace SGAE. That information has been manipulated.”

A legal spokeswoman for SGAE clarifies that the PRO’s lawsuit was aimed at the Mercantil, not the performers – and says Macías displayed a “clear misunderstanding” of copyright law by failing to distinguish between the rights of performers, composers and publishers.

“The performers said to the court that they’d received their royalties, and the court understood that to mean the composers had, too,” she tells IQ. “It was a clear misunderstanding of Spanish copyright law, which distinguishes between the rights of composers and artists.” (In both cases, it should be noted, the composers and performers were one and the same.)

“It was a clear misunderstanding of Spanish copyright law, which distinguishes between the rights of composers and artists”

She insists Spanish creators can, if they wish, opt out of SGAE’s collective licensing – but that in the case of the two disputed shows, neither performer had done so. “If any of our members want to withdraw certain rights, there’s a procedure for it,” she explains. “But what we can’t do is have both systems: If they have a blanket licence, they can’t then administer their rights directly as well – it would be chaos for us.”

Matters are complicated by a pending supreme court case over whether SGAE must abolish its 10% box-office tariff on major shows – dubbed “abusive” by promoters’ association APM – with the PRO provisionally adopting a lower 8.5% while it awaits the final decision.

Adam Elfin, of leading direct-licensing agency PACE Rights Management, says it’s important those wishing to collect their performance royalties directly go through the proper channels. “PACE’s position has always been that if you want to directly license, you first need to reassign the rights from your PRO,” he comments. “If rights-owners are directly licensing without first engaging with their PRO, I can see that causing unnecessary confusion for all stakeholders.”

While Castejón says Macías’s ruling is the first time a court has agreed that “the author can collect their own royalties if they want to”, SGAE doubts whether the case – which concerned the non-payment of less than €1,000 – was a “landmark decision”, and says the story has been “exaggerated” by the Spanish press.

Victorious law firm OpenLaw, however, says the decision shows traditional collection societies are ultimately subordinate to the wishes of copyright holders – and demonstrates a “clear victory over the unjustified position of dominance that SGAE exerts over many of Spain’s music venues and artists”.

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