COLLECTIVE MANAGEMENT OF MUSICAL COPYRIGHT IN A SELF-REGULATED REGIME

• Author: TAY Eu-Yen1 Master of Studies in Legal Research (with Distinction) (Oxford University), LLB (Bristol University); Non-practising Barrister (England and Wales, Inner Temple); Advocate and Solicitor (Singapore); Advisory Board Member, Asia Law Network; Founding Member, Singapore Nightlife Business Association; Co-Founder, Executive Chairman and General Counsel, Coterie Dining Concepts Pte Ltd.
• Date: 01 December 2020
• Citation: (2020) 32 SAcLJ 1063
• Published date: 01 December 2020

Singapore's Copyright Review and the Hope for Transparency

Musical copyright has been the subject of collective rights management in Singapore for decades, conducted by what are known as collective management organisations (“CMOs”). Whereas CMOs serve the public interest by facilitating protection of copyright, they unfortunately exist in a legal void, let to self-regulate. This has resulted in opaque systems and damage to the legitimacy of copyright protection. This article provides timely insight into the flaws of the selfregulated regime of CMOs and proposes regulatory measures in response to these issues, just as the reforms following Singapore's latest copyright review are eagerly anticipated.

I. Introduction

A. Scope of article

1 This article discusses the activities conducted by collective management organisations (“CMOs”) managing music and music-

related copyright, focusing mainly on royalty management and rights representation (collectively “Rights Management”). It goes on to discuss the hope for greater transparency over Rights Management; hope that has been ignited by the Singapore Copyright Review Report2 (“Review Report”). While proposed reforms are underway, this article explores the regulatory direction that Singapore law could thrive toward, with particular focus on the comparative legal position in the UK, which mirrors the stance taken by the European Union (“EU”) as a whole. Since the topic of Rights Management has sparked a good amount of interest in various jurisdictions, where appropriate throughout this article, reference may also be made to other foreign case law or commentary that illuminates certain important observations.

B. Rationale behind CMOs

2 The idea behind CMOs is a functional one: to establish a centralised way for music users to pay royalties for the use of music. Under the Copyright Act,3 copyright subsists in lyrical works and musical works4 as the exclusive right to reproduce, publish, publicly perform, communicate and adapt the work.5 There also subsists copyright in sound recordings6 and cinematographic films,7 which include soundtracks associated with such visual images.8 Each copyright may be owned by different right holders, meaning that a single piece of music (not to mention an entire playlist) can consist of a number of right holders: primarily, the lyricist, the music composer, the performer and the record company.

3 The primary objective of CMOs is to eliminate the impracticality of having each right holder enforce copyright separately, by offering centralised Rights Management services. In brief, CMOs contract with right holders to collect royalties on their behalf from music users. As middlemen, they play a crucial role in ensuring that copyright protection is efficiently and effectively upheld. The UK Intellectual Property Office (“UK-IPO”) describes the main purpose of CMOs as one to facilitate remuneration to right holders for use of their copyright and, conversely, to enable music users to use a range of music without having to negotiate each copyright licence individually.9 In similar vein, the Review Report recognises that CMOs are “a vital link”10 between right holders seeking access to commercial markets and music users who need simplified access to music works.

4 There are three CMOs in Singapore dealing with music and music-related copyright: Composers and Authors Society of Singapore Ltd11 (“COMPASS”), Music Rights (Singapore) Public Limited12 (“MRSS”) and Recording Industry Music Services Singapore13 (“RIMS”), established by the Recording Industry Association of Singapore. Broadly, COMPASS is responsible for the collection of royalties relating to lyricists' and music composers' rights,14 MRSS for rights in recorded music (both in sound recordings and in music videos),15 and RIMS for rights relating to cinematographic film reproduced in karaoke music videos.16 These CMOs obtain the authority to represent right holders by way of direct agreement with the right holders or by signing reciprocal agreements with foreign CMOs to mutually represent one another's interests.

C. Need for regulation

5 It is important to know that CMOs are incorporated as private companies run by music industry stakeholders, such as music labels, who

have commercial reasons to protect copyright. CMOs are not government bodies.17 In Singapore, CMOs are not licensed by the Government to conduct the business of Rights Management and are self-regulated, or in other words, not regulated by any legal framework. That there is no definition of “CMO” found under Singapore's copyright law is testimony to how far outside legal regulation CMOs are accustomed to operate. This state of affairs where CMOs conduct their business without legal accountability has now come under scrutiny, because although CMOs pursue the object of copyright protection and are seen to exist for the public interest, their privatised nature makes it essential for them to be held to commercial standards of transparency.

6 The case for regulatory intervention is strongest when seen in light of CMOs' monopolistic stronghold. Explained in economic terms, CMOs are generally accepted as natural monopolies18 and strong governance over CMOs is thus necessary to curb potential abuse. Daniel Gervais identifies the sentiment well by observing that when “CMOs are de factor or de jure monopolies, it is not unreasonable to suggest that some governmental supervision is warranted”.19 Similarly, the Max Planck Institute for Intellectual Property and Competition Law (“Max Planck Institute”) states that CMOs “are in need of state control in light of their monopoly vis-à-vis rightholders and users and the public interests involved”.20

7 A seminal case that spurred the exemption of CMOs from anti-trust laws is the US Supreme Court decision in Broadcast Music, Inc v Columbia Broadcasting Systems, Inc,21 where the question arose as to whether blanket licence fees constituted price fixing by CMOs that was per se unlawful under antitrust laws. The US Supreme Court found

that they were not, holding that such a blanket licence was “an obvious necessity” for effective copyright protection.22 This judgment has been regarded as having set the scene for CMOs to fall into the category of “natural monopoly”, a concept that describes the situation where due to the overwhelming benefits of administrative efficiency, “society is better served by a single seller”.23 With natural monopolies, regulation, instead of competition, is the expected response. Indeed, because competition runs counter to the very purpose of a natural monopoly, keen regulation is the only way to curb monopolistic abuse in such a case.

8 In Singapore, the Copyright Tribunal24 (“the Tribunal”) has affirmed that CMOs are in a position of natural monopoly and that it is therefore important for CMOs to be duly and effectively regulated. On this topic, the Tribunal held:25

[R]egulatory control is necessary in the public interest to curb any abuse by collecting societies of collective licensing bodies, which are often in a monopolistic position as a result of their right to license the use of virtually all the works and subject-matter other than words needed in a particular sector (eg popular music in the entertainment world). [emphasis added]

9 Apart from being a natural monopoly, CMOs might also be considered trustees of right holders' money. Commenting in 2012, before the EU Directive on the Collective Management of Copyright and Related Rights and Multi-Territorial Licensing of Rights in Musical Works for Online Use in the Internal Market26 (“EU Directive”) was finally laid down, the Max Planck Institute proposed that in setting out its framework, the European Commission ought to “highlight the role of the collecting society as a trustee of the rights it administers”27 and that it was important to express “the trusteeship in the very definition of

collecting societies”.28 The role of CMOs as collectors of royalties from users on behalf of right holders does attract the consideration that CMOs take on the personality of trustees. This is a crucial point that potentially drags in complex issues of trust law and fiduciary duties going beyond the scope of this article, but suffice it to say here that just the possibility CMOs could be regarded as trustees certainly provides another reason for subjecting CMOs to regulation.

10 Thus far, against the tide of reasons that call for regulation of CMOs, however, CMOs in Singapore have been left to self-regulate. The current landscape has left music users vulnerable to CMOs abusing their position of power as the self-instituted, self-appointed and selfregulated guardian of musical copyright.29 As this article reveals, CMOs have not effectively self-governed. Given their privatised, monopolistic and perhaps even fiduciary personality, coupled with their inability to maintain transparency, it is necessary that CMOs are made subject to government regulation as soon as possible.

D. The copyright review

11 Singapore's latest copyright review, captured in the Review Report, acknowledges the indispensable role of CMOs in facilitating copyright protection but cautions that this precise role makes it “imperative that they operate with high standards of transparency and governance”.30 With that caution, the Review Report brought the regulation of CMOs to the forefront of Singapore's latest and most extensive copyright reform. The Ministry of Law (“MinLaw”) and Intellectual Property of Singapore (“IPOS”) issued a joint response in the Review Report recommending legal scrutiny over the conduct of CMOs, noting that “[although] there has been successful self-regulation by CMOs in overseas jurisdictions, this does not appear to be the case in Singapore”31 and that “[g]iven the existing problems in the current unregulated or self-regulated

environment, we are of the view that there is a need for external oversight...