04 May 2004

The European Commission has some strange ideas on "competition." Now it has gotten around to threatening musicians because they have the temerity to stand up to the music industry.

The Santiago agreement was designed as a one-stop shop for music copyright licensing, sparing users — companies selling downloads — the need for a collecting agreement in each EU state. The commission said there should be competition between the societies, which would benefit music download providers and users. Collecting societies would compete with each other to offer pan-European licences and companies could shop around for where to obtain the right to sell downloads across the 25-nation bloc.

Record companies have long been angry about the power of the collecting societies in Europe. They insist that they are more than willing to sell downloads on a pan-European basis but that the societies insist on continuing on a country by country basis. Two years ago, Universal Music complained to the commission that the societies acted as a de facto cartel and that their unfair terms were to the detriment of record companies and consumers, who end up paying more for music.

Julia Finch, "EC Warns on Music Royalty Pact," The Guardian (04 May 2004) (fake paragraphing removed for clarity).

Only someone who had no conception of language rights could accept the music industry's argument. But then, the real problem here is that the music industries want a single place that they can go to coopt the artists. Labor organizations have diseconomies of scale as well as economies of scale; the subtext of the Commission's position is that the "union-like" activities of the collecting societies—most of which charge a lower rate than that demanded in the US under the mechanical license system—will absorb the administrative costs that the music industries do. Then there's the problem with boycotts and refusals to deal, which are far less regulated under European competition law than in the US. The irony that an entrenched oligopoly is objecting to someone else's fragmented monopoly (the collecting societies do not get along!) seems to have escaped notice.