NMPA_International_Survey_12th_Edition

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NMPA INTERNATIONAL SURVEY TWELTH EDITION INTERNATIONAL YEAR IN REVIEW 2002 At issue are the Directive’s restrictions—or lack thereof—on private copying. The European consumers’ lobby BEUC has maintained that the Directive gives the music industry the ability to control or prevent all copying for personal use, and the European Association of Consumer Electronics Manufacturers has gone so far as to ask EU members to install “opt-out” clauses in order to provide consumers more rights in making private copies of digital material. A draft EU Enforcement Directive presented on January 30, 2003 by the European Commission met with mixed reaction. IFPI, the Independent Music Companies Association (IMPALA), and the European Grouping of Societies of Authors and Composers released a joint statement saying the “draft directive fails to introduce harmonization at the levels necessary to ensure that pirates can no longer play on national differences to avoid detection and prosecution,” adding that the proposal would induce a confusing array of different legal measures across the continent. Under the proposal,counterfeiters across the EU could face fines equal to double the amount they should have paid the copyright holders,a measure that currently is law only in the U.K.,Ireland,Greece and Austria. In addition, the proposal includes terms for infringed parties to sue for loss of profits, a measure that does not currently exist in the Netherlands, Spain, or the U.K. The draft does not include tougher sanctions against individuals downloading tracks for noncommercial purposes. In October 2002, the European Commission passed an agreement offering broadcasters a "one-stop" license for simulcasting on the Internet.The system, first proposed by IFPI in late 2000, is the first such Internet licensing plan approved by the EC and is expected to open up competition within Europe. Under the deal, broadcasters can obtain a single performing rights license from one collecting agency to cover Internet broadcasts in those countries covered by the agreement, superseding a system whereby broadcasters were required to secure a license from each national copyright administration and collecting society. In addition to most of the major societies across the 18-nation European Economic Area (EEA), the agreement also includes societies from Central and Eastern Europe, Asia, South America, Australia, and New Zealand. European music merchants have thrown their weight behind record labels’ efforts to reduce the level of value-added tax (VAT, or sales tax) on recorded music to match that of other “cultural goods,” such as books, across the European Union (EU). The level of VAT applied to records in EU member states currently varies from country to country. At its highest, in Denmark and Sweden, it runs at 25%, while in Luxembourg, it stands at 15%. The level of VAT applied to books,meanwhile, ranges from 0% in the U.K. to 25% in Sweden and Denmark. The existing EU VAT directive allows individual states to lower VAT on products specified in Annex H of the document. IFPI and IMPALA have lobbied for recorded music to be added to that annex. While France and Italy have expressed support for the measure, the U.K. government does not seem inclined to change the current system. French finance minister Francis Mer is expected to place the VAT issue on the agenda of a meeting of the European Union’s finance ministers to be held June 3 in Brussels; the European Commission should then make its proposal on VAT at the end of June, 2003. Universal Music International (UMI) filed a complaint in July 2002 with the EC alleging that BIEM, the international trade body representing collecting societies from 38 countries, has an unfair monopoly when it comes to the licensing of mechanical reproduction rights in Europe. In September, BIEM issued a reply urging the EC to reject the complaint, claiming that UMI’s efforts were merely an attempt to increase its own profitability. BIEM’s stance that the system is both fair and efficient is backed by the International Confederation of Music Publishers/Confederation 20
Internationale des Editeurs de Musique (ICMP/CIEM), whose members include all 29 national music publishers’ associations in Europe.The case now awaits a ruling by the EC, which could open further investigations into the allegations. Under EU competition rules, organizations found guilty of breaches of antitrust legislation can be fined up to 10% of their gross annual revenue. The most recent deal covering European mechanical royalty rates was negotiated in 1998 between IFPI and BIEM. Under the terms of that deal, the two bodies agreed to a royalty rate paid by labels to publishers of 9.009% of published price to dealer (PPD) everywhere in Europe except the U.K. (where the rate is 8.5%), while also allowing individual societies across a number of territories to negotiate the rate for such releases as TVadvertised product. In its final evaluation of the Czech Republic before that country's entry into the EU in 2004, the European Commission said the nation should step up its efforts against the import, production, and sale of pirated musical and computer recordings. The EC reported that pirated music recordings account for 48% of the Czech market. It added,however,that the country has made great strides in aligning itself with EU law, citing the Czech Republic’s accession in October 2001 to the World Intellectual Property Organization Performance and Phonograms Treaty. On the independent front, European independent labels’trade association IMPALA has launched IMPALA Interactive, an initiative aimed at providing the region's independents with a one-stop shop for licensing their repertoire to online music service operators. Managing IMPALA Interactive is London-based Musicindie, the newmedia and commercial arm of U.K. labels’ group the Association of Independent Music, which maintains that such a program is needed to help independents benefit from the 861 million euros ($867 million) that Jupiter Research predicts the music industry will earn from legitimate digital sales in Western Europe by 2007. The Belgian Entertainment Retail Association (BERA) has become the newest member of the European branch of GERA, joining retail groups in the U.K., France, Germany, and the Netherlands. Established in early 2002, BERA operates as part of the Belgian Federation of Distributors (Fedis). In February 2003, Tiscali became the first European-based Internet Service Provider (ISP) to offer free, legitimate access to digital music. The company teamed with digital music firm OD2 and Microsoft Windows Media 9 Series to offer its service for six months to all registered customers, through May 12, 2003. Tiscali maintains a catalog of over 150,000 tracks. THE UNITED STATES In 2002, the U.S. market experienced its third consecutive year of decline, with a 10.2% loss in unit sales to 905.5 million, per IFPI, and a corresponding loss in value of 8.1% to $12.3 billion. The effect of the Internet on major album releases was cited as a major factor by IFPI for the decline. In September 2002 came word that attorneys general in 41 states and three U.S. commonwealths had reached a $143 million settlement of price-fixing charges against the five major U.S. distributors and retailers Trans World Entertainment,Tower Records, and Musicland Stores. The suit, filed in August 2000 in federal court, alleged that from 1995 to 2000, the companies had conspired to inflate the price of CDs, costing consumers millions of dollars. The suit further claimed that the majors and retailers illegally used minimum advertised pricing (MAP) policies to raise CD prices. Under the settlement, which admitted no wrongdoing on the part of the majors,$67.38 million in cash is to be distributed to the settling states to compensate consumers who overpaid for CDs during the 1995-2000 period,as well as to pay settlement administration costs and attorneys’ fees. In addition, 5.5 million CDs, valued at $75.7 million, will be distributed to public entities and nonprofit organizations in each state to benefit consumers and promote music programs, with the companies paying artist royalties on the CDs. On Capitol Hill, two limited bills were introduced in Congress during 2002. In the Senate, Ernest Hollings (D-SC) introduced a controversial bill that would have called for new technical anti-copying standards and devices, while in the House, Howard Berman, (D-CA) introduced a measure that would have permitted copyright industries to employ several so-called “self-help” technical measures to slow down and defeat computer networks that allow unauthorized file sharing. Neither bill made its way out of committee. Also failing to get out of committee was the Music Online Competition Act (MOCA), re-introduced by Rep. Rick Boucher (D- VA).The bill would have amended sections of the Digital Millennium Copyright Act (DMCA) to require record companies and other con- NMPA INTERNATIONAL SURVEY TWELTH EDITION INTERNATIONAL YEAR IN REVIEW 2002 21
Page 1: 12th e d i t i o n NATIONAL MUSIC P
Page 4 and 5: Preface The National Music Publishe
Page 6 and 7: Executive Summary This is the NMPA
Page 8 and 9: Following a solid 14% growth in rev
Page 10 and 11: Table 6 Master Survey Data 2001 INT
Page 12 and 13: Table 7 Flat Exchange Rates 2001 IN
Page 14 and 15: Chart 4 22 Other Countries Ireland
Page 16 and 17: REPRODUCTION-BASED INCOME In 2001,
Page 18 and 19: NMPA INTERNATIONAL SURVEY TWELTH ED
Page 20 and 21: International Year in Review:2002 C
Page 26 and 27: LATIN AMERICA NMPA INTERNATIONAL SU
Page 42 and 43: APPENDIX A NMPA INTERNATIONAL SURVE
Page 44 and 45: APPENDIX B International Involvemen
Page 46 and 47: APPENDIX C U.K., JAPAN, GERMANY, FR
Page 48 and 49: APPENDIX C NMPA INTERNATIONAL SURVE
Page 50 and 51: APPENDIX C The Main Organizations o
Page 52 and 53: APPENDIX C The Main Organizations o
Page 58 and 59: APPENDIX C ITALY UPDATE NMPA INTERN
Page 60 and 61: APPENDIX C SPAIN UPDATE NMPA INTERN
Page 62 and 63: APPENDIX D GLOSSARY OF TERMS INTERN
Page 64 and 65: NMPA: A Brief History As technology
Page 66: n m pa NATIONAL MUSIC PUBLISHERS’

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