Is the Monopoly era of Collecting Societies coming to an end?

by eleonoracurreri

Apparently this is the new rising scenario in Italy that might be spread all over Europe.

Everything started when a smart start-up had been launched in 2011, Soundreef. Since the beginning it was clear to its founder, Davide D’Atri, that Soundreef would have competed on the market place with other European Collecting Societies, a very ambitious goal since CMOs have always had a monopolistic role in the rights management. The way in which Soundreef grew in the last couple of years is extremely fascinating and it is evident that this phenomenon will have a strong impact on the traditional role and functions of Collecting Societies throughout Europe.

Basically, the kind of activities undertaken by the Italian start-up can be divided into two categories: IN STORE, that licenses music used in the stores reaching over 45 million customers who can choose their playlist from a catalogue of over 170.000 songs (allowing store owners to save up to 50% on what they would have paid to collecting societies for the same service) and Soundreef LIVE, a system that offers to all the registered artists the possibility to receive royalties from their live performances.

Another factor that helps in understanding the significant success of Soundreef is its efficiency. For instance, regarding the Live system, Soundreef is incredibly fast in giving back royalties to the artists. Not only efficiency but also transparency is a secret of its success. Every artist, publisher or editor has an online account, continuously updated, that provides information concerning how much he or she has earned and will be paid, and at what time and in which place the music has been played.

The founders of Soundreef decided to compete with the collecting societies since the European Commission affirmed, in 2008, that the creation of a cross-border market for royalty collection is preferable. For this reason, Davide and his friends incorporated Soundreef in London where it mainly operates while serving 13 other countries, including UK, USA, Italy, France, Spain and Sweden.

As the numbers grows in favour of Soundreef, the traditional Collecting Societies should be aware of this new reality. SIAE, the Italian CMO, pointed out that the start-up does not protect users against a potentially abusive use of their works no longer managed by SIAE and that the mandate of Soundreef is not legitimate.

There is no question that a lawsuit between the two rivals in the royalty management field would be deeply interesting, but it is far more interesting that Soundreef has been sued by a private author, Laura Piccinelli, filing a precautionary injunction arguing that Soundreef infringed the exclusivity granted to SIAE. According to the Italian Judge, not only were the prerequisites for the injunction not met, but also the activity undertaken by Soundreef is absolutely legitimate as it operates accordingly to the principles of the Directive 2014/26/EU, playing a crucial role in the creation of a single digital market, underlying the obsolescence of Art. 180 of the Italian Copyright Act[1].

The claimant filed an appeal since she insisted that Soundreef infringed the intermediary activity SIAE is entitled to. The Judge of Appeal declared, in accordance with the Judge of First Instance[2], that the SIAE exclusiveness shall be applied only to music works composed in Italy or by foreigners who are domiciled in Italy (Art. 185 ICA). Soundreef manages music and rights that belong to foreign composers and as a consequence there is no infringement of the prerogatives of SIAE.

Even though the ruling of the Court of Milan simply interpreted Art. 180 in the light of the Directive 2012/26/EU and it does not represent the end of SIAE monopoly, certainly it is significant. This decision tries to expand the exclusive prerogatives ever since attributed to SIAE. Furthermore is the clear that the Soundreef phenomenon is increasing very quickly and that in the future it will represent a serious threat to the traditional Collecting Societies as it might inspire the rise of other startups in this field.

Eleonora Currieri
Assistant Editor, QMJIP

Further information on Soundreef is available via their website:  http://www.soundreef.com/en/

[1] Legge 22 Aprile 1941 n.633

[2] http://www.tafter.it/wp-content/uploads/2014/11/Ordinanza-20443671-Rigetto-Reclamo-Piccinelli.pdf First Instance Decision