7.1 Intro

In practice, there are several obstacles to the application of the substantive legal framework analysed in the previous chapters. First, there is a risk of contractual provisions that deviate from the legal norm. The qualification of certain rules as mandatory law may prevent such contractual deviation (Section 7.2). Even so, effective recourse to the protective regimes throughout the course of the contract is not guaranteed. Reference may be made to the possibility for corporate partners to have recourse to trade secret protection (Section 7.3) and the apparent limited invocation of the protective legal framework (Section 7.4). Collective enforcement may contribute to enhanced transparency throughout the music value chain and counter musicians’ fear of commercial retaliation. Further bolstering extra-judicial enforcement is likely to fulfil an important complementary role (Section 7.5).

7.2 Risk of Contractual Deviations and Qualification as Mandatory Law

The mandatory nature of the protective regimes under review in this book appears to be a precondition for the effective application of the legal framework in practice. The qualification as mandatory law has important consequences. A mandatory legal norm excludes contrary contractual terms. In the absence of such qualification, contractual deviations are to be expected, especially where unequal bargaining positions apply. Moreover, subject to several nuances under national law, the temporal scope of a mandatory legal norm – or, as is the case in France and Germany, an act of public policy – may be extended to include ongoing contracts.Footnote ¹ Bar certain exceptional circumstances arising from a collective bargaining context, it should not be possible to contractually override the protection offered by the relevant legal framework.Footnote ² Derogating contractual provisions should be sanctioned with (relative) nullity.Footnote ³ This consideration rings true as to restrictions to the grant of rights as well as to obligations arising in the course of contract performance.

Many of the provisions reviewed in previous chapters have been expressly qualified as mandatory law.Footnote ⁴ Regarding restrictions on the scope of rights granted, the potential sanction of invalidity of contrary contractual provisionsFootnote ⁵ and the exclusion of advance waivers of the right to invoke such invalidityFootnote ⁶ point towards a qualification of a certain rule as mandatory law. Many obligations applicable to the performance phase of the contract under review have also been imbued with mandatory status.Footnote ⁷

As to exploitation, the qualification of direct duties to exploit as mandatory law would constitute a disproportionate encroachment upon parties’ freedom to act (or not act). Conversely, the mandatory nature of the indirect duty to exploit stemming from use-it-or-lose-it clauses is warranted, given the double objective of enhancing musician agency and countering the warehousing of rights.Footnote ⁸

Obligations pertaining to fair remuneration should arguably also not be overridable by contract, despite the lack of express qualification of Article 18 DSM Directive as such.Footnote ⁹ Each of the chosen EU jurisdictions has excluded contractual overridability.Footnote ¹⁰ Further, the express qualification of Articles 20 and 19 DSM Directive as mandatory law means that the rights arising from both the harmonised contract adjustment mechanisms and the active reporting obligations are not waivable in advance.Footnote ¹¹

The framework surrounding contract termination largely lacks the elevated status of mandatory law, save the prohibition against perpetual obligations, which is widely accepted as being of a public order nature.Footnote ¹²

The qualification of many aspects of the protective legal framework as mandatory mitigates the risk of contractual deviations. This approach deserves to be emulated.Footnote ¹³

7.3 Obstacles to Transparency

The second set of obstacles that may hinder the application of the protective legal framework relates to the objective of securing transparency throughout the music value chain. Reporting obligations will not by themselves lead to transparency, in view of the persisting problems surrounding music metadata and rights fragmentation,Footnote ¹⁴ as well as the difficulties of enforcing reporting obligations in practice. Indeed, securing the cooperation of all parties may be problematic. Moreover, assessing whether comprehensive information is provided in a timely manner may prove impossible in practice without a full audit of the corporate partner’s books. The qualification of certain data as a trade secret may negatively affect the free flow of data throughout the music value chain.

The Trade Secret Directive, as implemented,Footnote ¹⁵ provides a significant additional layer of protection for secret information that derives commercial value from its secrecy and is subject to reasonable steps on the part of the lawful controller of this information to ensure its secrecy.Footnote ¹⁶ Such information, designated as a ‘trade secret’, is protected against misappropriation through unlawful acquisition, use and/or disclosure, subject to a number of limitations.Footnote ¹⁷ The objective is to aid businesses in recouping their investments. Corporate partners may seek to rely on trade secret protection in a bid to prevent the disclosure of information relevant to the exploitation of music and the resulting remuneration therefor.

The potential conflict with the objective of securing transparency throughout the value chain is readily apparent. Not only may problems arise as to data access, but also regarding its subsequent use and further disclosure. These issues should be expressly treated in the contract.Footnote ¹⁸ However, differences in relative bargaining power also affect the content of such specifications, leading to a significant variance in degree of transparency.Footnote ¹⁹

The question whether audience data is susceptible to trade secret protection is therefore pertinent. For this to occur, three conditions need to be fulfilled. First, the information may not be ‘generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question’.Footnote ²⁰ As for the data collected by the DSP, this first condition will often be fulfilled. While, in terms of exploitation, the total number of streams of a certain song on Spotify is publicly displayed, this is not true for the division between subscription-based and ad-based streams, between playlist and on-demand streams, between different geographical territories, between thirty-second plays and full listens, and so forth. On the revenue side, precise information regarding the calculation of remuneration is deal-specific and often secret. Corporate partners may have a legitimate interest in keeping such audience data confidential and a legitimate expectation that this confidentiality will be preserved.Footnote ²¹ The commercial value arising from this informationFootnote ²² should require no further argument. Indeed, in the music industry, really knowing your audience may very well be the biggest potential asset in terms of both strategy and competitive edge.Footnote ²³ Third, the lawful controller of the information must take reasonable steps to maintain secrecy, such as NDAs.Footnote ²⁴ Such steps are part and parcel of corporate deals in the streaming age.

The next question is who may be considered the holder(s) of these trade secrets. The Trade Secret Directive links the identity of the holder(s) to the lawful controller(s) of the data at issue. The latter is in turn linked with the question of who developed the trade secret, among other things through ‘independent discovery or creation’ or ‘observation, study, disassembly or testing’ of a lawfully acquired product or object.Footnote ²⁵ In case of joint control, a situation of co-holdership may be envisaged. It is difficult to translate these principles to the streaming age. Musicians, primary corporate partners, DSPs and even users may stake a claim, since they all play a role in the creation, collection and processing of audience data. As the law remains largely silent on the issue of how control or co-control of trade secrets is actually allocated in practice, contractual solutions are likely.Footnote ²⁶ Thus, the interests of both musicians and users risk falling by the wayside, with musicians unlikely to be included in contractual specifications between corporate partners, and users likely to have waived any rights through standard end-user agreements. Contractual arrangements are likely to result in primary corporate partners and DSPs qualifying as co-holders of trade secrets in audience data.

Trade secrets are protected against unlawful acquisition, use and/or disclosure. All three acts must take place for musicians to be able to enforce their rights: not only must they obtain access to the data at issue; the reliance upon such data in the context of either judicial or extra-judicial proceedings undeniably requires both its use and disclosure. The disclosure of relevant information to representative organisations that support musicians in the enforcement of their rights, such as trade unions or CMOs, may also prove to be vital.

Careful consideration of the interplay between trade secrets and reporting obligations is therefore merited.Footnote ²⁷ The DSM Directive itself offers little assistance. While Recital 76 posits that artists ‘should always be able to use the shared information for the purpose of exercising their rights’ under the DSM Directive, the legal status of this interjection is dubious.Footnote ²⁸ Not only is it confined to the Directive’s recitals; its formulation is imprecise, since it presupposes the sharing of information by the corporate partner(s) – which is exactly where trade secrets protection comes into play.

The only other express specification in the DSM Directive relates to the (secondary) relationship between OCSSPs and rightsholders in the context of licensing activities undertaken in accordance with Article 17 DSM Directive. In particular, Recital 68 exempts OCSSPs from providing rightsholders with ‘detailed and individualised information for each work or other subject matter identified’, without prejudice to possible contrary contractual arrangements. Thus, OCSSPs’ reporting obligations appear to be curtailed by legitimate recourse to trade secret protection.Footnote ²⁹ By analogy, corporate partners’ reporting obligations stemming from national implementations of Article 19 DSM Directive will also apply without prejudice to trade secret protection.Footnote ³⁰ Reference may be made to the EU Parliament proposal regarding the applicability of active reporting obligations to secondary relationships. After confirming the extension of such obligations to secondary contractual partners such as DSPs, it was specified that information from DSPs provided to artists should be unchanged, ‘except in the case of commercially sensitive information’ possibly subject to an NDA.Footnote ³¹ This leads to clear red flags. Detailed and individualised information regarding the exploitation of each piece of music – and the ensuing remuneration for it – is exactly what is required to ensure the requisite transparency.

The Trade Secret Directive itself also contains a number of specifications meant to contribute to attaining a fair balance between the interests of all stakeholders. Particular reference may be made to the fact that the acquisition of a trade secret is considered lawful if it is acquired in the context of collective labour agreements,Footnote ³², in conformity with honest trade practices,Footnote ³³ or as required or allowed by law.Footnote ³⁴ The lawfulness of subsequent use or disclosure under this provision depends on whether this is required or allowed by law.Footnote ³⁵ The exception allowing employees to disclose information to their representatives that is necessary for the legitimate exercise of their representative functionsFootnote ³⁶ may provide a source of inspiration for musicians seeking the assistance of trade unions, CMOs or other representative organisations that may support them. Finally, an exception applies if the acquisition, use and/or disclosure follows from the protection of a legitimate interest recognised by law.Footnote ³⁷ Given the express, repeated legislative acknowledgement of the tenuous contractual bargaining position of artists, this latter exception may provide fruitful ground to argue in favour of a restrictive application of trade secret protection in the context of active reporting obligations.

In sum, recourse to trade secret protection by corporate partners risks negating regulatory efforts to enhance transparency in the music value chain. A balanced application of trade secrets protection that curbs excessive claims on the part of both primary and secondary corporate partners is merited. It may be beneficial to accord co-holdership of audience data to musicians. However, given the prevalence of contractual solutions, the materialisation of such co-controllership in practice appears unlikely.Footnote ³⁸ Alternatively, inspiration may be sourced from the abovementioned balancing measures that already exist within the EU trade secret regime. While employed musicians may already benefit from specifications stemming from the collective negotiation context,Footnote ³⁹ an express hard law provision allowing – or even mandating – the lawful acquisition, use and disclosure of relevant (audience) data by artists for the purpose of enforcing their rights against their primary contractual partners would be welcome.Footnote ⁴⁰ Even so, there is a significant leap between arguing that the acquisition and subsequent use or disclosure of certain secret audience data is lawful under the trade secret regime, and successfully bringing corporate partners to fully share such data in a timely way. Musicians who acquire data that may also have an impact on other musicians are likely to be requested to sign an NDA in order to avoid setting a public precedent.Footnote ⁴¹ The complex nature of many secondary relationships with sub-licensees across the globe further exacerbates this issue.Footnote ⁴² Finally, musicians faced with a corporate partner that is unwilling to provide full audience data during or after the contract are unlikely to take any steps to remedy this – either because their contract does not contain an express right to audit, or because they hesitate to invoke such a right due to cost considerations or because of fear of retaliation.Footnote ⁴³ Regardless, such a hard law measure may contribute to granting musicians and their representatives a right – to a certain extent – to obtain access to such data, as well as use and/or disclose it under certain, well-defined circumstances. Cross-border stakeholder dialogue on appropriate rules concerning confidentiality leading to soft law, such as Commission guidelines, is the preferred solution. Inspiration may be drawn from other sectors at the crossroads between transparency and trade secret protection – also outside the CCIs, such as relating to environmental information.Footnote ⁴⁴ In the context of dispute resolution, a form of ‘confidentiality clubs’ or a filtering system may be envisaged.Footnote ⁴⁵ Such a mechanism may be used to limit the dissemination of data on a need-to-know basis, while safeguarding the right for musicians to lean on the support of representative organisations. Finally, while the prohibition on abuse of law may in theory provide a fallback solution in certain situations, this is unlikely to provide added value in practice, given the existing checks and balances within the trade secret regime. Indeed, a judge that has held none of these internal mechanisms to apply is unlikely to nevertheless label certain behaviour as abusive.

7.4 Lack of Invocation in Practice

Effective challenges to the fairness of the contracts under review on the basis of the relevant legal framework remain, to date, rather scarce. This finding not only applies to the scope of rights granted,Footnote ⁴⁶ but also to the exploitation of music and the ensuing remuneration. As to indirect duties to exploit, their traditionally rare applicationFootnote ⁴⁷ has been confirmed in an EU study concerning the application of the Term Extension Directive, where no examples enforcing the indirect duty to exploit pertaining to performers were reported.Footnote ⁴⁸ There is also a conspicuous lack of cases on the measures regarding remuneration. The abovementioned EU study on the implementation of the Term Extension Directive identifies no examples of any recourse to either the clean slate provision or the right to annual supplementary remuneration.Footnote ⁴⁹ Empirical research conducted in the Netherlands reports only two cases in total on fair remuneration (regarding photographyFootnote ⁵⁰ and journalism,Footnote ⁵¹ respectively), with no cases on the additional right to remuneration for emerging methods of exploitation.Footnote ⁵² Contract adjustment mechanisms have also led to a very limited number of cases in the chosen jurisdictions.Footnote ⁵³ More generally, empirical research in Germany and the Netherlands indicates that these measures have not improved the income of artists to a significant extent.Footnote ⁵⁴

Several factors contribute to this. A first aspect is the apparent limited interest in and/or knowledge of the ins and outs of the protective framework among musicians, combined with the limited resources that most musicians are able to devote to the legal aspects of their career.Footnote ⁵⁵ Many musicians are insufficiently aware of their rights and the various options that are available.Footnote ⁵⁶ This contributes to the persistence of information asymmetries between musicians and their corporate partners. Musicians who are unaware of their rights are unlikely to invoke them. Remedying this not only requires a transparent legal framework that provides the requisite legal certainty, but also sustained attention to the empowerment of musicians through knowledge creation and dissemination.Footnote ⁵⁷

Sector-specific knowledge on the part of musicians – and, if applicable, their managers – such as regarding the wide array of available ALS, their rights under the protective legal framework, and their options to effectively enforce those rights in practice, both individually and collectively and in either a judicial or extra-judicial context, may enhance their bargaining power and lead to a fairer music marketplace.Footnote ⁵⁸ The steep increase in the variety of choices, coupled with musicians’ prospective enhanced knowledge of those choices, provides an additional opportunity; the strong competition in the music distribution sector may lead to balanced deals.

Significant efforts are ongoing. The importance of the commercial and legal literacy of musicians is widely accepted. Online portals for artists,Footnote ⁵⁹ dedicated music blogs,Footnote ⁶⁰ academic institutionsFootnote ⁶¹ and musician and/or manager interest groupsFootnote ⁶² conduct timely research on sector-related topics and offer relevant information on their website. CMOs and trade unions for composers and/or performers offer similar services to their members.Footnote ⁶³ Helpful and to-the-point books oriented towards musicians provide the essence of the legal and business framework surrounding the music industry as well as practical tips that guide musicians on the road towards (commercial) success.Footnote ⁶⁴ Online simulation tools guide musicians through the complexities of the fine print of their contracts towards transparent information on the amount of remuneration that is due to them.Footnote ⁶⁵

More can be done. Scoping surveys on commercial and legal knowledge and perceived musician needs provide a clearer picture of what action may be taken to move the music industry further in the right direction. Training programmes that cover commercial and legal aspects of their career should be further developed, possibly under the auspices of musician interest groups and/or CMOs, and should obtain enhanced and sustained institutional and financial support.Footnote ⁶⁶ Within advanced music schools, an argument may be made in favour of making courses on commercial and legal skills mandatory. Through knowledge creation and transfer, musicians will be empowered to make free, personal choices regarding the exploitation of their music. Not only musicians would benefit from knowledge enhancement concerning the functioning of the music marketplace. In line with society’s inherent pull towards the underdog, users are likely to be more drawn towards the interests of musicians than those of their corporate partners.Footnote ⁶⁷

Taking inspiration from fair trade labels that promote sustainable and equitable trade relationships, a type of certification for ‘fair music’ may be envisaged. A (neutral) body could draw attention to corporate partners that adhere to certain standards in terms of fair scope, exploitation and remuneration – the latter including a high-performing transparency mechanism.Footnote ⁶⁸ Such ‘naming and faming’Footnote ⁶⁹ may have a nudging effect on users. It is therefore likely to result in a competitive advantage for certified ‘fair’ partners.Footnote ⁷⁰ A general emphasis on ‘fair trade music’ may also motivate musicians.Footnote ⁷¹ An incentive could be provided by making the grant of certain government subsidies dependent on the adherence to certain benchmarks as to contractual fairness, including the participation in relevant ADR mechanisms.Footnote ⁷² Much work has already been done to set certain minimum standards for this particular purpose. Reference may be made to industry guidelines such as the Industry Agreement on Music Streaming Metadata in the United Kingdom,Footnote ⁷³ the Belgian ‘Juist is Juist’ campaignFootnote ⁷⁴ and the Dutch ‘Fair Practice Code’.Footnote ⁷⁵ Other projects offer promise, such as the UK music industry working group on fair pay for creatorsFootnote ⁷⁶ and the international ‘Fair Trade Music’ (FTM) project.Footnote ⁷⁷

A second obstacle to the invocation of the legal framework is that fear of the chilling effect of overt disputes with contractual partners on their musical career risks deterring musicians faced with unfair contracts.Footnote ⁷⁸ Conducting a public feud with a corporate partner almost inevitably implies a temporary halt to a musician’s career. Moreover, legal complaints voiced by musicians risk compromising their commercial future.Footnote ⁷⁹ As a result, musicians tend to submit to disadvantageous contractual terms, even if their chances of success in a judicial setting would in fact be substantial. This, in turn, may incentivise corporate partners to overreach and press for contractual conditions that would not survive judicial scrutiny. Moreover, given the oversupply of musicians, corporate partners are more or less unhindered by the risk of retaliation. Therefore, they are more inclined to strategic litigation and/or settlement behaviour.

Moreover, the costs associated with the enforcement of the legal framework are significant.Footnote ⁸⁰ Given that the burden of proof regarding instances of unfairness lies with the musician(s) and in view of the inherent risk of legal proceedings, such costs may have a prohibitive effect.Footnote ⁸¹ This risk is exacerbated by the use of abstract legal terms that would benefit from further concretisation, as well as the lack of specialised knowledge of the music industry on the part of judges. Since relevant case law is largely lacking, the lingering legal uncertainty may dissuade other musicians from challenging the fairness of their contracts. Moreover, when a musician eventually amasses the resources and the stamina to directly challenge a contract in court, often a confidential settlement is reached in order to avoid the lengthy, costly judicial process, as well as, ultimately, precedent.Footnote ⁸² Further, the scarce disputes that play out publicly lead to legal sagas that span several years, due to the propensity of appeal proceedings. This long duration of the judicial process constitutes another reason for musicians to avoid a courtroom.Footnote ⁸³ The consolidation and ensuing increased concentration in the music industry is likely to increase appeals by corporate partners against negative judgments at first instance, since bigger companies have more revenues and thus a bigger budget for litigation. By way of example, the case of Jost Vacano, the director of photography of Das Boot, was filed in 2008 and was ultimately settled in July 2021, after three judgments of the German Supreme Court.Footnote ⁸⁴

Corporate partners are likely to think twice before entering into a contractual relationship with musicians that are known for having objected to unfavourable contract terms in the past. This attitude is understandable and, from a commercial perspective, perfectly legitimate. The risk of commercial retaliation is therefore very real.

The path towards a solution to the obstacles discussed above is likely to be illuminated by enhanced recourse to collective initiatives. In addition to knowledge creation and awareness-raising, representative groups such as CMOs, trade unions, guilds and other representative entities may play an important role in providing a collective voice for the heterogeneous groups of relevant stakeholders, with a significant margin for collective bargaining and self-regulation.Footnote ⁸⁵ Both sustained public support and high-performing oversight mechanisms are merited.Footnote ⁸⁶

The interests of composers are defended by cross-border organisations such as ECSA,Footnote ⁸⁷ as well as several national initiatives.Footnote ⁸⁸ The heterogeneous group of performers also has several international entities that seek to further their collective interests, such as AEPO-ARTIS,Footnote ⁸⁹ FAC,Footnote ⁹⁰ FIMFootnote ⁹¹ and IAO.Footnote ⁹² Grouping composers and performers are, among others, the Artist Rights AllianceFootnote ⁹³ and the UK Council of Music Makers.Footnote ⁹⁴ Other notable musician-led initiatives include the ‘Broken Record’ and ‘Keep Music Alive’ campaigns established in 2020, which advocate for substantive changes to the distribution of revenues in the music industry – albeit primarily in the United Kingdom.Footnote ⁹⁵

The potential role of CMOs in furthering the collective interests of musicians is clear. The main CMOs in the chosen jurisdictions were already mentioned above.Footnote ⁹⁶ In addition, it is noted that national CMOs have joined forces in several umbrella organisations, such as GESACFootnote ⁹⁷ and CISAC.Footnote ⁹⁸ In the political sphere, musicians can count on groups such as the CCFG.Footnote ⁹⁹ For managers, reference may be made to IMMFFootnote ¹⁰⁰ and EMMA.Footnote ¹⁰¹

The interests of corporate partners are also defended collectively, through a number of representative organisations. As to record companies, in addition to national associations such as the BRMA,Footnote ¹⁰² at the international level, reference may be made to IFPI, IMPALAFootnote ¹⁰³ and WIN.Footnote ¹⁰⁴ Music publishers are represented by, among others, AIMP,Footnote ¹⁰⁵ ICMPFootnote ¹⁰⁶ and IMPF.Footnote ¹⁰⁷

Finally, in the United Kingdom in particular, a collective voice for various representatives of the music industry stakeholder groups is provided through UK Music.Footnote ¹⁰⁸

The voice of users has traditionally had limited traction in the copyright debate. However, it is noted that BEUC,Footnote ¹⁰⁹ the umbrella group for European consumer organisations, has registered increased interest in copyright-related matters.Footnote ¹¹⁰

The groundwork for collective empowerment in the music industry has been laid. While many opportunities are already being mined, progress is possible. Collective interest groups may not only provide support for individuals, but also substantively affect copyright policy and engage in self-regulation, including through recourse to collective bargaining.

First, collective entities have a key, long-term role to play in knowledge dissemination and the reduction of information asymmetries. Reference may be made to the provision of information on average revenues, a clear overview of the ins and outs of the relevant legal framework, and/or a comparative list of typical contractual arrangements that allows interested parties to compare cross-border opportunities, accompanied by the drafting and sustained promotion of balanced model agreements that include the baselines of contractual protection.Footnote ¹¹¹ CMOs may use a share of the revenues they collect for such sociocultural and educational purposes.Footnote ¹¹² While an argument may be made in favour of a certain degree of uniformity, care must be taken to accord sufficient attention to the specificity of independent repertoire and niche genres, such as jazz and classical music – and thus contribute to enhancing the diversity of cultural expression.Footnote ¹¹³ Individual stakeholders have a responsibility to make use of the possibilities offered by such a collective platform to make their voices heard.

Another positive effect that collective organisations may have on the individual empowerment of musicians is for them to make use of the possibilities granted by the legal framework to represent individuals collectively.Footnote ¹¹⁴ It should be remembered that the fact-specific nature of many disputes is likely to thwart the objective of maintaining anonymity and thus indirectly quelling fears of retaliation.Footnote ¹¹⁵ Regardless, providing a collective backbone to the individual may contribute to the effective application of the protective legal framework.

A second strand of opportunities results from the collective representation of stakeholders at the policy level, in the debate surrounding the balance between the interests of rightsholders and users. At present, different initiatives risk remaining heterogeneous and siloed. Ideally, in the long term, all of these relatively scattered groups should be brought together in a positive industry-wide discussion on the future of the music industry, to create synergies – and, ultimately, meaningful change.

Two sources of inspiration may be referred to in this regard. First, AEPO-ARTIS, FIM and IAO joined forces in the ‘Fair Internet for Performers’ Campaign in the context of the legislative process of the DSM Directive, in a bid to establish a collectively managed right to equitable remuneration for performers for online exploitation.Footnote ¹¹⁶ While this joint initiative was not fully successful, it resulted in the inclusion of the right to appropriate and proportionate remuneration in Article 18 DSM Directive.Footnote ¹¹⁷ A second example is provided by the various open letters sent to the EU regulatory level regarding the effect of the COVID-19 pandemic, which were signed by a large variety of collective organisations across all CCIs.Footnote ¹¹⁸ In May 2021, the Creative Europe 2021–2027 programme was launched, bringing €2.44 billion to support the CCIs over the following years.Footnote ¹¹⁹ The unified voice of the heterogeneous group of CCI stakeholders has undoubtedly played a role in this context.

For positive change to occur, stakeholders’ individual and collective voice must be harnessed. Sustained individual empowerment primarily depends on awareness-raising and knowledge-building, and mainly applies to the artistic side of the music industry equation. Further, providing a collective voice to all stakeholders in the music industry, listening to it and acting upon the results may ensure that all stakeholders can acquire that coveted seat at the table. Nurturing industry-wide dialogue may contribute to a fairer distribution of revenues in the long run. A clear opportunity for meaningful intra-industry collaboration arises. As extensively discussed in Chapter 5, collective bargaining can play an important role in this regard.Footnote ¹²⁰

Collective enforcement may also contribute to enhanced transparency in the music value chain in practice, as well as to the effective application of the protective legal framework.Footnote ¹²¹ Indeed, the prevalence of collaborations in the music sector raises the question whether the collective dimension of copyright affects – or rather, should affect – the provision of information under the applicable reporting obligations. The impact of the collective dimension of copyright on the scope of reporting obligations in the chosen jurisdictions was already briefly discussed, as was the desirability of fleshing out substantive standards for reporting obligations on a sector-specific level, potentially through the vehicle of collective agreements.Footnote ¹²²

The application of reporting obligations in practice usually takes place on an individual basis. This may hinder efficiency in the context of large groups, such as (chamber) orchestras. While transparency on an individual level certainly has its benefits, collective transparency could have additional advantages. Given that many musicians shy away from enforcing their rights on an individual level, representative organisations, including CMOs, should be able to obtain information for the benefit of their members through recourse to passive reporting obligations.Footnote ¹²³ Alternatively or complementarily thereto, inspiration may be drawn from the role of group leaders and elected representatives as already exists in Belgium and Germany for live performances by large groups of performing musicians.Footnote ¹²⁴ These rules, meant to allow efficient contracting in the context of large-scale live productions, may also aid in operationalising transparency requirements. Further cementing these roles would require hard law legislative intervention. Also for active reporting obligations, it makes sense to require that relevant information (only) be provided to certain representative members of the group(s) at issue. This would alleviate the administrative burden for corporate partners and contribute to legal certainty. Thus, the enhancement of the role of representatives and representative organisations in the operationalisation of transparency requirements could amplify the potential impact of collectiveness. The DSM Directive expressly refers to the potential for ‘representatives’ of artists to assist in the operationalisation of active reporting obligations.Footnote ¹²⁵ It should be made clear that such ‘representatives’ include representative organisations such as CMOs, trade unions, guilds, and so forth.Footnote ¹²⁶ The importance of securing a balanced trade secret protection framework also rings true here, since undue recourse to trade secret protection could prevent representative organisations from accessing and using relevant audience data, as well as from disclosing such data in a dispute resolution context.

Moreover, the potential for collectiveness as to transparency should extend to the possibility to take relevant follow-up action, such as recourse to a collective adjustment mechanism – or even judicial or extra-judicial dispute resolution – if the circumstances so require. French law already expressly notes the possibility for the contract adjustment mechanism to be invoked by representatives of artists.Footnote ¹²⁷ The explicit inclusion of this possibility in the (hard) laws of the other jurisdictions is to be supported. The same is true for an additional reference to the powers of representation of representative organisations.

In terms of enforcement, a collective dimension may also be developed. Individual musicians may be supported by collective entities.Footnote ¹²⁸ If the circumstances so require, representative organisations should have the possibility to file a collective complaint.Footnote ¹²⁹ The concept of class actions as known in a consumer law context could serve as a source of inspiration.Footnote ¹³⁰

In order for collective organisations effectively to be able to take on their role in this regard (which would give them an identity that is similar to a consumer rights body), both qualified personnel and sufficient financial means to undertake legal action are required. While membership fees and non-allocated CMO revenue may provide some margin in this regard, additional institutional support may be warranted.Footnote ¹³¹

Several rules already allow for collective judicial enforcement of (part of) the legal framework. The DSM Directive expressly notes the potential for representative organisations in this context.Footnote ¹³² It does not specify anything regarding the possibility and/or desirability of granting such organisations the legal standing to commence judicial proceedings in the name of and on the account of musicians. Article 4 IPRED expressly noted the option for Member States to grant legal standing to CMOs and professional defence bodies that are regularly recognised as having authority to represent rightsholders, insofar as permitted by and in accordance with national law.Footnote ¹³³ Both Belgium and France have made use of this possibility.Footnote ¹³⁴ As a result, in those countries, such collective entities have legal standing in cases deemed of interest to their members with a view to defending the rights of those members, if this is expressly provided in those entities’ statutes.Footnote ¹³⁵ In the Netherlands, a foundation or association with full legal capacity may commence legal proceedings aimed at protecting similar interests of other persons, insofar as the objective of furthering these interests is included in the articles of association.Footnote ¹³⁶

In the field of copyright contract law in particular, under pre-DSM German law, trade unions and representative associations already had the right to bring legal action in their own name in order to secure injunctive relief following the breach of a joint remuneration agreement.Footnote ¹³⁷ Given that only a limited number of such collective agreements have been entered into so far, this possibility remains rather theoretical at present.Footnote ¹³⁸ In addition, the newly added, more general Article 32g German Copyright Act grants representative organisations the possibility to represent artists collectively when it comes to the application of Articles 32–32f German Copyright Act ‘in accordance with the Act on Out-of-Court Legal Services and the procedural rules’.Footnote ¹³⁹ Thus, it grants a right of action to representative organisations on both a judicial and extra-judicial level. Representative organisations also have the right to commence ADR proceedings under both French and Dutch law, while such a right remains absent under Belgian law at the time of writing.Footnote ¹⁴⁰

Collective enforcement also appears to be on the rise in the application of the law of unfair B2B contract terms and trade practices.Footnote ¹⁴¹ The legal standing of professional defence bodies under Belgian law also applies in the context of unfair B2B situations.Footnote ¹⁴² It grants the competent minister a right to obtain an injunction. The provision specific to unfair B2B contract terms and trade practices under French law also refers to a right of initiative on the part of the competent minister.Footnote ¹⁴³ Finally, on unfair trade practices in particular, reference may also be made to the right of action granted to certain professional organisations with legal personality under the German Act on Unfair Competition.Footnote ¹⁴⁴

The fear of retaliation associated with the enforcement of the legal framework would cease to apply if the anonymity of the artist(s) involved is preserved throughout the (collective) proceedings. The DSM Directive expressly acknowledges the pertinence of protecting the anonymity of the represented artists.Footnote ¹⁴⁵ However, it seems almost inevitable for the identity of the artist(s) involved to surface in the course of dispute resolution proceedings, in view of the specific set of facts surrounding the dispute(s) at issue and the concrete evidence.Footnote ¹⁴⁶ In many cases, the objective of preserving anonymity is likely to remain a pipedream.Footnote ¹⁴⁷ Consequently, it appears unproductive to focus on measures aimed at maintaining such anonymity outside the context of potential class actionsFootnote ¹⁴⁸ that transcend a specific set of facts.

7.5 Extra-judicial Enforcement

The courtroom is not the only place to settle a dispute. In addition, several alternative extra-judicial routes are available, such as negotiation, conciliation, mediation and arbitration. These are commonly grouped together under the label ‘alternative dispute resolution’ or ‘ADR’. Proponents of ADR argue that it is quicker, less expensive and less antagonistic than litigation, all of which are considerations that may be beneficial to musicians who seek to enforce the rights drawn from Chapters 4–6.Footnote ¹⁴⁹ This section reviews the potential of ADR in the streaming age.

While, prior to the DSM Directive, some efforts had been made towards the establishment and promotion of ADR in the CCIs in BelgiumFootnote ¹⁵⁰ and Germany,Footnote ¹⁵¹ the main notable initiatives in this regard may be found in France and the Netherlands.

First, in 2016, in addition to the general framework on ADR, the French legislator created the figure of a médiateur de la musique.Footnote ¹⁵² This mediator has jurisdiction for all disputes pertaining to the interpretation and/or performance of contracts between performing musicians and record companies.Footnote ¹⁵³ Extra-judicial proceedings before the mediator may be brought by performing musicians, record companies, their representatives, any interested professional organisation and/or trade union, or even the French minister for culture.Footnote ¹⁵⁴ If the parties cannot come to an agreement themselves, the mediator may propose a compromise.Footnote ¹⁵⁵ Both the agreement and the proposed compromise may be published, provided that applicable trade secrets are safeguarded.Footnote ¹⁵⁶ The mediator may also propose measures that could lead to codes of conduct regarding the behaviour of stakeholders, thus also potentially contributing to bottom-up change within the music industry.Footnote ¹⁵⁷ In addition to the mediator, in the music publishing sector there is the potential establishment of a conciliation commission to address contractual disputes relating to exploitation and remuneration.Footnote ¹⁵⁸ Finally, indicating the potential value of ADR over litigation, the French IP Code expressly allows for extra-judicial arbitration of copyright disputes.Footnote ¹⁵⁹ However, the reports published by the French music mediator show an extremely sparse utilisation of the mediation function – with a total of three cases falling within the mediator’s jurisdiction between its establishment in 2017 and the second report in March 2020.Footnote ¹⁶⁰ This limited number of cases even brought the previous music mediator to the rather discouraging conclusion that it may be best just to abolish this ADR mechanism in its entirety, or instead transfer its competence to the Centre National de la Musique (CNM), a public institution under the supervision of the French Ministry for Culture that was established in January 2020.Footnote ¹⁶¹

Second, in the Netherlands, the primary entity of note is the Geschillencommissie Auteurscontractenrecht,^, Footnote ¹⁶² which was established in 2015 following the overhaul of Dutch copyright contract law.Footnote ¹⁶³ This committee has jurisdiction for disputes concerning the provisions of Dutch copyright contract law that regulate fair scope, fair exploitation and fair remuneration.Footnote ¹⁶⁴ Regardless of this broad scope of jurisdiction, recourse to this dispute resolution mechanism has been scant so far. The only available cases pertain to an (albeit successful) action brought on the basis of the Dutch contract adjustment mechanism by the director and screenwriter of the Dutch film Soof 2.Footnote ¹⁶⁵ One of the reasons for this apparent lack of recourse to the mechanism is that it is voluntary. Indeed, a dispute may only be submitted to the ADR proceedings if the corporate partner at issue has enlisted with the committee, and if both parties agree to submit the specific dispute to ADR.Footnote ¹⁶⁶ Incentives for corporate partners to participate voluntarily are lacking at present, also in view of the currently limited number of cases and the negative reception of the Soof 2 decisions.Footnote ¹⁶⁷ The lengthy ADR process has also been cited as a reason for the Dutch ADR mechanism’s limited success to date.Footnote ¹⁶⁸ Artists’ fear of commercial retaliation also applies here.Footnote ¹⁶⁹ In a bid to mitigate this risk, a claim before the committee may also be introduced by representative organisations of artists.Footnote ¹⁷⁰ Apparently, this possibility has not yet been used, as is the case for the possibility to file a complaint anonymously – the latter because of the fear of this anonymity being compromised in the course of the proceedings.Footnote ¹⁷¹ In parallel, a mechanism concerning the extra-judicial rescission of publishing contracts was set up in 2010 between BumaStemra, the songwriter association Professionele Auteurs Lichte Muziek (PALM)Footnote ¹⁷² and the music publishers’ association Nederlandse Muziek Uitgevers Vereniging (NMUV). Authoritative research from the Netherlands has found that, between 2010 and 2015, use of the mechanism was made in a total of forty-five cases, a small minority of which was followed by judicial proceedings.Footnote ¹⁷³ While these proceedings, at the time of writing, are conceptually separate from the Geschillencommissie, it has been considered to link both types of ADR proceedings in some way.Footnote ¹⁷⁴

Inspired by the French and Dutch examples, Article 21 DSM Directive obliges Member States to take active steps towards the establishment of a voluntary ADR mechanism for the harmonised active reporting obligations and the harmonised contract adjustment mechanism.Footnote ¹⁷⁵ The temporal application of such ADR mechanisms to acts of exploitation after 7 June 2021 is warranted.Footnote ¹⁷⁶ Member States may extend the scope of such an ADR mechanism to other types of disputes. The implementation leeway for Member States extends beyond the appropriate scope of the ADR mechanism and includes questions of procedure, composition and presidency of the ADR panel, as well as cost issues.Footnote ¹⁷⁷ If an existing national ADR mechanism fulfils the substantive conditions set by Article 21 DSM Directive – without any requirements as to institutional setup – the Member States need not set up a new one.Footnote ¹⁷⁸

Post-DSM, the ADR setup in France and the Netherlands remains essentially the same.Footnote ¹⁷⁹ In Germany, two new provisions are of note. First, the German legislator has expressly acknowledged the possibility of voluntary mediation or another form of ADR for disputes concerning Articles 32–32e German Copyright Act.Footnote ¹⁸⁰ The mandatory nature of this option is confirmed by the fact that corporate partners cannot invoke a clause to the disadvantage of artists.Footnote ¹⁸¹ Second, since the implementation of the DSM Directive, the German Copyright Act expressly provides that artists can be represented collectively in the event of disputes concerning the application of Articles 32–32f German Copyright Act ‘in accordance with the Act on Out-of-Court Legal Services and the procedural rules’ – thus implying the possibility of both extra-judicial and judicial collective representation.Footnote ¹⁸² The Belgian legislator decided not to actively implement Article 21 in view of detailed existing regimes for both judicial and extra-judicial mediation proceedings in the Belgian Judicial Code.Footnote ¹⁸³ Contrary to what the last sentence of Article 21 DSM Directive establishes, the Belgian extra-judicial mediation mechanism requires the initiative of one of the parties to the dispute, without referring to the possible role of representative organisations. Therefore, while the general mechanisms on mediation under Belgian law may have their merits, a mere reference to these mechanisms in the context of the implementation of the DSM Directive falls short.

For the sake of completeness, it is noted that the Brennan Bill does not accord express attention to ADR. Instead, it opted to accord jurisdiction for the proposed rules to the Copyright Tribunal.Footnote ¹⁸⁴

Out-of-court alternatives that enhance application of the legal framework in practice, such as those outlined, deserve institutional support.Footnote ¹⁸⁵ The slow uptake of ADR in practice is cause for concern. In addition to the merits of increasing awareness and allowing collective representation of musicians to counter the fear of commercial retaliation, four courses of action are suggested.

First, applicable ADR mechanisms should cover all types of disputes concerning copyright exploitation contracts, in terms of fair scope, exploitation and remuneration. Procedural rules by ADR mechanisms that allow them to refuse to hear a certain dispute – such as a monetary threshold – should be kept at a minimum.Footnote ¹⁸⁶ The specification of the jurisdiction of the French médiateur de la musique as extending to all disputes pertaining to the interpretation and/or performance of contracts may serve as a source of inspiration. This jurisdiction should apply to both composing and performing musicians, as is the case in Germany and the Netherlands. On a substantive level, the German and Dutch alternative of expressly attaching the jurisdiction of the relevant ADR mechanism to the relevant provisions of copyright contract law may also be assessed largely positively.Footnote ¹⁸⁷ However, it has the slight disadvantage of implicitly excluding from its scope the complementary provisions of unfair B2B contract terms and trade practices, as well as relevant principles of general contract law.

Second, in order to enhance the use of ADR mechanisms in practice, their legitimacy should be ensured, providing stakeholders with sufficient incentives to submit their dispute(s) to such a mechanism.Footnote ¹⁸⁸ This means that available ADR mechanisms should fulfil demanding procedural and substantive requirements in terms of overall quality and, importantly, neutrality.Footnote ¹⁸⁹ The participation of representative stakeholder organisations in the setup and functioning of ADR mechanisms is desirable.Footnote ¹⁹⁰ Procedurally speaking, guarantees must be offered in terms of accessibility, impartiality and independence, transparency, speed and cost-effectiveness.Footnote ¹⁹¹ Substantive fairness requires an objective assessment that takes due account of the interests of all stakeholders, with a practical perspective that is grounded in the reality of the music sector.Footnote ¹⁹² To this end, the legal and music industry expertise of relevant mediators and adjudicating panels should be guaranteed.Footnote ¹⁹³

Supervisory authorities and public oversight bodies, as more frequently active in the area of consumer law and data protection, may have a complementary role to play in terms of ex post quality control – or even participate in ADR mechanisms themselves.Footnote ¹⁹⁴ As another form of quality control, but also to further transparency and legal certainty, ADR entities should publish a periodic overview of relevant findings in specific cases that have a broader potential application, allowing for public scrutiny regarding their decisions while maintaining confidentiality and privacy where necessary.Footnote ¹⁹⁵ This may contribute to the establishment of good practices.Footnote ¹⁹⁶ Similarly, the exchange of such good practices between ADR entities established in different national territories is likely to be beneficial.Footnote ¹⁹⁷

Third, if the above safeguards prove to be insufficient to convince stakeholders to opt for ADR in times of need, it may be considered to make recourse to ADR mandatory if one of the parties to the disputes so requests.Footnote ¹⁹⁸ The Dutch legislator has proposed to include the possibility to force publicly financed corporate partners to submit to the jurisdiction of the Geschillencommissie.Footnote ¹⁹⁹ Reference may also be made to the rule of general Belgian procedural law established in 2018 that seeks to enhance recourse to ADR by, among other things, allowing judges to impose mediation when deemed appropriate.Footnote ²⁰⁰

Article 23(1) DSM Directive expressly qualifies the possibility to have recourse to ADR as mandatory law.Footnote ²⁰¹ Regardless, the mechanism is referred to as ‘voluntary’. The question therefore arises whether corporate partners may avoid ADR proceedings by just refusing to submit a particular dispute to ADR. On the one hand, if a party wishes to go to court, they must arguably be free to do so.Footnote ²⁰² The right of access to the judicial system must be safeguarded.Footnote ²⁰³ Prior recourse to ADR should not be a precondition for being allowed to commence judicial proceedings. On the other hand, if the ADR mechanism is actually purely voluntary, there is a risk that corporate partners refuse participate – even if the proceedings may be commenced by representative organisations, as is the case in the Netherlands.Footnote ²⁰⁴ This renders the potential intervention of representative organisations rather ineffective.Footnote ²⁰⁵ In turn, this supports the argument that corporate partners should not be able to avoid ADR proceedings by simply refusing to participate.Footnote ²⁰⁶ Another argument is the principled mandatory nature of the ADR mechanism, which renders it impervious to contractual deviation.Footnote ²⁰⁷ A future preliminary reference to the ECJ may be envisaged. Presumably relevant criteria will be whether the ADR proceedings lead to a binding result for the parties and whether certain procedural benchmarks are attained, such as on speed and costs, and the possibility to obtain interim measures.Footnote ²⁰⁸

Fourth and finally, ADR would benefit from increased recourse to collectiveness. Article 21 DSM Directive already requires EU Member States to ensure that representative organisations of artists can initiate ADR proceedings at the specific request of one or more artists, but only for the application of contract adjustment mechanisms and active reporting obligations.Footnote ²⁰⁹ This possibility should be extended, as is already the case in France, Germany and the Netherlands.

7.6 Outro

A protective legal framework risks pointlessness if its application in practice is not secured. Precisely this application in practice leaves much to be desired at present. The express qualification of much of the relevant provisions as mandatory law is laudable. However, the limited number of cases where the legal framework is actually invoked is concerning.

This rings all the more true in view of the recurring observation that the relevant legal framework sets forth many abstract, vague concepts that would benefit from further concretisation through case law. The resulting chicken and egg situation is that stakeholders confronted with vague legal provisions are likely to shy away from taking legal action, while precisely such action could bring clarity.

The limited amount of available case law does little to remedy this. This goes back to an aversity to invoking relevant legal provisions that finds its basis in a fear of retaliation. If we want to avoid the legal framework becoming an empty shell, affirmative action is required. This implies increased attention for individual and collective stakeholder empowerment, as well as regulatory intervention aimed at optimising the application of the legal framework in practice. Tentative proposals include several measures that may further boost collective enforcement, and contribute to the optimisation of judicial and extra-judicial dispute resolution.