The Collective Rights Management Directive, intended to improve intellectual property licensing in the EU, came into effect yesterday.
Yesterday was the deadline for member states to implement this directive, which was passed in February of 2014. It sets out new regulations governing "collective management organizations," or CMOs, which are the organizations that collect royalties and other fees on behalf of rights holders (like PRS in the UK). The point is to make sure that creators get the royalty payments they deserve and in a timely fashion. It also aims to improve the mechanics of multi-territory licensing deals, which will iron out logistical kinks with online music services.
Under the new regulations, CMOs with multi-territory licenses are required to show "sufficient capacity" to administer those licenses. That means they must have the means to properly invoice clients, collect fees and distribute earnings in a timely fashion. (New guidelines define "timely" as being within nine months of the end of the financial year in which fees were collected.) Artists and songwriters will also be able to work with CMOs of their choice in a given territory, regardless of whether those organizations or licensing clients are based in the EU.
The directive requires greater transparency from CMOs. Traditionally, it's been difficult for artists to understand the fine print when it comes to deals between their labels, publishers and CMOs, especially with digital services. But now, CMOs are required to publish detailed reports explaining financial performance, membership criteria and other elements of the decision-making process. That means rights holders will be able to peruse any CMO's policies to better understand, for instance, what type of fee they charge for their service. The idea is that this will create more competition between CMOs and ultimately improve the options available to artists.