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EU Seeks to Ease Licensing Rules That Block Online Music Stores

July 11 (Bloomberg) -- The European Union proposed changes to ease licensing rules that prevent Internet music stores, including Apple Inc.’s iTunes, from selling digital music across the 27-nation bloc.

Royalty-collection societies could be forced under the draft rules to transfer their revenue-gathering activities to rivals if they lack the technical capacity to license music to Internet services in multiple countries.

Music copyright licenses are granted on a national basis in the EU so consumers can only download music from an iTunes store in their home country. The EU has sought to promote pan-European licensing for years, and the commission issued an antitrust decision in 2008 against national agencies that collect royalties on behalf of artists.

Under current rules, European consumers “have less access to innovative services,” EU Internal Market Commissioner Michel Barnier said today. “It’s not surprising that young consumers look elsewhere than the legal” online music stores.

Collection societies also face more oversight and must report quickly to musicians on the royalties they’ve collected under the draft rules, which need the support of EU governments and lawmakers before becoming law.

Apple rolled out iTunes stores in Poland, Hungary and 10 other European countries last year, seven years since arriving in Germany, the U.K. and France. Obtaining licensing rights from publishers and royalty-collecting societies was an obstacle to opening stores in all EU nations, it said in 2009.

Most royalty revenue comes from music played on radio and television, according to the International Confederation of Societies of Authors and Composers. Digital music accounts for 1.7 percent of the 7.5 billion euros ($9.2 billion) the French group, known as CISAC, collected in 2010 and doesn’t offset the royalties lost as recorded-music sales fall, according to its statement this year.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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