New Copyright Act sets it sights on chaotic royalty collection

A revised Copyright Act, which contains provisions relating to royalty collection, has been passed by the Office of the Council of State. If the revisions are approved by the National Legislative Assembly, the revised act will come into force, introducing significant changes to the Thai music industry. In particular, it is hoped that the act will help to resolve deep-seated problems with the collection of royalties in Thailand.

The collection system followed by many businesses that use copyrighted songs – including airlines, cafés, department stores, hotels, karaoke bars, pubs, supermarkets and restaurants – was initially arranged by a small number of influential music businesses in Thailand, which collect royalties on behalf of copyright owners. However, suspicions on the part of copyright owners over the transparency and fairness of this system led to an explosion in the number of collecting societies – it is estimated that at least 16 are in operation. There is no law governing collecting societies; neither are they subject to government supervision. As a consequence, businesses have faced various problems, including overlaps in fee collection, unlawful collection and unfair royalty rates.

Since registration of copyright ownership is not required by law, it is difficult for businesses to be certain they are paying royalty fees to the correct copyright owner for every single copyrighted song they use, placing them in danger of inadvertently infringing copyright. Of course, businesses could limit themselves to using songs managed by only a few collecting societies. However, this can result in a severely limited playlist, which can have a commercial impact on a business. This problem is exacerbated by the royalty fees themselves. Although the Ministry of Commerce’s Department of Internal Trade has determined that the right to disseminate copyrighted works for commerce is a controlled service, royalty fees for which cannot exceed a determined standard, this limit has never been successfully applied. Businesses can boycott certain collecting societies, but this may not be economically viable where a collecting society manages popular songs for which there is high market demand. In addition, some unscrupulous people take advantage of the lack of registration for copyright ownership by falsely claiming to be the copyright owner and demanding royalties from businesses.

On December 11 2007 several major music companies asked the National Legislative Assembly and the prime minister to reject the revised Copyright Act. They argued that their right independently to collect royalty fees would be compromised by the legislation. Crucially, the revised act would place collecting companies under the authority of a supervisory committee, which would be appointed under the revised act. The supervisory committee would have authority over collecting societies and would be responsible for, such as:

  • approving the establishment of new collecting societies;
  • announcing any requirements, in accordance with the act, that collecting societies must follow; 
  • determining forms of assignment and licence contract; and 
  • mediating disputes between collecting societies and copyright users.

The act further states that existing collecting societies must apply for a licence in order to continue operating. Similarly, any existing contracts or agreements made with copyright owners or licensors of copyrighted works will remain valid, but only up to a maximum of three years.

With regard to royalty rates, under the act collecting societies must submit their rates to the supervisory committee when they apply for a licence. The supervisory committee may turn down the application if it considers the submitted rate to be unreasonable. In this way, the supervisory committee will be able to oversee royalty rates and ensure that they are fair. In addition, the revised act makes it a criminal offence for a party that is not a collecting society within the meaning of the act to collect royalties. Under the licence system, businesses are obliged to pay royalty fees only to licensed collecting societies and need not pay royalties to any person claiming copyright ownership without a licence.

Although the proposed system of royalty collection seems to address many of the problems with the current system, it remains to be seen whether the revised Copyright Act will be implemented in its current form and, more importantly, whether it will be efficient in practice.

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

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