The collection and distribution of fees paid to phonogram producers

The first Croatian contract made between a user of music and the creator of that music in regard to fees for use was signed between composers and Croatian Radio and Television. It was agreed that fees would be collected through the Croatian Composers’ Society from users on the basis of the broadcasting and public communication of musical works. In practice, collecting societies often cooperate so that certain executive matters relating to the realisation of rights are entrusted to other similar associations. The legal basis for such cooperation is founded in Article 158 of the Copyright and Related Rights Act 2003. In line with this legal option, the Association for the Protection, Collection and Distribution of Phonogram Producers’ Rights (ZAPRAF) has entered into cooperation agreements with the Croatian Performers’ Rights Collecting Society and the Croatian Composers Society – Protection of Authors’ Music Rights in order to collect fees from radio and television stations that broadcast phonograms produced by those producers who have given ZAPRAF power of attorney to collect their fees. In addition, ZAPRAF collects fees from television stations with a national concession (eg, RTL and Nova TV) and from TV Sljeme(Z1) at county level through direct contracts. Fees are also collected in association with the Association of Organisers of Entertainment Games.

The distribution of fees is carried out according to the airplay of certain recordings. In distributing fees, ZAPRAF is guided by the principle that within the total data gathered on the use of a recording, first ownership must be identified and verified by a special commission, and the distribution is then approved by the managing board. The ownership of the recordings is used to calculate the percentage of use, which is then applied to the total amount to be distributed. The total amount comprises the total collected fees minus the costs of collecting, the reserve funds and the domestic programme stimulation fund. Shares in the fees are then distributed to the owners of the recordings which issued a power of attorney and whose ownership has been recognised (eg, through a licensing agreement). The domestic programme stimulation fund consists of recordings that are not published under a licensing agreement, while the reserve fund is kept for possible corrections, appeals and subsequently discovered recordings.

Relationship between phonogram producer and discographer
In Croatia, the term “publishing” generally refers to the relationship between the phonographic label and the author who is tied to the discographer (or publisher). In the past, authors were usually contractually tied exclusively to one publisher or discographer. In most cases publishing contracts regulated the advance that an author receives from the discographer; in return, the author was obliged to publish the copyrighted work in a graphic form and offer it for use, and then paid the advance back through a percentage of the revenue received for the work. With the development of technology and the rise of new media, modern publishers act as agents for authors and consent on their behalf to various types of exploitation of the author’s work, as well as collecting the authors’ fees. Previously, publishing was almost exclusively located within the realm of the phonographic label, but today it has evolved to such an extent that special companies (or agencies) are formed with publishing as their main activity. New technologies and ever more diverse forms of the use of authors’ works have aided its development.

Online rights and cross-border licensing
As a result of the emergence of new technologies and due to the ever-increasing use of the Internet, the need to regulate explicitly the use of authors’ works and their related rights in that environment has arisen in order to protect the interests of rights holders and improve indirectly the development of legal online services.

In an attempt to organise this area, various multi-territorial and multi-repertoire agreements on the mutual representation of collective organisations have been signed between the collecting societies for phonogram producers, such as the Agreement on Reciprocal Representation to License Certain Webcasts and the Agreement on Reciprocal Representation to License Simulcasts. Under these agreements the contracting parties regulate the right to webcast and simulcast audio recordings in the country in which the signal originates, as well as in the country to which the signal is being broadcast. The purpose of such agreements is to offer organisations dealing with webcasting and simulcasting the opportunity to obtain non-exclusive multi-territorial approval, and give the phonographic labels the option to give collective approval for use of their rights on a non-exclusive basis.

For the purposes of the webcasting agreement, the term “webcasting” means the transmission of audio recordings through the Internet when the primary purpose of this service is not the sale, advertisement or promotion of some other product or service, but the audio recordings themselves, live concerts or other music-related events. For the purposes of the simulcasting agreement, the term “simulcasting” means the simultaneous and unaltered broadcast over the Internet of audio recordings which are included in the original broadcast of radio and/or television signal in line with the regulations on providing broadcasting services.

To date, the webcasting agreement has been signed by collecting societies for phonogram producers from 39 countries worldwide, while the simulcasting agreement has been signed by collecting societies from 40 countries worldwide.

Following these agreements, several other agreements based on the same principle (known as “new media reciprocal agreements”) have been signed, including the Agreement on Streaming on Demand. This agreement regulates the rules under which collecting societies can cooperate regarding the rights for streaming on demand. In addition the Webcasting Protocol regulates some additional issues related to webcasting. So far, these agreements have been signed by the collecting societies for phonogram producers in Finland, France, Italy and Sweden.

ZAPRAF is not authorised to realise all the rights that need to be regulated in the online environment - phonogram producers retain the right to make their works public and the right to reproduce their works. Therefore, ZAPRAF has not yet signed any of the abovementioned agreements.

The European Commission Recommendation on the Cross-Border Realisation of Copyright and Related Rights must also be considered. The recommendation expressly indicates the rights which are to be regulated in the online environment and the principles by which collecting societies should conduct business in that area. The term “online rights” includes the reproduction right, the right to make a work public and the right to make a work available to the public.

The reproduction right is an exclusive right covering each reproduction stipulated in the EU Digital Copyright Directive (2001/29/EC) in the form of an intangible copy, made in the process of the online distribution of musical works.

The right to make a musical work public, regardless of whether it is an exclusive right to approve or ban the use of the work according to the EU Digital Copyright Directive, or whether it is regulated by the right to compensation under the EU Rental and Lending Rights Directive (92/100/EEC), includes webcasting, internet radio and simulcasting or the so-called “on demand", services received on a personal computer or a mobile phone.

The right to make a work of music available to the public is an exclusive right under the EU Digital Copyright Directive and involves on-demand and other interactive services.