music copyright, performing right, collective management organization

1. Key Success Factors for Composers' Copyright Collective Management Regime
in Asian Countries
By Supatchara Distabanjong
EC-ASEAN Seminar on Contract Law for Creators
26-27 May 2004
Abstract. Implementing copyright regime in developing countries is quite challenging. Composers
are generally in a low bargaining power situation. Furthermore, differences in cultural background
between western and eastern people may cause some difficulties. Although composers' copyright
collecting organizations are quite successful for representing composers for demanding their entitled
royalties in most developed countries, the composers in some Asian countries are still not able to
appreciate the full benefits of such organizations. By examining the development of those in the
developed countries, the paper proposes key success factors of composers' copyright collective
administration regime for Asian countries. The factors are grouped into three levels; individual,
industrial, and national levels. Factors at individual level include the unity of composers and the
proper awareness, which may reflect the issues of social and cultural background. Factors at
industrial level involve structure and practices of music industry. These are the proper function of
music publishers and composers' copyright collective management organization in the country.
Finally commitment of government policy and level of intervention, proper legal framework, and
enforcement are factors at national level.
Key words: intellectual property, copyright, music industry, author's rights, performing rights

2. 1. Introduction
Copyrights have been increasingly important in cultural development as well as the global
economy due to the fast progress of globalization and information technology. At international level,
several pressures, in forms of international treaties and agreements, from powerful developed
countries have forced both under-develop and developing countries to recognize and accept
copyrights, one category of the intellectual property rights, as rules of the international trade.
As members of World Trade Organization (WTO), developing countries in Asia have to
reform their copyright laws conforming to the requirement of Trade-Related Aspects of Intellectual
Property Rights (TRIPS) agreement. However there are still many problems and difficulties in
implementation, especially in the music business, for some countries. Although piracy seems to
obtain more attention at international level, communication to the public right should not be
overlooked. If the copyright regime is properly implemented, this right can directly benefit the local
composers and contribute to the prosperous of the cultural industry in that country.
It is extremely important for any developing country, especially those that have its own
cultural industry, to ensure the balance of interests among local authors & composers, local
entrepreneurs involved in dissemination of copyrighted products, and the copyright product users.
Unless the local structure provides fair and equity incentives for the local authors/ composers without
any abuse or distortion of the rights by the business entities, the country is not likely in the position to
obtain the full benefits of collaboration with other countries at the international trade forum.
Implementing copyright regime in developing countries is quite challenging. Composers are
generally in a low bargaining power situation. Furthermore, differences in cultural background
between western and eastern people may cause some difficulties. Although composers' copyright
collective management organizations are quite successful for representing composers for demanding
their entitled royalties in most developed countries, the composers in some Asian countries are still
not able to appreciate the full benefits of such organizations.
This paper examines authors’ rights in the music industry, emphasizing on the collective
management organization. Firstly, the principle of copyrights and the development of composer's
rights in music industry are reviewed. Secondly, the concept and development of collective
management organization in developed countries are presented. Then the paper further examines the
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3. situation of the development and implementation of composers' collective management organizations
in Asia Pacific. Finally several key success factors for the implementation of composers' copyright
collective management regime in Asian countries are proposed.
2. Copyrights and Music Industry
2.1 Principle of Copyrights
Copyrights, one kind of the intellectual property, protects certain type of creative works that
provide cultural, social and economic benefits to the society. Copyright works originally include such
works as literary, musical, dramatic, artistic works, and, later on, computer programs. Because of its
intangible nature as well as cultural involvement, some forms of legal system and protection
mechanism are essential. Copyright law provides the authors/composers and/or the owners a bundle
of exclusive rights to prevent unauthorized reproduction, public performances, broadcasting,
communicating to the public, and adaptation of the works.
Further most countries provide ‘neighboring rights’ or ‘related rights’ protecting the rights
of those who disseminate the authors/composers’ works, such as sound-recording producers,
broadcaster, and performers, to prevent unauthorized duplication and performance of their efforts.
Copyright protection is extremely essential to prevent the ease of free ride on those creative efforts
and the price of copyright products. The protection has limited time period, typically the lifetime of
the authors/composers plus 50 to 70 years. After expiration, the works become in public domain for
free use (Drahos, 1996; Bainbridge, 1999; and Zimmerman, 1999).
The fundamental objective of copyrights is to provide incentives for talented
authors/composers to create new works of music. Furthermore, marketing the copyrighted products
requires costly investment. Being granted these exclusive rights, the authors/composers can be
associated with commercial exploitation and economic success resulting from the use of their works
(Maskus, 2000 and Watt, 2000). At the same time, these works have social and cultural value to the
society as well. Thus, theoretically speaking, the copyright system has to ensure the balance between
creator’s incentives and society’s interest to exploit the creative works.
In terms of economic point of view, copyright system can be analyzed as three perspectives:
public goods; cumulative creation; and transaction cost. The first perspective views copyrightable
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4. works as public goods. The system must ensure that the works of authors are protected, the authors
obtain proper incentive for their creations, and the society as a whole can gain access to the work
broadly. The cumulative creation perspective views that copyrighted works usually build on the
earlier creations. Therefore the system should balance the incentive of early creations against the
essential to provide incentives to later creations. The last perspective considers the nature of high
transaction cost of the copyright dependent industries. As a result, the system should facilitate
transactions among numerous copyright owners and among authors, publishers and recording
companies as they are working together to bring the copyrighted works to the market by clearly
defining the rights and the ways to exercise them (Anderson et. al., 2000 and Meurer, 2001).
The strengthening of copyright system is expected to have positive impacts in developing
countries, especially the countries that have their own entertainment industries such as music, sound
recording and film. The protection of those industries can promote national culture, both within and
outside the country, as well as provide an opportunity for export. A national framework - which
includes a specialized institutional arrangement that cooperates among government sectors,
authors/composers, music business entities, and copyright collective management organizations –
should be established.
Besides, ensuring the protection of copyright products on both domestic and international
markets, this framework should help facilitate the creation and dissemination of these cultural works
through business enterprise and define a reliable income flows through royalties and other related
from copyright product users to creators. The collective management organizations, one of the
essential institutional mechanisms, also ensure that local authors/composers, copyright owners, and
performers will obtain the royalties whenever their works are exploited.
2.2 Development of Copyright in International Music Industry
Music copyright has its root in Europe during the eighteenth century. From the 1880s to the
1930s, the development of copyright was driven by the interest of songwriters and composers. The
international recognition of authors’ rights was reflected in the Berne Convention for Protection of
Literary and Artistic Works in 1886 (WIPO, 1996). During the 1900s, technological revolution has
created an economic environment in the music industry. Sound recording, radio and television
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5. broadcastings had become new powerful commercial means to communicate musical works to the
public. Since the Berne Convention emphasizes mainly on authorship without the interests of other
contributors who are involved in the creative process, the 1961 Rome Convention for Protection of
Performers, Producer of Phonograms and Broadcasting Organizations was established. After that, the
issue of piracy has been raised quickly in the music industry due to the advancement of technology.
The rise of piracy coincided with a globalization of music and record industry. Both the
United States and the European Commission had exerted pressure on Asian countries to reform their
copyright system (Laing, 1993). The attempt to incorporate the trade-related aspects of copyright
protection was made in the Uruguay Round of the GATT (General Agreement on Tariff and Trade)
treaty, later on became TRIPS (Trade Related Aspects of Intellectual Property Rights) agreement
under the World Trade Organization (WTO). As members of WTO, many countries in Asia had to
reform their copyright regimes to conform to the minimum requirement of TRIPS agreement.
Although piracy seems to obtain more attention at the international level, composer’s rights should
not be overlooked because they can directly benefit the local music industry when the system is
properly implemented.
2.3 Composer’s Rights in Music Industry
A musical work is normally defined as a musical composition, which is a rhythm with or
without lyrics, created by composers (WIPO, 1996). According to Banbridge (1999), authorship and
ownership are two distinct concepts. The authors/composers have moral rights, the rights to be
respected and recognized as the authors/composers of musical works. The owner possesses economic
rights such as reproduction, public performance (or communication to the public), broadcasting, and
adaptation. This implies that the owner of a musical work may not always be the composer. For
example if the composer composes a song under the contract of employment, his employer will be the
first owner of the copyright work.
Moral rights allow authors/composers to control the integrity of their works. This certainly
reflects a deep cultural belief in the value of authors/composers to society. Some European countries,
such as France, take the moral rights of authors/composers so seriously that the rights are not
waivable by contract. For the continental European laws, it is desirable to provide authors/composers
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6. with rights in their works as rewards for their contributions to the enrichment of culture. In fact the
continental European do use the term "droit d' auteur" (the law of authors' rights) instead of copyright
law. This approach is, to a certain extent, quite different from the Angro-American copyright
approach whose emphasis is placed more on trade and economic rights (Leelataweewud, 1996 and
Samuelson, 1999).
In terms of economic rights, the owner of a musical work may exercise the rights of his work
by himself, by an agent, or by the author’s administration organization using several types of contract
such as license and assignment (Schepens, 2000). In the case of license, the owner still retains his
ownership of the work. By an exclusive license, the owner (the licensor) grants the sole license to the
licensee to exercise the right. By a non-exclusive license, the licensor grants the same right to a
number of different persons. Contrary to license by an assignment, the copyright owner (the assignor)
transfers his ownership of the right to the assignee.
Assignment Performing
Public Right
performance Society
right
Right to publish
Composer & sheet music Music Publications
1st owner Exclusive Publishing Assignment of
of copyright license exclusive license
Recording
right Recording Recording
Exclusive company no.1 company no. 2
license Sub-license for
other countries
Figure 1 : Exploitation of musical work
Source: Bainbridge, 1993, p. 25
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7. A simple example of the musical work exploitation is shown in figure 1. Legally speaking,
the composer who is also the first owner of the copyrights can exploit his work by dealing with each
right separately. For example he may assign the public performance right to the performing right
organization. In terms of musical work’s reproduction rights, the composer can grant an exclusive
license to a music publishing company who will transfer that license to a publication company to
publish the sheet music. The recording right (or mechanical right), one other kind of reproduction
rights, is granted to a recording company by means of an exclusive worldwide license, then that
recording company will grant a sub-license to another recording company in another country. As a
result, the composer receives payment for the assignment or license. The payment can be in form of a
lump sum, a periodic payment or royalties (Bainbridge, 1993). However the actual practicing in the
developed music industry is more complicated.
As summarized in figure 2, normally there is a business entity called a music publishing
company who acts as a representative of composers aiming at exploiting music compositions for
profit. The music publisher will responsible for overall business administration of the work, including
marketing promotion, collecting fees and handling the money (Lathrop and Pettigrew, 1999 p. 215).
However, the relationships between music publishers and composers is both complementary and
adversary. As a composer’s agent, the publisher is then responsible for marketing of the musical
work. The publisher attempts to have the works recorded, used in advertisements or motion pictures,
and performed in concert. In this scenario, both composers and publishers share the same interests
and benefits.
Within these complementary relationships, there may be an element of conflict. First, conflict
of interest is due to the fact that the publisher is an entrepreneur, who has more experience of the
market. The lower the royalty paid to the composer for exploitation of his works, the greater the
income for the publisher. Or sometimes the composer tends to over estimate his chance of success.
And then, he may think that his publisher does not fully promote his works. Second, in recent years
the entertainment conglomerate has formed multinational corporations that embody music publishing,
sound recording production, and audiovisual works production. In such situation there is no incentive
for music publisher to seek higher royalties for the use in sound recording or audiovisual because the
companies are commonly owned (Sinacore-Guinn, 1993 and Towse, 1999).
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8. COMPOSER MUSIC USERS
Creates joins and assigns to (public performance;broadcast;cable)
MUSICAL WORK pay royalties
Copyright Law gives a licenses
Bundle of exclusive rights royalties COLLECTIVE
REPRODUCTION RIGHTS ADMINISTRATION
PUBLIC PERFORMANCE RIGHTS ORGANIZATION
BROADCAST RIGHTS
CABLE DIFFUSION RIGHTS royalties
PUBLICATION RIGHTS CONSUMERS
ADAPTATION RIGHTS
Contracts with sells to
joints
MUSIC PUBLISHER Contracts reproduction rights to RECORDING CDs/
Contracts with COMPANY makes Cassettes
FILM ADVERTISING Arrangers Producers
COMPANY COMPANY
Musicians Singers
Figure 2 : Composer’s rights and Collective Management of Rights in Musical Works
Source : Ang, 1998
Exploiting musical work’s reproduction rights can be divided into several types of licensing
fees. The income can be in forms of mechanical licensing fees, synchronization licensing fees, and
commercial advertising licensing fees. In the USA the fee of mechanical license, the license for audio
recording, is set at 7.1 cents per composition or 1.35 cents a minute of playing time (whichever is
greater) for every tape, CD, or record that is manufactured and distributed. Synchronization licensing
fee is paid when recorded music is combined with visual images. The fee varies depending on
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9. negotiation. For example, synchronization fee for a movie can be between $10,000 to $50,000
(Lathrop and Pettigrew, 1999, p. 217-220).
Exercising the communication to the public right or the public performance right is far more
different. Musical work’s public performance right (or sometimes called a performing right) means
that whenever a musical work is playing- on radio, television, in pubs, or live concerts- the owner of
the work can demand for payment. It is extremely difficult and ineffective for an individual composer
to monitor and demand for payment from hundreds of premises (such as pubs, lounges, karaokes,
restaurants, hotels, radio and television stations) that may perform his works. Utilizing a collective
administration is the answer to the problem of multiple users and multiple rights’ owners (WIPO,
1990; Ang, 1998; Schepens, 2000; Suthersanen, 2002; and Ercolani, 2002).
3. Collective Administration of Copyrights and Neighboring Rights
WIPO (1990, p. 6) provided the definition of a collective administration as a system of
copyright administration that consists of three parties: the collective administration organization, the
copyright owners, and the copyright work users. WIPO emphasizes on the functions of the collective
administration organization as a mediator on behalf of copyright owners regarding contracts for the
use of their works (by users). Those functions include administering the rights, monitoring the use,
negotiating, licensing under appropriate fees and conditions, and distributing the fees among the
owners of rights. Sinacore-Guinn (1993, p.10) further defined the collective administration
organization by considering the elements of “legally cognizable entity” and “degree of
collectivization” which imply the level of government intervention. The degree of collectivization
means the level of control retained by individual right owner as opposed to the level of control
exercised by the collective organization. Based on the level of collectivization, four general schemes
of collective administration organization are identified. They are agency-collective organization,
collective licensing organization, collection & distribution organization, and social collective.
Within the collective framework, the agency-collective organization is one in which the right
owner retains the highest level of control over his works. In the collective licensing scheme, the
owner surrenders the control of the licensing activity of particular rights in his works to the
organization. If the organization administered the rights of remuneration instead of the rights to
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10. control, the collection and distribution organization is applied. This can be done by statute. In social
collective frameworks, some form of statutory license is utilized to turn the licensing function to the
state (ibid., p.188-196). It is clearly seen that the lower level of control retained by individual rights
owner, the higher level of governmental intervention.
Suthersanen (2002) further elaborated the governmental intervention by focusing on dispute
resolution mechanisms. Four models are developed based on the establishment of an independent
body which can counsel on the dispute arising from the relationship between rights owners, users, and
collective administration organizations. From European Union experience those models are De
Minimis Supervision with Specialist Bodies, Global Supervision with Arbitration Bodies, Global
Supervision with Limited Arbitration, and Global Supervision with Civil Courts.
The very little governmental supervision is found in the de minimis regulatory model. There
is a special tribunal that exercises the control of collective organization’s licensing schemes. The
efficiency of the system mainly lies on the achievement of dispute settlement without recourse to the
general courts. The other three models emphasize high level of governmental control where
differences are on dispute settlement bodies. Because there is no specialist court available, the
disputes are brought to arbitration boards or commissions for the models with arbitration bodies and
limited arbitration. The summarized of the level of intervention is shown in table 1.
According to Sinacore-Guinn (1993) and WIPO (1990), there are two possible legal bases for
governmental control over the operation of collective administration organization, shown in Table 2.
The first is laws and regulations of general application. These include laws and regulations
concerning the formation and operation of all economic entities, laws regulating contract, and laws
relating competition situation. The second ground is to enact specialized laws regulating the
collective administration organization. These laws can be classified into four types depending on
levels of control. The lowest level of control is by recognition statues. These laws are to regulate and
specify the formation of collective and the types of the organization. For example, the laws should
specify whether the rights exercised by the owners via the organization are voluntary or mandatory,
whether the organization is private, public, or semi structure and whether the organization is
monopoly or free market.
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11. The next level of control can be either fair governance or fair licensing regulations. The
regulations under fair governance are trying to ensure the fair and equity balance between the
interests between the right owners and the public at large. These regulations concern about right
holder affiliation process, accounting procedures and report, revenue distribution process, etc. The
organization management structure is also investigated to assure right owner participation.
Table 1 : Government Supervision and Control of Collective Management
Policy Decisions Characteristics
1) Level of Collectivization:
Four types of organization
1.1 Agency – Collective - Creator /Right owner retains high level of control over his work
Management - Appropriate for musical work’s reproduction Rights (mechanical, synchronization and electrical
transcription rights)
1.2 Collective – Licensing - Provide blanket license allowing users to use any work in the repertoire upon payment
Management - Creators / Owners exercise control of their rights indirectly through the involvement of managing
the organization
- Appropriate for dramatic, literary, musical and neighboring public performance right; Cable
retransmission right; reprographic reproduction right.
1.3 Collection and Distribution - Administer rights of remuneration instead of rights of control
Management - Highest level of Collective management that still maintaints private reward for creations
- Appropriate for audio and audio visual home taping royalties and public lending rights
1.4 Social Collective Management - Extreme level of Collectivization with no existence of private right
- Appropriate for use of folklore and public domain works for some countries that provide protective
of such works.
2) Dispute Resolution:
2.1 De Minimis Supervision with - Little government supervision
Specialist Bodies - Specialist tribunal controls over tariffs and licensing schemes
2.2 Global Supervision with - Government exercise control over creators/owners, collective Management Organization, and users
Arbitration Bodies in terms of their duties among each other
- Arbitration boards settle all aspects of dispute
- Arbitration is a part of Global supervision
2.3 Global Supervision with - Government exercise control over creators/owners, collective Management Organization, and users
Limited Arbitration in terms of their duties among each other
Dispute only in special situations is settled by Arbitration
2.4 Global Supervision with - Government exercise control over creators/owners, collective Management Organization, and users
Civil Courts in terms of their duties among each other
- Civil Courts have jurisdiction over all disputes.
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12. Table 2 : Method of Government Intervention
Legal Bases Characteristics
1. Laws of General Application - Laws that regulate the existence of all economic entities
- Laws concerning contracts, interpretation and enforcement
- Laws concerning Competition
- Laws protecting consumers
- etc.
2. Specialized Laws for Collective
Management
Four Levels of Control
2.1 Recognition Statues - To regulate the formation of organization
2.2 Fair Governance - To ensure fair and equity balance between creators / owners
and public interests.
2.3 Fair Licensing - To protect possible distort or abusive of rights and market
position.
2.4 Complete Operation - Combination of 2.2 and 2.3
Under fair licensing approach, the regulations aim to govern collective licensing practices in
order to prevent any potential abusive of market position. It was also argued that while some
regulations were aimed to assist the collectives in their operations, others are- to certain extent-
restrict the discretion of the licensing (Sinacore-Guinn,1993, p 549 and Ang, 2000). Therefore the last
approach, complete operational regulations, is developed to reach the extensive level of supervision
by combining the fair governance and the fair licensing regulations together.
Whatever angle of looking at governmental intervention, it is just simply ranged from low to
high level based on the ground of laws, regulations and the supervision authorities. In practice, there
seem to be no clear cut among Sinacore-Guinn’s four-type of specialized laws. Sinacore-Guinn’s
recognition statute approach, to a certain extent, is similar to Suthersanen’s de minimis model. The
complete operational regulations also seemed to be closed to the global supervision model. Suggested
by WIPO (1990), the extent to what level of governmental intervention varies from country to
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13. country. Looking at the development of the collective administration system in several countries
could reveal this variation.
4. The Development of Collective Administration of Copyrights and Neighboring Rights
The development of the copyrights collecting organization started during the 1700s in France
where the first authors’ society, SACD, was established to fight for the recognition of their rights.
Later on a number of other European authors’ collecting societies such as SACEM (the replacement
of SACD) in France, SIAE in Italy, GEMA in Germany and PRS in the UK were started in mid
1800s.
SACEM - Society of Authors, Composers and Music Publishers (France) - was established
for administration of a certain right in a certain category of copyright works, that is, the public
performance right of musical works (WIPO, 1990). According to Suthersanen (2002), SACEM was
the type of global supervision with limited arbitration. Role of collecting organization indicated by
legal provision involved both as trustees of the economic rights of its members and as promoters of
cultural activities.
Governmental supervisions of SACEM were conducted by the Ministry of Culture. These
included approval and appointment of an organization, investigation of annual statement accounts,
and requisition all documents relevant to the organization’s function. The assurance of the
organization’s transparency was governed by statutory obligations under the Law on Commercial
Companies. The obligations were to appoint a certified auditor, to provide the right of member in
accessing accounting information, and to provide the right of one-tenth of memberships in appointing
experts for management operation monitoring. Serious disputes were settled by the Tribunal de
Grande Instance (ibid., p.11-12).
SIAE (Italian Society of Authors and Publishers) was a state-authorized collecting
organization. The organization was completely subsumed into the government structure under the
Italian Copyright Law. SIAE was a multi-works organization, meaning that it administered several
kinds of copyright works. Besides musical works, it also collected royalties for literary, artistic, and
audiovisual works. However, the organization did not have the power to represent all authors. The
copyright owners were still able to management their rights individually (Ercolani 2002).
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14. SIAE was under the supervision of the President of the Council of Ministers. Furthermore,
the Italian Antitrust Authority could investigate the organization’s management and distribution
structure. Since there was no special tribunal or arbitration, any dispute had to be submitted to civil
courts (Suthersanen, p. 18-19).
GEMA (Musical Performing and Mechanical Reproduction Rights Society of Federal
Republic of Germany) was a state-recognized organization under a specialized law, the German
Copyright Administration Act. The act set out a strict and comprehensive code of conduct concerning
all details of conditions, duties and activities of the organizations. The statutory provision of both
presumption concept and the shifting the burden of proof on the users help strengthening the
organization. Because it received proper authorization from the government, GEMA was entitled to
claim remuneration for all musical work owners.
To balance the powerful position of the organization, GEMA was subject to strict supervision
and control by the President of the German Patent Office, the Federal Antitrust Office and the Federal
Ministry of Justice (WIPO, 1990). According to Suthersanen (2002), the system in Germany was
classified as global supervision with arbitration bodies.
The Performing Right Society Limited (PRS) in the United Kingdom was formed as a private
enterprise. Thus, PRS had to comply with the normal company, agency, and contract laws. The
structure and ownership of the organization were not under any governmental control. However, the
national competition authorities, the Monopolies and Mergers Commission, could examine the
conduct of the collecting organization for any abuse of market position. The disputes concerning
licensing schemes were subject to the scrutiny of the Copyright Tribunal. So the collecting
organizations in the United Kingdom were the type of de minimis supervision with special bodies
(ibid., p. 6).
In 1926, authors’ societies in 18 countries set up the International Confederation of Societies
of Authors and Composers (CISAC) to support more efficient protection of authors’ rights throughout
the world. CISAC is a non-profit, non-governmental organization that is officially accredited with
UNESCO (United Nations Educational, Scientific and Cultural Organization), WIPO (World
Intellectual Property Organization), the Council of Europe, and the European Community (CISAC,
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15. 1987). Currently CISAC has about 200 Authors’ Societies in over 100 countries, representing more
than 2 million creators of musical works, mainly (WIPO, 1990; Schepens, 2000; and Ercolani, 2002).
In most countries, the collective administration of musical works’ performing rights (or
composer performing right organization, or composers' copyright collecting organization) will act on
its member behalf (composers and music publishers) to provide blanket license that authorizes users
to use any music from its repertoire. By means of reciprocal agreement with the collective
administration organization in other countries, all national organization can license the use of the
world music repertoire (Figure 3).
Foreign Authors,
Composers & Publishers
By assignment/ entrustment
Royalties or licence
Reciprocal Representation
Foreign Copyright Societies Agreement License for both
Local and foreign
Local Copyright works
USERS
Society
Royalties collect royalties
Local Authors,
Composers & Publishers Deed of assignment/
Entrustment/ licence
Figure 3: Flow of musical work’s rights and royalties
Source: Ang, 1998
The operation of a copyright collecting organization (or a composer’s society), that is a
member of CISAC, is non-profit in nature. After deducting the actual administrative costs from the
amount of royalties collected, the organization must distribute the money to the composers and music
publishers based on music usage. In other words, the organization licenses collectively but distributes
the royalty individually (Ang, 1998 and Schepens, 2000).
15

16. Collective administration of mechanical right (the reproduction right of musical works in the
form of audio recording) can also be done either by the performing right organization or by setting a
new organization. For example in the United Kingdom there are PRS (The Performing Right Society
Limited) administers musical works’ public performance right and MCPS (Mechanical Copyright
Protection Society Limited) for musical works’ mechanical right. In Germany there is GEMA
administers both performance and mechanical rights for authors and composers (WIPO, 1990).
Besides those of musical works, there are also several collective administrations for other
types of copyright and neighboring right works. The International Federation of the Phonographic
Industry (IFPI) was set up in 1933 to protect the rights of phonogram producers. Although the main
activity of IFPI seems to emphasize on piracy, it also set up the collective administration of the rights
of phonogram producers. For example, there is PPL (Phonographic Performance Limited) in the
United Kingdom. Figure 4 shows flow of payment for rights in music and records in the UK (Taylor
and Towse, 1998). Moreover in some countries there are the collective administration of rights
concerned by cable transmission of broadcast programs and home taping (WIPO, 1990; Suthersanen,
2002; and Ficsor, 2002).
Performers and PPL –Phonogram performance fees Users
Record Companies
Television,
MCPS radio, discos,
Mechanical restaurants,
Rights shops, etc.
Composers and PRS – Musical work performance fees
publishers
Figure 4 : Flow of Payment for Rights in Music and Records in the UK.
Source: Taylor and Towse, 1998, p. 635.
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17. There is no one solution to how right owners are represented by a collective administration
organization. The situation varies from country to country, depending on the political, economical,
cultural, social and legal circumstances (WIPO, 1990 and Schepens, 2000). For example, while the
collecting organizations of musical work in most European countries were monopolies in practice,
there are three organizations for musical work’s public performance right, namely ASCAP, BMI, and
SESAC, in the United States (Lathrop and Pettigrew, 1999 p. 221). Tremendous size of worldwide
American music business and the US’s nature of strong monopoly’s opposition are believed to be the
reasons (Sinacore-Guinn, 1993 and Ang, 2000). Bear in mind that there is no collective management
organization for sound recording’s public performance right under the US's copyright regime (Laing,
1993), hence it is understandable that free-trade concept is applied for collecting organization of
musical works.
Local composers and the owners drove the development of the collecting organizations in
most developed countries. In other words, they fought for recognition of the rights. Proper level of
governmental intervention acted as catalyst for the mechanism. However giving that the reforms of
copyright regime in most developing countries were driven by international forces, it was the
challenging for developing countries to set out the system that can balance the benefits of local
composers and public as a whole.
5. Implementing Collective Administration of Composer's Rights in Asian and Pacific
Countries
According to Ang (2002), the concept of collective management of copyright was somewhat
late in coming to the Asia Pacific. Similar to those in Europe and America, author and composer
rights are the first category to appreciate the collective management concept. Australasian Performing
Right Association (APRA), which was formed in 1926, was the earliest collective management
organization in the region. In 1939, JASRAC (Japanese Society for Rights of Authors, Composers,
and Publishers) was established to administer the rights in musical works.
CISAC had developed its activities to assist the formation and operation of authors’
collecting organizations in developing countries in Asia. During 1965 and 1981, six organizations
were formed, namely in Philippines (FILSCAP in 1965), South Korea (KOMCA in 1965), India
17

18. (IPRS in 1969), Hong Kong (CASH in 1977), Taiwan (CHA in 1977) and Sri Langka (SLPRS in
1981).
The greatest growth was achieved in the year between 1987 and 2000 when nine new
organizations were established. For example there were COMPASS in Singapore (1987), MACP in
Malaysia (1989), YKCI in Indonesia (1990), MCSC in China (1992), and MCT in Thailand (1994).
The other four organizations were in Fiji (1993), Nepal (1997), Taiwan (1999), and Mongolia (2000).
Currently there is also a discussion of forming a composer’s society in Vietnam.
Government policies play a vital role for copyright implementation. Strong commitment
from the government with clear objective and plans seems to be a common ground for the success of
the nation’s copyright regime. Government supports include improving legal framework, establishing
the relevant administrative institution, enhancing enforcement mechanism, and monitoring the system
to restrain negative effect of abusive use of the rights (UNCTAD 1996).
In terms of legal situation, quite a number of Asia-Pacific countries are signatories of major
international trade agreement or treaties. China, Indonesia, Malaysia, Singapore, South Korea, and
Mongolia were new accessions to the Berne Convention in the last decade. Those countries including
Thailand and Philippines had reformed their copyright law conforming to the requirement of the
international agreement.
In Japan, a country with fully developed copyright law in Asia (Mitsui, 1993, p. 126), the
government supported the existence of collective administration system by enacting a Law on
Intermediary Business Concerning Copyright in 1939. Basically the law provides that any entity
which engages in the intermediary business of copyright must be granted authorization by the
Commissioner of the Agency for Cultural Affairs. Furthermore the royalty rate and fees, distribution
rules, trust contract with copyright owners, and other issues of conducting the business must be
approved by the Commissioner of the Agency (Oyama, 2000). The law was modeled on Germany
Collective Administration Law with due consideration of Japanese’s social customs and other related
laws (Mitsui, 1993). At present, laws governing collective administration can also be found in Hong
Kong, India, Pakistan, Taiwan, and Mongolia (Ang, 2002, p. 39).
Besides the good structure of copyright legislation, speedy and effective implementation,
enforcement, and dispute settlement has become important. Countries such as China, Philippines, and
18

19. Thailand have either established or designated specialized Intellectual Property Courts to facilitate the
enforcement of intellectual property rights as a whole. Other countries such as Australia, New
Zealand, Singapore, and Malaysia have created tribunals, especially for copyrights, as dispute
settlement bodies for licensing schemes of collective administration (Ang, 1998). These
developments, to a certain extent, should enable collective administration organizations to develop
faster enforcement of its rights leading to growth of its revenues.
The issue of monopoly or anti-competition always seems to be brought up in the copyright
system implementation. By granting a bundle of exclusive rights to the owners, the possible negative
effects can occur to the public when a powerful copyright owner exercise his rights. The relationships
between copyrights and its potential abuses are complex and require significant expert to monitor.
Australian government is quite active in such monitoring.
In 1990 the Australia’s Prices Surveillance Authority (PSA) conducted an inquiry into prices
of sound recordings. The inquiry provided insight details of the industry and PSA recommendations
helped balancing the power of sound recording companies and public interests (Breen, 1993). The
Australian’s Department of Communication and Arts also reviewed the structure and operations of
collecting societies to ensure their proper functioning. The first comprehensive report, conducted in
1995, provided more than 100 recommendations useful for the government policy development
(Simpson, 1995).
The presence of music publishing companies, which operate independently of the recording
companies, tend to be an important integral part of the music industry in both Europe and America. It
has proven that in those countries where foreign musical works is more dominant, the collective
organizations tend to be more successful (Ang, 1998(b)). Foreign publishers with sub-publishing
operation cooperate readily with local right owners to create collective administration organization in
such countries as Hong Kong, Singapore, and Malaysia. It was stated that without a music publisher
advising the composers and acting in their interests, the composers are less likely to be able to obtain
appropriate remuneration from their works’ exploitation (Ang, 2002).
In such country as Thailand, powerful local recording companies have bought out the
copyrights from the composers or hired them as its employed staffs. Therefore, the local recording
companies own two categories of copyright works, musical works and sound recordings. Under these
19

20. circumstances, together with the improper function or non-existing of music publishers in the
business, the full benefits of collective management may be difficult to be achieved (Thanasawat,
1999; Ang, 2002; and Distabanjong, 2002).
It is not surprising to find that the organization’s performance over the period varied in each
country. Excellent growth was found in the organizations in Malaysia, Singapore, and Indonesia
where the ratio of administration cost to gross revenue reduced dramatically over the three years after
the operation of licensing activities. However, difficulties are still challenging the organizations in
China, Thailand, Fiji and Nepal (Ang, 1998(b) and 2002). The reason behind this variation may be
similar to other kinds of intellectual property rights implementation, that is, implementing copyright
collective management system is complicated.
Most of Asian countries were bound by international agreements or conventions to protect
and enforce copyright. The Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) is a common ground to all World Trade Organization’s members for protecting intellectual
property rights. Regarding the copyright protection, both Berne and Rome Conventions were also
incorporated into TRIPS agreement.
TRIPS simply set out the general principles and minimum requirements for protections,
however the formation of copyrights collective administration was not the requirement. Nonetheless it
does clearly state the objectives of the protection and enforcement in Article 7 that the creators and
the users of the works must have mutual advantage. The copyright regime must be implemented in a
manner conductive not only to the economic but also to the social welfare. The creators, owners, and
public all had rights and obligations to each other (WIPO, 1997 and Weeraworawit, 2000).
It was described that the positive impact and benefit of a particular intellectual property right
depended on several factors. Besides the selection of appropriate standards for local laws, an effective
enforcement and administration mechanism as well as an application of competition policy are
essential (UNCTAD, 1996; Braga and Fink, 1998; Maskus and Lahouel, 2000). These three factors
are mainly at the government policy level.
Maskus (2000) further suggested that the factors at industry level such as market structure
and business practices & norm are also important. Furthermore, the issue of both individual and small
group's cultural background was also brought up in a few studies (Gopal and Sanders, 1998; Smith,
20

21. 1999; Marron and Steel, 2000). Additionally Burke (1996) and Ang (2001) suggested in his study that
socio-economic environment in which the laws were applied also seemed to be a primary important
factor.
By taking all those factors into consideration, the success of the composers’ rights collective
management regime in the Asia depends on the synergy among all relevant elements (shown in
Figure 5). These elements can be grouped into three levels; namely national, industrial, individual and
levels. The national level encompasses a wide range of implementation and mechanism at national
policy which includes legal framework, enforcement, and other forms of government interventions
and monitoring. At industry level, the factors mainly involve elements of structure and practices of
music industry and operations of the collecting organization. Lastly the individual level includes
factors at individual and small groups such as song writers/composers and music users. This certainly
involves such elements as knowledge, attitude and perception. The synergy of all three levels should
assure a proper development of the regime for the benefit of the nation’s social and economic welfare.
Figure 5 : Key Success Factors for Composer’s Copyright Collective Management
1.National Level
1.1 Commitment of Government
1.2 Proper Legal frameworks, Enforcement and Administration
2Industrial Level
2.1 Good governance of Collecting Organization
2.2 Proper Function of Publisher
3.Individual Level
3.1 Proper knowledge & Awareness
3.2 Unity of composers
21

22. 6. Key Success Factors of Composers' Copyright Collecting Regime in Asia
6.1 Factors at National Level
6.1.1 Commitment of Government Policy and Mechanism with Clear Objectives
Whether the copyright collecting regime can be of benefit to the nation mainly depends on
government policy and mechanism. As a policy- maker, the government must have clear objectives
with short- and long- term plans to direct the national collective administration system. These include
the establishment of authority institution, enhancing enforcement, and monitoring the overall system
to restrain abusive use of the rights.
The policy should decide proper level of government intervention on level of
collectivization; what rights of the copyright works to be administered collectively; should the
organization be the type of agency-collective, collective licensing, collective and distribution, or
social collection; and so on so forth. Then the policy should select what legal bases to be applied;
whether they should be general application laws or specialized laws; what regulations to be enacted
for controlling fair governance and fair licensing of the organization. Finally the system essentially
has to provide speedy and effective dispute resolution mechanism. Most importantly, monitoring and
adjusting the system to prevent any possible misconduct or potential abusive of the rights that can
occur by powerful right owners are crucial. This is a learning process for all developing countries.
The government’s commitments for assistance and support composers’ copyright collecting
organization need to be translated into action and made effective without delay.
6.1.2 Proper Legal Framework and Enforcement
According to Lewinski (2002), there should be five main parts of a modern copyright law.
The substantive law regarding authors’ rights should be separated from the substantive law regarding
neighboring rights. The Laws involving enforcement mechanism is considered the thired part.The
first two laws as well as the part of enforcement are covered as the minimum requirements under
TRIPS agreement. The provision of law on collecting societies (or organization), which is the fourth
parts, is also recognized as an essential part. Although it is not mentioned in TRIPS, the national
collection societies are recognized as one important institution of the copyright regime in developing
countries (UNCTAD, 1996, p.39).
22

23. Finally, the copyright contract law is recently obtained more attention. Because of the
different bargaining positions between the authors and the business entities, freedom of contract
principle may not be suitable to be utilized. The German government had amended its copyright law
to cover the new ‘Law on Strengthening the Contractual Position of Authors and Performers”, which
was in effect on July 2002. Under this law, it is a statutory right of the author and performer to obtain
an equitable remuneration to which they cannot abandon and which cannot be transferred beforehand
except to a collecting society (Lewinski, 2002, p. 4).
6.2 Factors at Industrial Level
6.2.1 Proper Function of Music Publishers
As mentioned earlier, music publishers were important in assisting the composers and acting
in their interests. Because they shared the success with the authors, the publishers helped balancing
the bargaining positions between the recording companies and the authors. However, the publishers
were still business enterprises. Moreover, some of them were commonly owned by sound recording
companies. Still, the disadvantage situation of individual authors and composers existed. The true
benefits of implementing the system will exist when the eventual increase income of the recording
companies is reasonably shared with authors and composers.
Inevitably, the industrial structure in Asian countries would be changed by copyright
(UNCTAD, 1996) when the concept and roles of music publisher entities from international practices
are gradually disseminated. For developing countries, whether the changes are for the benefits of
authors, business entities, or public at large still depended on several factors. Basically the important
factors would probably be on the ground of the composers themselves together with the national
policy concerning the copyright, creator and the promotion of culture.
6.2.2 Good Governance of Composers' Collective Management Organization
The composers' collecting organizations normally have a double nature. They are
undertaking who supply services to composers and to users of the musical works as well as
associations among the composers or owners of musical works. As service providers, the
organizations perform four activities; which are acquisition of the repertoire, documentation of works,
23

24. collection of royalties, and distribution of the collected royalties. As associations, they have general
purpose to promote nations’ culture.
Transparency and trustworthy are crucial elements to ensure correct operation of the
organizations, both as service providers and as cultural promoters. At national level, the fundamental
requirements for transparency include the publication and /or approval of annual report, account,
tariff rates, distribution rules and articles of the organizations. At international level, CISAC sets out a
standard principle for all authors organizations to cooperate globally (Schepen, 2000; Ercolani ,2002;
and Suthersanen, 2002).
6.3 Factors at Individual Level
6.3.1 Unity of local composers
Unity of local composers is essential in order to increase their bargaining power collectively.
Consider the development of copyright system in European Continental countries. In France, for
example, the authors persistently protect their works and demand for payment (the case of Paul
Henrion and Victor Parizot against Ambassadeures café-concert mentioned in WIPO, 1990, p.9).
Later, the authors’ association was strong enough to fight for recognition of the rights (Laing, 1993).
The situation in developing countries could be different.
Smith (1999) suggested that the issues of culture and social attitudes should be taken into
consideration when applying the rights to developing countries, especially in Asia. The study presents
that there are two competing systems based on difference cultural background, the Anglo-American
system and the European Continental system. The first system emphasizes on free exchange of
property or free market while the latter emphasizes on author’s rights, especially moral rights (the
rights to be respected and recognized as the author). Therefore countries in either of these two
systems implement and enforce the rights that are economically and philosophically compatible with
their cultures. For example, moral rights stay with the creators under France law. The fact that the
United State’s concern for free market and France’s concern for art and culture have built two distinct
approaches to the rights of composers in their works. Thus, the problem with copyright regime in
Asia may also seem to arise from the misalignment of western views with cultural background of
Asian countries.
24

25. 6.3.2 Proper Knowledge Attitude and Awareness
Given that the need for strengthening copyrights protection is mainly driven from external
trade pressure (not directly from local people), it is likely that local interest in developing countries
will oppose effective enforcement (Braga and Fink, 1998). Even if the local cultural industries (such
as music, film, audiovisual, etc.) were also hurt from inefficient protection, there can be a chance that
the rights are abused and distorted to be of benefit more to the business entities.
It is very important for local people, especially users of copyright works, to realize a true
benefit of the regime as an incentive for local creators. And at the end, with a proper mechanism of
implementation, the creators’ reward will finally contribute to cultural industry and economic of the
nation.
7. Implication for Further Studies
The collective management organization is created within the political, social, cultural, and
economic environment of that country. The developing countries are facing with international
pressure on copyright protection as well as the growth of international trade in music business.
Furthermore, advancement of digital communication imposes more difficulties to the countries. Thus
implementing the copyright collective management regime in developing countries is still
challenging.
It is proved that proper legal framework and enforcement alone can not guarantee the
successful of the regime. Composers always have less negotiation powers. The system should support
and enhance collective power of composers’ rights protection in order to raise their bargaining power
against the music business entities. Monitoring and preventing possible abusive or distort of rights are
also essential. Whatever works well in developed countries may not be fully adopted and applicable
well in some developing countries. Therefore, such factors as attitude, perception, local practice and
cultural back ground of individual composers, music business entities as well as music users should
be taken into consideration. Still, opportunities for further studies are widely opened.
8. Conclusions
25

26. The nature of copyright system in music industry is complicated. It involves several parties
and entities at individual level, industry level, and national level. Given that the need for
implementing copyright regime is mainly driven from international trade pressure, it is extremely
important for Asian countries to ensure the balance of interests among local authors & composers,
local entrepreneurs involved in dissemination of copyrighted products, and the copyright product
users. Unless the local structure provides fair and equity incentives for the local authors/ composers
without any abuse or distortion of the rights by the business entities, the country is not likely in the
position to obtain the full benefits of collaboration with other countries at the international trade
forum.
The system of copyright collective administration is proved to work efficiently as a guardian
of composers' rights in developed countries. However composers in some Asian countries are still can
not enjoy the benefits of the system. This paper has focused on the development of copyright
collective management in developed countries and examined the situation of such development in
Asia–Pacific region in order to draw up key success factors of the regime. The key success factors are
proposed at three levels. It is found that at national level, in terms of legal framework, most Asian
countries had enacted national laws that complied with minimum standard requirements of the
international trade treaties. Thus further attentions should be put on the factors at industrial level and
at individual level. By examining the factors at industrial and individual levels thoroughly, the policy
maker is then in the position to decide the proper extent of government intervention. The synergy of
all factors at the three levels is extremely important to ensure the balance among composers, music
business entities, and the public’s interests.
26

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