Collective Management Organisations are there to take care of it for them.
Collective management organisations (CMOs) play a central role in the music industry. On many occasions they link composers and performers with a wide range of users, from pubs and hairdressers to radio/ TV broadcasts and online music services (Spotify, Deezer, Apple Music…). They do so by licensing music on behalf of composers and performers, music publishers and record companies. In particular when individual licensing would be impossible or require an unjustifiable amount of resources. For example, an individual composer or performer cannot visit every public venue in the world asking for a share of their royalties even with the best will and constitution. Conversely, a public venue will not be able to ask every composer or performer whether they can play their music. This applies equally for Radio/ TV broadcast and online music services; managing the rights collectively is practical and economically viable.
Collective management organisations are licensing the music on behalf of their members; specific collective management organisations represent individual right holders, i.e. composers and performers, music publishers and record companies respectively. Often they represent categories jointly, for instance one collective management organisation can represent composers and music publishers and another performers and record companies.
Users such as bar and restaurants only have to obtain one licence from the relevant collective management organisations to be allowed to play music in their premises or on their services; CMOs are able to grant a “blanket” licence covering all music within their repertoire nationally as well as internationally within the territories they cover.
CMOs negotiate licensing fees with users, collect those fees and distribute them to their members based on the usage data they receive. CMOs have to administer an enormous amount of data when assigning uses of music to individual rightholders (composers and performers); they possess comprehensive databases of the rightholders and the works they represent.
The cornerstone of their activities is the mandate which they obtain from rightholders either through a transfer of rights based on the choice and trust of the right holder or by mandatory transfer of rights which is provided in some specific cases. The operational costs of CMOs is deducted before the distribution to the members; notably, collective management organisations operate on a not-for-profit basis, i.e. they are not allowed to make any profit from their activities to keep themselves.
Collective management organisations in the European Union have to comply with 3 principles: transparency; good governance; and accountability. The foundation of the music industry however is the composer and the performer creating the music. It is their choice what aspect of the copyright they want to give to a collective management organisation and to which. They can choose between collective management organisations around the world.
Furthermore, their commercial activities such as the setting of rates for the licences are supervised by national authorities given the strong market position – any company which wants to use music in public need to obtain a licence from the CMO.
In the music sector; CMOs generally administer primary rights i.e. the right to reproduce, communicate to the public, perform in public. Notably, there is also an additional right to equitable remuneration for performers and record companies in relation to broadcasts and communication to the public. Even if the primary (“exclusive”) right is transferred, the performer retains an unwaivable right to equitable remuneration; i.e. they get paid for the use of their performance but they cannot allow or prohibit the use. This equitable remuneration has to be administered by the relevant collective management organisation under European Union legislation.
CMOs benefit rightholders in particular in areas where individual licensing is unpractical; they also benefit users such as radio/TV broadcasters and online music services providing a one-stop shop for a licence for the global music repertoire in their territory or increasingly in various territories.