IMPALA, PlayRight, and Others Demand EU Legislation Addressing Court Ruling on ‘The Longstanding Principle of Material Reciprocity’

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Brussels’ Berlaymont bulding. Photo Credit: Guillaume Périgois

Organizations including IMPALA are officially calling for the European Union “to come up urgently with a legislative solution” addressing a court ruling ending “the longstanding principle of material reciprocity” in recorded performance payments to non-EU nations.

IMPALA, Sweden’s Musikerförbundet, Belgium’s PlayRight, and several others yet reached out to DMN with word of their formal push for legislation. For background, stateside terrestrial radio stations pay royalties only for the use of underlying compositions – not recordings themselves.

AM/FM operators in Europe, for their part, cough up both for compositions and recordings. Because the continent’s music professionals (and those in other parts of the world) aren’t compensated for their recordings’ use on U.S. radio, though, CMOs have long opted against forwarding the corresponding royalties to the States, a practice summarized as the initially highlighted “material reciprocity.”

Organizations including musicFIRST have for some time been working to establish a framework through which domestic radio stations would also be compelled to pay for recordings.

But Big Radio has for obvious reasons pushed back against the proposed legislation, which musicFIRST claims would, among other things, stop foreign countries from seizing many millions in “royalties that should go to U.S. artists, due to the lack of an American terrestrial performance copyright.”

Moving beyond this point as well as the adjacent lack of U.S. recorded royalties for different types of public performances, the EU’s Court of Justice in 2020 delivered a ruling that the aforesaid European musician organizations maintain is bringing about the end of material reciprocity.

According to the Court of Justice’s determination in the RAAP-submitted suit, components of a 2006 EU Directive, owing to the WIPO Performances and Phonograms Treaty, should be interpreted “as precluding a [EU] Member State from excluding, when it transposes into its legislation the words ‘relevant performers’… performers who are nationals of States outside the European Economic Area (EEA).”

However, the same ruling acknowledged that related (and more precisely defined) “limitations may be introduced by the EU legislature.” And it’s against this backdrop that IMPALA, France’s Adami, the Netherlands’ Ntb/Kunstenbond, Sweden’s SAMI and SYMF, Germany’s Unisono, and the previously mentioned organizations are lobbying for legislation.

“Since the judgment was delivered, already back in 2020 (now over three years ago),” the signatory entities spelled out, “the European Commission has on several occasions acknowledged concerns about the impact of the ruling and made clear its intention to find a balanced solution. But a solution has yet to be proposed.

“Unless the principle of material reciprocity is restored in EU legislation,” the organizations proceeded, “European performers and producers in ‘reciprocity’ countries could see revenues from this vital source of income fall by up to 40%, the share of US repertoire in some of these countries.”

Expanding upon the position in a statement, IMPALA executive chair Helen Smith emphasized her belief that it’s “the EU’s responsibility to prevent European artists and producers losing millions every year to the USA, which has chosen not to protect these rights.”

“A proposal is needed now to restore legal certainty, safeguard cultural diversity and European sovereignty,” proceeded the almost 17-year IMPALA head Smith. “This needs to be done in a way that provides for member states to apply reciprocity whilst also allowing a grandparenting clause for countries who have a different system.

“Imposing a mandatory system is a disproportionate response. We call on the EU to act and also exert increased trade pressure on the USA to raise their level of protection. Their stance is costing the world music economy hundreds of millions a year.”

Lastly, Ntb/Kunstenbond chairman Will Maas indicated that the Netherlands, as “the first country to stop applying reciprocity,” is “seeing a clear and substantial drop in the revenue going to Dutch and other European performers and producers.”