The transposition of the new Copyright Directive and its impact on the music industry

On Tuesday 2 November 2021, the Council of Ministers approved by Royal Decree-Law 24/2021 the transposition into Spanish law of a series of Directives, including Directive (EU) 2019/790 on copyright and related rights in the Digital Single Market (hereinafter “Directive 2019/790”) on which we will focus in this article, the transposition of this directive has been faithful to the original text.

The Directive 2019/790, which has been the subject of much discussion, is of particular importance for the music industry. As we all know, in recent years the exploitation of musical works through digital platforms and social networks as a result of user-generated content has been growing steadily. One of the main objectives of Directive 2019/790 and its transposition into Spanish law is to adapt copyright to the digital environment, taking into account the behaviour of users, introducing measures to correct the prejudices that the emergence of these new platforms has caused for rightholders. 

One of the most discussed aspects of Directive 2019/790 was its article 17 (formerly article 13), which aims to reduce the value gap. This refers to the economic mismatch between the profits derived from the different digital platforms and what rightholders receive for the exploitation of their works on these platforms. To address this gap, article 17 of the Directive (art. 73 in Royal Decree-Law 24/2021) was introduced, which considers that platforms that share online content uploaded by their users carry out acts of communication to the public when they provide access to copyrighted works. It thus establishes that they are liable and obliges them to obtain the corresponding licence for the exploitation of the works from the rightholders.

Prior to the entry into force of the Directive, some digital platforms argued that it was the user who uploaded the content who carried out the acts of communication to the public and, therefore, they were responsible for the exploitation of the musical works. Now, article 17 of Directive 2019/790 opens a new paradigm in the music industry, establishing that the responsibility for the public communication of works falls on digital platforms, obliging them to negotiate with right holders a licence to exploit these works in good faith and therefore strengthening this avenue of income for authors, performers and performers.

Notwithstanding the fact that art. 17 of the Directive has been the most commented aspect, the reform also introduces a series of rights that aim to ensure that authors and performers obtain adequate and proportionate remuneration for the transfer of their rights. Such is the case of art. 18 of Directive 2019/790 (art. 74 of Royal Decree 24/2021), which establishes that when authors and performers grant authorisations or transfer their exclusive rights, they shall be entitled to receive adequate and proportionate remuneration. This right is also complemented by the obligation of transparency established in art. 19 of Directive 2019/790 (art. 75 of Royal Decree 24/2021), which imposes an obligation on users to provide authors or performers, at least once a year and by electronic means, with updated information on the exploitation of their works. In this way, the right to receive adequate remuneration proportionate to the income generated by the exploitation of their works is reinforced by the information that the user is obliged to provide.

Another aspect of great importance is the introduction of the right of revocation regulated in the new art. 48 bis of the new Consolidated Text of the Law on Intellectual Property, which gives the author -when he has granted an authorisation or assigned his rights over a work on an exclusive basis- the possibility to terminate the contract over the work in whole or in part if the work is not being exploited. Along the same lines, a revision was also introduced to art. 47 of the Consolidated Text of the Law on Intellectual Property, which establishes the possibility of carrying out contract review actions if in the assignment there is a manifest disproportion between the remuneration initially agreed by the author in comparison with the total subsequent income derived from the exploitation of the works obtained by the assignee or his or her successor in title. Previously, this review action could only be requested for flat-rate assignments; however, it has now been extended to all assignments of rights and, therefore, a review may also be requested for contracts where remuneration based on percentages (royalties) has been agreed. These rules take on particular relevance in relation to the growing worldwide trend of catalogue acquisitions by investment funds, where certain terms of assignment are agreed that may not be beneficial to rightholders in the future, providing an escape route in case their works are not exploited or the agreed remuneration does not correspond to the income generated by the exploitation of their works. 

With this transposition, which has come five months late, Spain joins other EU Member States that have already transposed it into national law. This opens up a new framework for authors, performers and interpreters to obtain the fair financial compensation due for the exploitation of their works.

Nicolás Matías Mansilla,

Legal & Licensing Coordinator at Unison.