Purpose of the Draft Regulations
The draft regulations build on earlier consultations, which noted that CMOs require additional self-regulation and a class licensing scheme will provide a more transparent and efficient system for CMO members (i.e. the copyright holders) and users (i.e. persons using copyright works). While the draft regulations do not appear to change significantly how CMOs operate, they clarify some areas for users and members.
CMOs are not regulated specifically under Singapore law. The draft regulations set out a mandatory class licensing scheme for CMOs. Class licensing does not require CMOs to register with IPOS; CMOs only need to comply with the class license requirements (e.g. preparing annual reports, publishing portfolio information and observing distribution policies) to be licensed. Class licensing could help lower the barriers to entry and temper the monopolistic nature of CMOs currently. To comply, CMOs will have a proposed 6-month transitional period starting from the date the regulations enter into force. Overall, the draft regulations adopt a “light-touch” approach with CMOs given flexibility in deciding on how to achieve compliance and resolve disputes. IPOS does not administer approvals for tariffs and distributions, only intervening in limited scenarios using regulatory directions, financial penalties and cessation orders.
What is a CMO
The definition of CMO in s 459 of the Copyright Act 2021 includes corporate entities that carry out collective rights management activities. Certain classes of persons are excluded from the CMO definition, such as subscription service providers. This is because subscription service providers, whose business is video-on-demand or music-on-demand streaming, are typically the users of the copyright works. Thus, permitting them to operate as CMOs would be a clear conflict of interest.
How are tariffs disputed
There are no changes to how users dispute CMO tariffs. If there are disputes over the tariffs charged by CMOs, users may submit a complaint to the Copyright Tribunal. The Copyright Tribunal decides if tariffs are reasonable by conducting a fact-specific enquiry based on a broad-based assessment of fairness.
Although there are no changes to how users dispute CMO tariffs, the class licensing scheme could provide users with more information to justify their positions in disputes. Together with annual reports the class licensing scheme requires CMOs to publish their distribution policies, which must cover the following areas:
(a) calculation of distributions, including where CMOs must account for their methodology and deductions;
(b) frequency and manner of distributions;
(c) obligations concerning tariffs that CMOs are unable to distribute despite their best efforts;
(d) collection of information on use of CMOs’ portfolios, whether from users or otherwise;
(e) sufficient information to members on usage of CMOs’ portfolios and distributions; and
(f) members’ rights to query and dispute their distributions.
As for other disputes under the class licensing scheme, IPOS does not mandate dispute resolution methods but can direct CMOs to use mediation for their disputes if IPOS determines it necessary.
How is data collected and disclosed
The class licensing scheme sets out how CMOs should collect and disclose data, helping users to better understand their data rights and reporting obligations.
Although CMOs are free to determine how they collect usage information from users, they must disclose how they collect data from users in their distribution policies. This creates greater transparency in the licence negotiation and tariff calculation processes. Users, members and CMOs should look out for upcoming IPOS Best Practice(s), which will recommend the use of technical solutions for accurate, timely and cost-effective collection of usage information.
CMOs are also required to disclose their policies (e.g. distribution policy, disputes policy and membership policy) and their repertoire of works. As discussed above, the distribution policy helps both members and users understand better how royalties are distributed after CMOs collect tariffs. This may be a useful point of reference in licence/tariff negotiations.
In respect of the CMOs’ repertoire, CMOs must publish information of every work and performance in their repertoire on their websites. The minimum information for works and performances set out in the draft regulations includes their title/description, author/performer, rights owner, categories of rights managed by the CMO and whether the CMO manages them on an exclusive basis. The portfolio disclosure requirements give users up-to-date information to determine from which CMO to acquire rights. This will also help to standardise the repertoire details provided by CMOs on their websites, which currently varies from CMO to CMO.
How users impact CMO compliance
Although the class licensing scheme does not target users directly, some CMO requirements are contingent on user conduct. For example, the draft regulations allow CMOs to distribute royalties to their members late if they do not receive timely payments from users. Thus, the draft regulations aim to avoid disputes between CMOs and their members if distributions are not made on time.
The draft regulations are a step forward for the CMO ecosystem in Singapore, clarifying the relationship between CMOs, users and members in important areas like tariff setting, distributions and data collection. The light-touch approach helps to reduce regulatory overhead and supports the future development of the ecosystem, especially as IPOS will publish Best Practices to guide local CMOs.
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