The Directive and Decree 35/2017 identify two kind of entities which may be entrusted with the management of copyright and related rights: (i) collective management organisations and (ii) independent management entities.
Collective management organisations are owned/controlled by their members and/or are organised on a not-for-profit basis, while independent management entities are neither owned nor controlled by rightholders and are organised on a for-profit basis.
Art. 4 of Decree 35/2017 states that rightholders may entrust the management of their rights to a collective management organisation or an independent management entity, without prejudice to Art. 180 of the Italian Law on Copyright (Law no. 633 of 22 April 1941).
Until recently, Art. 180 of the Italian Law on Copyright provided the Italian Society of Authors and Publishers (SIAE) with a monopoly on intermediation activities relating to the management of copyright. However, last October 2017 Law Decree 148/2017 amended this provision so as to allow copyright intermediation activities to also be carried out by other collective management organisations.
The fact that Law Decree 148/2017 did not include independent management entities among the subjects who could carry out copyright intermediation activities caught the attention of the Italian Competition Authority (ICA).
Furthermore, Art. 20 of Decree 35/2017 provides that collection of rights revenue in Italy by foreign independent management entities shall be regulated by representation agreements. This forces such entities to enter into representation agreements with local collecting management organisations.
In this respect, the ICA publicly questioned the legislator through the issuing of a notice stating that since Law Decree 148/2017 removed the monopoly granted to SIAE by enabling other operators to enter the market, restricting such entrance to collective management organisations only and thereby excluding independent management entities (for profit), was not justified by any overriding reasons of public interest. Thus, such restriction raised serious proportionality issues as it discriminated between operators exclusively on the basis of the type of organisation.
In light of this, the ICA concluded that Law Decree 148/2017 amending art. 180 of the Italian Law on Copyright should be reformed by including also independent management entities among the subjects who can carry out copyright intermediation activities.
However, the Italian legislator, in approving the final version of Law Decree 148/2017 last December, did not include the amendments suggested by the ICA. It is yet to be seen whether these amendments will be implemented in the future. Of course, a critical factor will be the political landscape which will be shaped by the approaching elections.
An interesting attempt to circumvent this obstacle for independent management entities was recently made by Soundreef. More specifically, Soundreef established a non-profit entity in Italy (LEA) for collecting the rights revenues of its members, including the Italian singer-songwriter Fedez. This entity was established with the purpose of bypassing SIAE.
In this regard, SIAE objected that this mechanism set up by Soundreef does not comply with a correct interpretation of the law, since LEA is “controlled” by Soundreef and does not meet the transparency and monitoring requirements provided by law. Therefore, it remains to be seen whether such mechanism will prove to be lawful and whether other for-profit entities will choose to follow this path.