EU Investigating Royalty Collectors

The European Commission will open an investigation into the way that music rights holders are collecting royalties from Internet sites operating within the European Union, antitrust regulators said on Tuesday.

Current laws require a service to obtain a license to operate within each country, which can make the process of offering digital music within the EU very costly. Fees are paid to the country's arm of the International Confederation of Societies of Authors and Composers, known as CISAC.

Regulators claim that this could be a violation of the EU's restrictive business practices law and give these agencies a monopoly. Membership rules state that authors can only choose the CISAC that represents their country, and makes it impossible for other collection agencies to start their business.

Similarly, it causes a problem where services like iTunes, Napster, or satellite and cable broadcasters have to obtain a license from each country's organization, a lengthy process.

The EC believes this may have to do with Europe's lagging online music sales. Although the EU has a significantly larger population than the US, music sales in 2004 were only an eighth of the US' $248 million in revenue.

A Europe-wide system would help even the score, the EU believes, as well as make it easier for services like iTunes to operate within the region. The Commission has given CISAC two months to respond, and could face a fine if they are found guilty.

The CISAC was not available for comment.

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