A decade of legislative effort to craft the new Copyright Law will see broadcasting rights expanded and provide new sources of revenue for music artists and producers
The third revision of the Copyright Law was passed on 11 November 2020, and came into force on 1 June 2021. As an intellectual property lawyer engaged in the practice of the Copyright Law in the music industry for more than 20 years, the author has been paying close attention to the progress of revision of the law, and it looks as though the years of legislative effort have achieved positive results.
The revised law expands broadcasting rights and brings the acts of live webcasting, regular broadcasting on websites and real-time broadcasting under the protection of broadcasting rights. Broadcasting rights in the old law only included three kinds of acts: Wireless broadcasting; rebroadcasting the wireless broadcasting by wire or wirelessly; and publicly broadcasting the received broadcast. If the initial dissemination is by wire, such as wire broadcasting and network broadcasting, it cannot be included in the scope of broadcasting rights. The new law adds the technical means of “wired” communication on the original basis (article 9.11). Since then, the revised broadcasting rights have covered all the “non-interactive communication” acts, including the non-interactive communication involving the network, and have achieved a seamless connection with the information network communication right characterised by “interactive communication”.
In past judicial practice, it was necessary to apply the miscellaneous provision of “other rights that shall be enjoyed by copyright owners” to regulate music transmitted by wire and in a non-interactive way. After the implementation of the new law, the acts of live singing or playing background music by anchors, regular broadcasting on websites, and real-time broadcasting of concerts and TV variety shows are all included in the protection scope of broadcasting rights.
If there is no stipulation or unclear stipulation, the right holder of music works shall enjoy the right to remuneration for the subsequent dissemination of other audiovisual works such as short videos, game screens, variety shows and music videos (MVs). The new law introduces the concept of “audiovisual works” and changes “movies and works created in a similar way to making movies” into “movie works, TV series works and other audiovisual works”. It also adds new provisions: The copyright ownership of audio-visual works other than movies and TV series shall be stipulated by the parties concerned; and if there is no stipulation or the stipulation is unclear, the ownership shall be enjoyed by the producer, but the author shall enjoy the right of authorship and the right to remuneration (article 17).
Other audiovisual works referred to in the law include short videos, sports events, game screens, variety shows, MVs and other audiovisual works that are not movies or TV series, and also included are new ways of exploiting music works brought about by industrial development.
It is worth noting that this paragraph also clarifies that the right holder of music works is entitled to receive remuneration for audiovisual works the ownership of which is not stipulated or is unclear. Here, the right to receive remuneration should be understood as including the use of audiovisual works in the subsequent dissemination process. To distinguish it from the right to receive remuneration in the production of audiovisual works, this article calls the right to receive remuneration in the subsequent dissemination process “the right to secondary remuneration”.
The clarification of the right to secondary remuneration in the new law guarantees the benefits that music right holders are entitled to receive for the subsequent dissemination of audiovisual works, and solves the dilemma brought by article 15 of the old law, that is, in the past, the copyright of music works was absorbed by the copyright of audiovisual works. If the music right holders did not agree with the producers to recover the proceeds from the dissemination process in the initial contract on authorised production, the right holders could not claim any rights for the subsequent dissemination, that is, the authorisation of audiovisual synchronisation under the old law could not cover the proceeds from the use of music works in the dissemination process.
The question to be considered here is who is the payer – the producer or the user of audiovisual works? The legal provisions are not clear, and there are no supporting regulations or judicial interpretations at present. However, the author believes that it should be the common obligation of both the producer and the user, from whom music rights holders can choose one.
For example, when a digital platform provides a large number of short music videos, game screens and variety shows produced by third-party users, in addition to obtaining the permission of the producers, it is necessary to pay remuneration to the right holders of music works used in the videos, unless the producers and music right holders have agreed on such matter in the production contract. As another example, for a large number of MVs used in karaoke bars, if the record company does not cover their use at KTV when making the MVs, the right holder of music works has the right to collect remuneration for the use at KTV.
The new law gives the phonogram right holder the right to remuneration for the playing and performing of phonograms in public, expanding the rights of record companies. With the advent of the digital and network era, the income of the traditional record market, on which the phonogram right holders depend, is greatly shrinking, and the phonogram producers cannot obtain income through selling physical discs (the right of reproduction and distribution). After more than 10 years’ appeal from the right holders in the recording industry, the new law finally gives the phonogram producers the right to remuneration for the public broadcasting and performance of the phonograms. The new law provides that if a phonogram is used for wired or wireless public dissemination, or is publicly disseminated through technical equipment for transmitting sound, remuneration shall be paid to the phonogram producer (article 45).
The new law expands the income sources of record producers, which is undoubtedly worth cheering for music practitioners. The author worked in the International Federation of the Phonographic Industry (IFPI) many years ago and, with some knowledge of sound recording practitioners, believes that the process of recording music is also a process of creation, that the producer’s technical means and level, artistic taste and experience fully reflect the originality of the output, and that the phonogram products should be protected as phonogram works.
However, China’s Copyright Law adopts the “author’s right” system of the civil law system, in which the phonogram producer is a disseminator, and the producer’s right is a kind of neighbouring right. The producer’s rights only consist of four attributes – reproduction, distribution, lease and information network transmission (article 44), and the protection level is far lower than the 13 property rights enjoyed by the right holders of works. The two additional rights to remuneration for producers in the new law are, in fact, compensation for the absence, which is also called “luxury goods” in the industry.
After the expansion of the new law, the broadcasting rights include the means of cable technology transmission, and thus the range of remuneration for phonogram producers for the broadcasting act will be extended to the transmission and broadcasting in wired and wireless ways. The specific use scenarios are as follows: Playing phonogram products by radio stations, television stations and network radio stations; and playing background music during live webcasting.
The act of public broadcasting to the public through technical equipment for transmitting sound is interpreted as mechanical performance/playing of phonogram products, including publicly broadcasting records, audiotapes and videotapes containing performances by using recording and playing equipment, such as playing music, and singing and dancing performances, for customers in hotels, restaurants, shops and dance halls, and using musical accompaniment in concerts. Under the old law, only the right holders of music works enjoyed the right to performance. After the implementation of the new law, phonogram producers also have the right to receive remuneration.
It is worth noting that the Copyright Law provides that the statutory licence system should be applied to the use of music works in broadcasting (article 46), but the payment of remuneration for using phonograms in broadcasting as provided in the new law does not belong to the statutory licence, and what the right holder enjoys is the right to remuneration without the licensing basis. The difference of rights basis directly affects the charging practice, including the legal basis of charging, the charging subject, and the formulation and implementation of remuneration standards.
The scope of activities of collective management organisations for copyright will be greatly expanded, and the charging sources will continue to increase. Music Copyright Society of China (MCSC) is a collective management organisation that manages the copyright of music works. In the past 10 years, MCSC has been carrying out the statutory licensing and charging of broadcasting rights and authorising the use of music on digital platforms. The expansion of broadcasting rights and the addition of the right to secondary remuneration will both become new charging areas for MCSC.
China Audio-Video Copyright Association (CAVCA) is a collective management organisation that manages the copyright of audiovisual programmes. In the past, restricted by the types of rights of record companies, its main activities were limited to collecting royalties for karaoke’s using MV. This right and the right to remuneration from the use of phonograms for broadcasting and performance granted by the new law are rights that are difficult for the right holder to exercise. Therefore, it is most suitable to exercise them through collective management, and the scope of activities of the CAVCA will expand rapidly, and the number of members will increase sharply. As for the charging standard and charging method, it is necessary to wait for the detailed rules for the implementation of the new law or the supporting amendments to the collective management regulations.
It should be mentioned that the new law makes it clear that users can settle disputes on the standard of royalties through administrative departments and courts (article 8.2), which makes up the gap in the old law and provides a legal basis for regulating the charging behaviour of collective management organisations for copyright.
The new law will usher in a new prosperity for China’s music industry. The third revision of the Copyright Law took 10 years. Although it has gone through rough times, it is encouraging that the new law has improved the legal status of the right holders in the music industry, which is in line with the development of new technologies and is welcomed by practitioners in the music industry.
In recent years, the development of China’s music market has attracted more and more attention from international peers. According to the global music report released by the IFPI, the scale of China’s music record market continued to expand rapidly in 2020, ranking seventh globally.
The author believes that with the formal implementation of the new law, music rights holders will gain more income, and more international music rights holders will be attracted to participate in this market. Since the promulgation of the new law, the author has received business consultations from overseas copyright companies, and believes that China’s music industry will usher in a new round of prosperity under the protection of the new Copyright Law.
Cherry Guo is a senior partner at Tiantai Law Firm and the director of the Special Committee of Music Industry of the Beijing Entertainment Law Society. She can be contacted on +86 10 6184 8000 or by email at firstname.lastname@example.org