Article 8(2) of the EU Directive on Rental and Lending Rights provides a remuneration right for performers and record producers, irrespective of nationality (“national treatment”), when their sound recordings are broadcast to the public (e.g. on TV or radio) or played in public places (e.g. restaurants and bars) (“single remuneration right” (“SRR”)). Article 8(2) implements the EU’s obligations under Article 15(1) WIPO Performance and Phonograms Treaty (“WPPT”). Article 4(2) of the WPPT allows signatory countries to limit or not apply the SRR at all. In such cases, the WPPT allows other signatory countries to limit national treatment for nationals of those countries who do not apply the SRR, under the principle of “material reciprocity”.

In the RAAP case heard by the Court of Justice of the EU (“CJEU”) in 2020 (Recorded Artists Actors Performers Ltd v Phonographic Performance (Ireland) Ltd and Others, Case C-265/19), the Grand Chamber considered whether an EU member state alone could apply material reciprocity by way of a reservation so that it would not have to remunerate producers and performers in a non-EEA country where performers or producers in the EEA are not entitled to remuneration in that country. The Court held that, as the EU law stands now, Article 8(2), interpreted in the light of the WPPT, the SRR is payable to performers and producers in all other WPPT signatory countries regardless of reciprocity. The Court also held that as the Directive makes no reference to national law, Member States cannot themselves choose the beneficiaries of the right to remuneration. In addition, as far as the EU’s obligations under the WPPT are concerned, this is a matter of exclusive competence, and it is for the EU and not Member States to limit the single equitable remuneration right of the third country nationals (should it choose to do so).

To date, the EU has not exercised the option of material reciprocity under Article 4(2) of the WPPT. In its Call for Evidence in July, the European Commission cited evidence that, in the absence of material reciprocity, the transfer of payments from Member States to non-EEA countries that do not apply all or part of the SRR may amount in future to more than €150m annually, while significantly smaller amounts would be transferred from these non-EEA countries to EU producers and performers when their music is played outside the EEA. EU performers who operate in the frequently international recorded music business would therefore have greater difficulty in recouping their investment.

The current consultation seeks input on the possible impacts of an amendment to the Directive to adopt material reciprocity at an EU level. This would limit the rights of non-EEA nationals in respect of the SRR when their records are played in the EU on TV, radio or in public places. It is hoped that this would incentivise non-EEA countries who have not introduced the SRR to do so, and so create a level playing field.

For background and to access the Call for Evidence, which closes on 12 November 2023, click here.