Regulatory clarification that music platforms are not allowed to sign exclusive agreements! How far is it to listen to songs without cutting apps

At the beginning of the new year of 2022, the digital music industry ushered in a blockbuster news - on January 6, the National Copyright Administration interviewed a number of digital music-related enterprises. This is the latest move in regulating the digital music industry since the Tencent Music Group monopoly case last July.

The interview clarified the core issues of "no exclusive copyright agreement shall be signed except in special circumstances", "settlement through the mode of guarantee and actual usage sharing", and exploration of new scenes and new formats of music works authorization and use mechanism.

In this regard, some insiders said that the era when copyright owners enjoyed vested interests brought about by vicious competition has passed.

When the regulation sends a clear signal, where does the exclusive copyright agreement go, can users no longer switch music apps to listen to songs, and will there be "new players" in the online music market? It has attracted much attention from all parties.

Involving upstream copyright owners, music platforms, industry organizations

In recent years, the copyright issues of works in China's digital music industry are complex, the application scenarios of works are diverse, and the authorization model formed in history is not perfect, and the copyright relations between all parties in the digital music industry need to be further standardized and straightened out.

To this end, on January 6, the National Copyright Administration interviewed major record companies, songwriting copyright companies and digital music platforms in Beijing, asking all parties in the digital music industry to work together to maintain the order of digital music copyright and build a good ecology of digital music copyright.

Some insiders revealed to Nandu reporters that the scope of digital music-related enterprises interviewed this time is relatively extensive. There are not only the world's three major record companies, South Korea SM and other upstream copyright owners, but also tencent music, NetEase cloud music, Migu music, Kuaishou and Douyin and other platform companies. In addition, the Music Writers Association, the Music Collection Association and the International Federation of the Phonographic Industry (IFPI) also participated in the conference.

According to official sources, the interview involved many core issues in the industry, such as the exclusive copyright agreement for digital music, the method of authorization settlement, and copyright protection.

Specifically, the National Copyright Administration requires that record companies, songwriting copyright companies, and digital music platforms should adopt an authorization model that conforms to the laws of music dissemination, the principle of fairness and reasonableness, and the rules of international practice, and should be settled through the mode of guarantee and actual usage sharing, and may not sign exclusive copyright agreements except in special circumstances.

As soon as the news came out, the topic of "music platforms must not sign exclusive copyright agreements" also quickly appeared on the Weibo hot search list.

Not only that, the National Copyright Administration stressed that the internal copyright management system should be improved, authorized music works should have a clear catalog of music libraries, clear copyright ownership, and safeguard the legitimate rights and interests of copyright owners and relevant right holders of musical works; give priority to resolving copyright disputes between parties in the digital music industry through consultation and mediation; and actively explore new scenes and new formats of music works authorization and use mechanisms; and establish a digital music copyright operation model that meets market demand.

In addition, the National Copyright Administration also requires that all parties in the digital music industry abide by copyright laws and regulations, exercise and maintain rights in accordance with the law, resist all kinds of music copyright infringements, cooperate with the National Copyright Administration's key copyright supervision of digital music, implement measures for relevant departments to maintain the order of digital music copyright, support relevant copyright collective management organizations to carry out digital music authorization work in accordance with the law, and promote the wide and orderly dissemination of digital music.

It is reported that the participating units have said that they will strictly implement the interview requirements of the National Copyright Administration, further improve the digital music licensing model and business model, jointly promote the construction of a good ecology of digital music copyright, and promote the prosperity and healthy development of China's digital music market.

Except in exceptional circumstances, an exclusive copyright agreement may not be signed

When it comes to the governance of the digital music industry, the State Administration for Market Regulation ordered Tencent Music to terminate the exclusive copyright agreement on digital music in July last year.

On July 24, 2021, the State Administration for Market Regulation (SAMR) made an administrative penalty decision on Tencent's acquisition of China Music Group for failing to declare in accordance with the law, in addition to imposing a fine of RMB500,000, and ordering Tencent to take measures to restore the relevant market competition. At that time, some experts said that the case "directly hit the competitive pain points of the online music playback platform market in China".

If you count the measures required by the State Administration for Market Regulation to restore relevant market competition, you will find that everywhere and this interview are mutually responsive, and the regulatory governance ideas have continuity.

One of the requirements that can most shake Tencent Music's existing business model is to break the exclusive copyright and stop the payment of copyright fees with high upfront payments. In this case, the State Administration for Market Regulation required Tencent not to enter into or covertly enter into an exclusive copyright agreement or other exclusive agreement with the upstream copyright owner; if it has already been reached, it must be terminated within 30 days.

The interview with the National Copyright Administration also stressed that record companies, songwriting copyright companies, and digital music platforms should adopt an authorization model that conforms to the laws of music dissemination, the principle of fairness and reasonableness, and the rules of international practice. Digital music-related enterprises may not sign exclusive copyright agreements except in special circumstances.

Zheng Ning, head of the law department and associate professor of the School of Cultural Industry Management at the Communication University of China, believes that the cancellation of the exclusive agreement may lead to a decrease in the income of creators on a single platform in the short term. However, due to the increase in cooperation channels, the comprehensive exposure rate of works has increased, which is also beneficial to creators in the long run. At the same time, the cancellation of the exclusive agreement can improve the user experience, listen to songs without switching multiple apps, and enjoy more works on one platform.

"Some veteran singers enjoy the dividends of the times, relying on exclusive copyright revenue to 'eat the old book', and have not produced new works for a long time." The lifting of the exclusive copyright agreement can also force them to continue to create and stimulate their creative vitality to some extent. Zheng Ning added.

It is worth noting that the National Copyright Administration does not prohibit exclusive copyright agreements in exceptional circumstances. What are special circumstances? One digital music practitioner said, "This leaves a hole in response to the new changes that may occur in the industry in the future." ”

In the Tencent Music case, the State Administration for Market Regulation also did not "one size fits all" the exclusive agreement, and Tencent Music's exclusive cooperation with independent musicians or new song debuts was excluded. However, the State Administration for Market Regulation restricts that the exclusive cooperation period between Tencent Music and independent musicians shall not exceed three years, and the exclusive cooperation period with the first release of new songs shall not exceed 30 days.

It may make sense to retain such space. The popularity of a song seems accidental, but there is no shortage of "pushers" behind it. Record labels and digital music platforms can be the main force, investing a lot of money to promote songs and package artists, so it's not hard to see why platforms are asking to buy out song rights and sign exclusive agreements with independent musicians.

However, some musicians said that if the newcomer's work wants to be pushed, it must agree to the terms of the platform to buy out the copyright, which will also compress the interest space of the creator.

Settle earnings on a "guaranteed deposit plus actual usage"

"For a long time, the unreasonable billing model of online music copyright fees in China and the excessive prepayment have been criticized by the industry." Meng Yanbei, a member of the Expert Advisory Group of the Anti-Monopoly Commission of the State Council, once wrote that the copyright payment method of "high prepayment + revenue sharing" raises the barriers to entry into the relevant market in disguise, which is not conducive to industrial innovation and development.

In the Tencent Music case, the State Administration for Market Regulation required Tencent to quote the upstream copyright party based on factors such as the actual use of copyright, user payment, song unit price, application scenarios, and signing period, and must not increase competitor costs in disguise through high prepayments, etc., to eliminate or restrict competition.

In view of the business model of "high prepayment + revenue sharing", which hinders the healthy competition of digital music platforms, the regulator has once again made its attitude clear. This time, the National Copyright Administration clarified that the music proceeds should be settled through the model of guarantee and actual usage share.

Meng Yanbei believes that negotiating a asking price based on the actual use of copyright is not only conducive to gradually achieving the goal of "settling copyright fees according to actual use" in line with international standards, but also can further reduce the burden of domestic platform enterprises paying copyright costs to overseas copyright owners while maintaining fair competition in the market.

The above-mentioned digital music practitioners told Nandu Reporter that the current common practice in the industry is more than "guaranteed gold plus actual use". This practice is to guarantee a minimum income for a song, which is then divided by clicks. But the platform is not willing to do this to every artist and copyright owner - "What if there is no traffic [of the song], how to guarantee the bottom line in the case of no revenue?" Therefore, for newcomer singers, the platform usually adopts the form of a one-time payment to reduce the risk of subsequent investment. ”

"The theme of the interview focused on the issue of digital music licensing, requiring the platform not to compete viciously for resources." An industry insider analyzed that the interview clearly "settled with the copyright owner according to the actual amount of use", although it did not negate the form of the guarantee deposit, but the requirements could not be maintained at a high cost, and at the same time emphasized that the industry could not sign an exclusive copyright agreement. This shows that the era when copyright holders enjoyed the vested benefits brought about by vicious competition has passed.

After the regulator clarified the signal, the industry paid more attention to the implementation of each family after the interview. Whether the head copyright owner will follow the international practice of abandoning the high-deposit model, whether the once exclusive music copyright resources can be opened to circulation to a number of people, and whether there will be new "players" in the domestic online music market have attracted much market attention. The above-mentioned industry insiders said that this can be regarded as a weather vane for the industry to improve order.

"In the final analysis, supervision is to break the exclusive copyright system in the field of digital music, achieve healthy competition, and promote the construction of a digital music ecosystem." Zheng Ning said.

Written by: Nandu reporter Huang Liling Li Ling