Counting the Costs of Collective Rights Management of Music Copyright in Europe.

A comparison of existing online revenues collected from digital music licenses and the potential royalty market for online music, suggests an inadequate royalty market capture within the European Union. An estimate of the 2012 market for digital music royalties in ten different E.U. countries indicates this market could have been well over €18 billion. However, only €116 million were reported by corresponding Collective Rights Management Organizations in that same year. The three largest digital music royalty markets (U.K., Germany and France) comprise around €11 billion. Yet, the corresponding Collective Rights Management Organizations (PRS for Music, SACEM and GEMA) generate only €95 million in royalty revenue from all online media. The gap between existing and potential royalties is tremendous and suggests that E.U. Member States have not come to grips yet with the internet. Their existing business models, paired with a regulatory environment rooted in the 19th century rationale of the Berne Convention has not been supportive of grasping the opportunities provided by a disruptive technology. By consequence, artists do not receive the royalties they deserve, commercial users are exposed to prohibitive license fees and non-commercial users suffer from adequate legal alternatives to digital piracy.