With the passage of the bill by the Senate, Brazil now has the chance to have one of the most advanced laws from the comparative perspective on the global collection and distribution of copyright.

By Ronaldo Lemos*

The Brazilian Congress  has approved landmark legislation regulating and changing the structure of the Copyright Collecting Societies (CCSs) in Brazil. The new law, which was drafted as a result of the Parliamentary Inquiry Commission (PIC) that investigated collecting societies, establishes a supervision role to the Ministry of Culture in regard to CCSs. The law, as well as portions of the PIC’s report, were originally drafted by a team led by professor Ronaldo Lemos, at the Center for Technology & Society at Fundacao Getulio Vargas in Brazil (see Ars Technica’s coverage of the report here).

It was then improved throughout the intensive contributions given by a number of major artists in Brazil, such as Gilberto Gil, Caetano Veloso, Roberto Carlos, Carlinhos Brown, Milton Nascimento and many others, who supported the new bill.

The approval of the bill is a successful conclusion to more than 10 years of debate in Brazil regarding the problems and role of collecting societies. This debate involved the academia (such as the Center for Technology and Society’s Open Business III, and A2K Brazil projects, supported by IDRC and OSI respectively), as well as artists, civil society, and a number of individuals concerned with the lack of transparency in the whole system.

The rapporteur of the project was Senator Humberto Costa, and other prominent supporters of the bill include congress member Jandira Feghali, as well as Senators Lindberg Farias, Randolfe Rodrigues and Pedro Taques. The law was finally passed by Congress on July 10^th, and now awaits presidential sanction. Political analysts believe the president will approve the law as it is, with no vetoes, especially after she had a 30-minute audience with singer Roberto Carlos, one of the most famous in musicians in Brazil and supporter of the, of whom the president declares herself as a fan.

For more information, please see below the translation of the article published by Professor Ronaldo Lemos at Folha de Sao Paulo’s website (a major newspaper in Brazil), describing the whole approval process, and some of the changes to be implemented (translation follows below and the link to the original article is here:

New law that oversees Copyright Collecting Societies in Brazil is a victory for the artists

Brazil is very close to create a body with the authority to supervise its copyright collecting societies, centralized at the organization called “ECAD”, through Bill 129, originating in the Senate. With that the country should end more than 20 years of a tragic exceptionalism: Brazil is one the only countries in which the entity that collects and distributes copyright does not have any form of oversight or regulation. This happened since when president Collor abolished in 1990 the organ that was competent to such supervision, which was never recreated.

Even the United States, a country where there is competition between collecting societies, have a complex system of supervision to its “Ecads”, including defense mechanisms of artists and competent courts to oversee abusive prices.

In Brazil the situation was worrying: there is an entity that has a monopoly on its activities, but no supervision whatsoever. This violates the basic principle that there should never be an unregulated monopoly.

Distortions generated by this situation penalized many Brazilian artists and creators. In their majority, even those at the top of the hall of fame, such as Roberto Carlos, Gilberto Gil, Ivan Lins, Caetano Veloso, among many others, felt uncomfortable and dissatisfied with an entity that collected more money each year, but operated without transparency, and with a poor standard of service that could not be compared to that offered by similar organizations in other countries.

“The internet has propelled a huge number of new artists, DJs in electronic music artists, indie bands, projects homemade experimental music. None of them felt represented by ECAD. ”

In addition, the directors of ECAD and its 9 associations had been in their same functions for almost a lifetime. Many are in the same job for 20 or 30 years without renewal or change.

Finally, the entity suffered from problems of representativity. The internet has propelled a huge number of new artists, DJs in electronic music artists, indie bands, home ased experimental musicians etc. None of them felt represented by ECAD. And that perception was real: the system of internal representation was obscure and obsolete. Instead of a democratic criterion (one person one vote), plutocratic criterion was adopted (societies that collected more money had more votes). This meant that only two associations (among the existing 9) concentrated all the decision-making at ECAD, shielding it not only from external oversight, but also regarding internal audits, which could be have been done by the artists themselves.

Thus, complaints that ECAD was a black box multiplied. They culminated in the creation of the Parliamentary Inquiry Commission (PIC) of the Senate (which is worth mentioning, I participated by invitation of the Senate as a lawyer expert on the subject, helping to draft the law and the final report). The bill which now is approved originates in the work of the PIC, which presented a detailed report pointing all problems at ECAD. Another important element is that the work of the PIC helped inform Cade, the body responsible for economic defense in Brazil, which ended up condemning ECAD of forming a illegal cartel and of abuse of dominant economic position.

“With the passage of the bill by the Senate, Brazil now has the chance to have one of the most advanced laws from the comparative perspective on the global collection and distribution of copyright.”

That was the spark that was lacking for the artists to articulate around this important cause. With this, the artists became immediately protagonists in the debate on the Senate bill. Well organized, they presented several suggestions for modification and improvement of the original draft, which were accepted and incorporated into the bill, improving the draft.

With the passage of the bill by the Senate, Brazil now has the chance to have one of the most advanced laws from the comparative perspective on the global collection and distribution of copyright.

The project brings many achievements and solutions, many sophisticated and well-designed. For example, states that the associations that make up the ECAD now have all the same number of votes (one vote per membership). This ingenious solution makes the artists decide to join each of them not by political reasons, but for reasons of efficiency. Before the artists basically become affiliated to only two associations, precisely those who controlled the whole system (the others were associations that had practically no decision-making power).

5 POINTS OF THE NEW LAW

1) The associations of composers and performers that make up the ECAD must be qualified by the Ministry of Culture, proving that they meet the conditions to administer effectively and transparently.

2) The management fee charged by ECAD cannot exceed 15% of the amount collected by way of royalty payments.

3) Radio and TV will be required to make public the complete list of works that were broad cast, and the price to be paid must reflect the reality of the proportional usage of the songs. Today, this distribution is effected by sampling.

4) Creation of a unified register of works that avoid distortion of data and duplicate titles. Authors can monitor the management of their right over the internet.

5) The associations that make up the ECAD can only be addressed by the copyright holders, ie, composers and performers. They have fixed term of three years with the right to reelection.

As of now, the association to offer the best services and the lowest price (and the smaller administration fee) will attract more artists and creators. The signal to decision-making is no longer a political signal (how many votes one association has), erroneous in principle, but becomes a signal of efficiency.

In addition, the Ministry of Culture will have the prerogative to oversee ECAD and even revoke its license to operate in the event of severe abuse (considered the principle of due process). The new law requires audits to ensure transparency, efficiency, modernization and that artists and creators must be the center and most important element in the collection and distribution of royalties.

It makes sense. In other countries artists have access to the statement of their due rights to receive royalties electronically, like a bank account. In Brazil, something like that was still far from being implemented.

The law also states that the collection of copyright must be in proportion to their use. It makes sense. A restaurant that plays music only at lunchtime, for three hours per day, must pay in proportion to such use. A restaurant which, in turn, is open 24 hours and play music throughout this period should pay more.

Before this change everyone paid the same price. If the restaurant played one song during the month, it would have to pay the “full” price on the whole repertoire of songs from ECAD. It was an all or nothing system. One could either pay for the full repertoire, or could not publicly perform music legally at all.

The list of achievements of the law that oversees ECAD is huge. It is practically a new dawn for artists and creators Brazilians. Many of them involved in the struggle for the improvement of the system for over 15 years. It was a fight that seemed inglorious. But now, thanks to the leadership and coordination occurred among the artists themselves, it is about to become victorious with the forthcoming presidential sanction. The creator wins, as well as the new generation of artists who had not being feeling represented by ECAD. And wins society as a whole, which watches in first row the possibility of ECAD finally start getting in tune with the values of the 21st century.

* Ronaldo Lemos is a lawyer and professor of intellectual property in Brazil.

*Editor’s note: this law has already been approved with Presidential sanction.