FIM

I. Backdrop

The French stream­ing agree­ment of 12 May 2022 is the result of nego­ti­a­tions between musi­cians’ unions, phono­gram pub­lish­ers and their respec­tive col­lec­tive man­age­ment organ­i­sa­tions. It falls with­in trans­po­si­tion into French law of Directive (EU) 2019/​790 and is based on the National Collective Agreement on Phonographic Publishing (CCNEP).

II. Principle

The agree­ment guar­an­tees all artists (fea­tured artists and accom­pa­ny­ing artists) the pay­ment of pro­por­tion­ate min­i­mum remu­ner­a­tions when their record­ings are exploit­ed as streaming.

III. Scope – Beneficiaries

1. Phonograms are eli­gi­ble that come under a record­ing con­tract of French law signed as from 1 July 2022 with pro­duc­ers for whom phono­graph­ic pub­lish­ing is their main busi­ness activ­i­ty. All phono­grams pub­lished from 1 July 2022 with­in the scope of a pre-​existing exclu­sive con­tract are also cov­ered by the agreement.

2. Beneficiaries are per­form­ers par­tic­i­pat­ing on an eli­gi­ble phono­gram with­out any dis­tinc­tion of nation­al­i­ty, whether their engage­ment con­tract be an employ­ment con­tract or a ser­vice pro­vi­sion contract.

3. The cal­cu­la­tion base for income sub­ject to pay­ment of roy­al­ties includes all income from stream­ing of an eli­gi­ble phono­gram, regard­less of the coun­try in which the stream­ing ser­vice is provided.

4. If an eli­gi­ble phono­gram is incor­po­rat­ed into a videogram made avail­able as stream­ing, the rev­enue gen­er­at­ed as such by the videogram is tak­en into account when cal­cu­lat­ing royalties.

IV. Calculating and pay­ing remu­ner­a­tions due to performers

A. Base remu­ner­a­tion pro­vid­ed under the CCNEP
For the record­ing of a 40-​minute phono­gram, the remu­ner­a­tions due are as follows:
– Featured artists: €1,219.60 (sole­ly salary)
– Non-​featured: between €916.41 and €1,030.96 (depend­ing on the num­ber of ser­vices), remu­ner­at­ing both record­ing time and trans­fer of rights.

B. Remunerations due under the guar­an­teed min­i­mum remu­ner­a­tion for streaming

• Featured artists

1. Guaranteed min­i­mum roy­al­ties (paid to the artist by the producer)
– Case of a producer-​distributor: a guar­an­teed min­i­mum rate of 11% dur­ing the deduc­tions peri­od. Outside of this peri­od, the rate is 10%.
– If the pro­duc­er is not his/​her own dis­trib­u­tor: a guar­an­teed min­i­mum rate of 13% of the net amounts col­lect­ed by the pro­duc­er for stream­ing, with­out being more than 11% of the amounts col­lect­ed by the distributor.
– If the pro­duc­er has entered into an exclu­sive licens­ing con­tract: a guar­an­teed min­i­mum rate of 28% of the net amounts col­lect­ed. Deductions are not authorized.

2. Advance pay­ments (paid to the artist by the producer)
– €1,000 gross per album as from the date the phono­gram goes online (€500 if the pro­duc­er is a microen­ter­prise ¹, with a time­frame of 3 months after going online).
– Producer Collective Management Organisations (CMOs) will grad­u­al­ly set up an aid mech­a­nism for microen­ter­pris­es to facil­i­tate advance payments.

The mech­a­nism imple­ment­ed in France is inno­v­a­tive inso­far as it cre­ates a right to pro­por­tion­ate remu­ner­a­tion for non-​featured artists where pre­vi­ous­ly such artists only received a sin­gle pay­ment at the time of fixation

• Non-​featured

1. A min­i­mum lump-​sum remu­ner­a­tion of 1.5% of the base fee (equal to €171.82), or €2.58 € per minute of record­ing, is paid to the per­former by the pro­duc­er at the moment of recording.

2. Payment of an addi­tion­al lump-​sum remu­ner­a­tion when the fol­low­ing thresh­olds are reached:
– 7.5 mil­lion streams: 20% of the base fee,
– 15 mil­lion streams: 30% of the base fee,
– 30 mil­lion streams: 35% of the base fee.

3. Remunerations due to non-​fearured artists shall be col­lect­ed from pro­duc­ers by pro­duc­er CMOs, then dis­trib­uted to ben­e­fi­cia­ry per­form­ers by their own CMOs.

V. Complementary mech­a­nism for employ­ment aid

Producer CMOs and the State con­tribute joint­ly to an employ­ment aid fund. By cov­er­ing up to 75% of the total pay­roll for per­form­ers, this fund fos­ters employ­ment and relieves microen­ter­pris­es, with­in the frame­work of the law and col­lec­tive agree­ments in force.

VI. Committee for fol­low­ing up and inter­pret­ing the agreement

The agree­ment pro­vides for an annu­al meet­ing of a com­mit­tee which, based on figure-​backed assess­ments, checks whether the mea­sures pro­vid­ed for under the agree­ment are actu­al­ly gen­er­at­ing remu­ner­a­tions pro­por­tion­ate to the eco­nom­ic val­ue of trans­ferred rights. In order to car­ry out its mis­sion, the com­mit­tee must take into account evo­lu­tions in the law and the stream­ing econ­o­my. It may pro­pose that new nego­ti­a­tions ensure that the agree­ment evolves.

VII. Comments

• Compliance with pro­por­tion­al­i­ty. The mech­a­nism imple­ment­ed in France is inno­v­a­tive inso­far as it cre­ates a right to pro­por­tion­ate remu­ner­a­tion for non-​featured artists –in the shape of suc­ces­sive lump-​sum pay­ments– where pre­vi­ous­ly such artists only received a sin­gle pay­ment at the time of fix­a­tion. Maintaining this prac­tice of a sin­gle lump-​sum pay­ment was clear­ly not com­pat­i­ble with Directive 2019/​790, which requires that remu­ner­a­tion be “appro­pri­ate and pro­por­tion­ate to the actu­al or poten­tial eco­nom­ic val­ue of the licensed or trans­ferred rights” (where­as #73). In real­i­ty, it is impos­si­ble to guar­an­tee pro­por­tion­al­i­ty for a sin­gle pay­ment made upstream of exploita­tion, as the suc­cess and rev­enues for a record­ing are like­ly to evolve over time. In where­as #75, the Directive gives a reminder that per­form­ers “[…] need infor­ma­tion to assess the con­tin­ued eco­nom­ic val­ue of their rights, com­pared to the remu­ner­a­tion received for their licence or trans­fer.” The mech­a­nism cho­sen (suc­ces­sive pay­ments trig­gered by pre­vi­ous­ly agreed thresh­olds) com­plies there­fore with the cri­te­ri­on of pro­por­tion­al­i­ty. It may, how­ev­er, be regret­ted that remu­ner­a­tions for which pro­vi­sion is cur­rent­ly made be so low.

• The reper­toire cov­ered is lim­it­ed. Since the pro­vi­sions of the agree­ment only apply to record­ing con­tracts signed as from 1 July 2022, the reper­toire pri­or to this date is not cov­ered. Even if it is like­ly that the pro­por­tion of new record­ings in the cat­a­logue will increase, this lim­i­ta­tion deprives artists who no longer record any album after 1 July 2022 from the ben­e­fits of the agree­ment, even if they have a con­sid­er­able cat­a­logue of titles pub­lished pri­or to that date. This sit­u­a­tion may be seen as dis­crim­i­na­to­ry by such artists, in par­tic­u­lar those who, hav­ing ter­mi­nat­ed their career, have to face a drop in their revenues.

• Few ben­e­fi­cia­ries out­side France. Since the ben­e­fit of the agree­ment requires the sig­na­ture of a record­ing con­tract under French law, almost all artists who do not reside in France or record out­side France are inel­i­gi­ble to ben­e­fit. Multiplying nation­al agree­ments found­ed on the same mod­el could pro­vide a solu­tion to this prob­lem, but this is a high­ly uncer­tain prospect and it is already the case that oth­er coun­tries have opt­ed for oth­er mech­a­nisms based for exam­ple on equi­table remu­ner­a­tion col­lect­ed from the plat­forms and man­aged col­lec­tive­ly. While this lat­ter solu­tion may pos­si­bly ben­e­fit non-​national artists, the mech­a­nisms of the French agree­ment do not seem to lend them­selves to this. The French gov­ern­ment could help break down the bar­ri­er by requir­ing plat­forms to nego­ti­ate with artists’ representatives.

• A sen­si­ble mech­a­nism for employ­ment aid. The employ­ment aid fund for which pro­vi­sion is made under the agree­ment is espe­cial­ly well thought-​out. In par­tic­u­lar, the fact that the per­cent­age of aid increas­es with the num­ber of artists engaged cre­ates a clear incen­tive for employ­ment in the sec­tor, for the ben­e­fit of artists and pro­duc­ers alike.

In con­clu­sion, this agree­ment con­sti­tutes a gen­uine advance and, as such, should be applaud­ed. For all that, it is desir­able that it should be pro­gres­sive­ly improved, by cor­rect­ing those aspects which, as of today, lim­it its reach.