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EU Regulators Probe Online Music Royalty Arrangements

European Union antitrust regulators said Tuesday they were investigating the European agencies that collect royalties for musicians from Internet sites — in parallel with other EU moves to open up the European market for online music.

The European Commission said it was concerned that the groups' contracts with composers — organized strictly along national lines — might violate rules on restrictive business practices and give national copyright agencies a de facto monopoly.

The International Confederation of Societies of Authors and Composers — known as CISAC — and its member agencies in EU countries collect royalty payments from broadcasters, night clubs or Internet sites.

The EU said it wanted to look at the membership rules that give authors only one choice of collecting society to pick up payments — the one based in their own country.

Commercial users — such as satellite or cable broadcasters and Internet sites — who want to buy the rights have to get a license from each national society that only covers that country.

This is a complex and expensive process for online music sites aiming to sell songs across the European Union.

Apple's iTunes, for example, has separate British, French and German sites with a different portfolio of music tracks.

The commission said that Europe-wide agreements guaranteed collecting societies a monopoly and prevents the emergence of new copyright collection agencies.

CISAC and its members have two months to respond to the charges and may face fines if found guilty of breaking EU competition rules.

The EU criticized the current system last year when it suggested a single Europe-wide copyright and licensing system for online music that would make it cheaper for commercial users to buy rights.

Online music sales in Europe have lagged behind those in the United States. In 2004, the U.S. had an estimated $248 million in online music sales, compared with Europe's 27.2 million euros ($32.5 million).

Musicians make money from their music after they register copyrights with collective rights managers. Those managers then license songs to online services, radio stations, night clubs and other outlets.