What real possibility do music festivals and concert promoters have to reduce or even avoid paying the SGAE fee?

5 March, 2024
–
Intellectual property
–
Lucas Charnet


With the glorious years of vinyl and CDs practically forgotten, live music has become the driving force of the music industry in recent decades. In Spain, the Association of Music Promoters of Spain (APM) estimates that there are approximately 900 music festivals per year, generating national revenues of around 459 million euros. However, for some promoters, the economic viability of these events can be a challenge, especially when SGAE fees prove to be a hard hit, sometimes even exceeding the performance of the event itself.

The SGAE, acting virtually as a monopoly in the market, applies a fee of 8.5% of box office revenue after APM initiated proceedings in 2013 to declare the previous 10% fee abusive before the National Commission of Markets and Competition (CNMC). This resolution was later ratified by the National Court. Additionally, the CNMC imposed a fine of 3.1 million euros on SGAE for abuse of dominant position.

The main argument of both the CNMC and the National Court lies in the definition of dominant position provided by the ruling of the Court of Justice of the European Union of September 14th, 2017 (Case C-177/17), which establishes that there is a dominant position when a company imposes services whose fees “are significantly higher than those applied in the other Member States“. In a first EU comparative analysis, we can see how the fees applied by the SGAE in Spain are higher than those of 14 countries in the European Union, and in some cases are three times higher than in some countries, such as the UK (3%).

3% fee reduction: Is it here to stay?

Other judicial rulings such as that of the Provincial Court of Barcelona in its judgment of November 7th, 2019 SAP 2000/2019, in the Def Leppard case, open the way to a reduction of the aforementioned 8.5%. In this case, the promoter Rocknrock organized a joint tour of Def Leppard and Whitesnake in San Sebastián, Barcelona, Madrid, and Santiago de Compostela in June 2013. At the end of the tour, the SGAE issued invoices for 10% of the box office, totalling 115,398.40 euros, for copyright royalties. Rocknrock refused to pay it, arguing that the SGAE had not demonstrated that it managed the copyright for all the songs and that the contracts were signed abusing its dominant position. The SGAE sued Rocknrock, and initially won the case, but the promoter appealed to the Provincial Court of Barcelona, ​​which ruled in their favour.

The Provincial Court of Barcelona considered that the SGAE had a dominant position in the copyright market and that the fees it applied were excessive. Following the ruling, the SGAE reduced its fees to 8.5%, but the court considered that they were still abusive and set the payment at 3% of the box office.

Verdict against the Starlite Marbella Festival: it is not all a bed of roses

Despite these legal precedents, we have recently learned about the verdict against the Starlite Marbella Festival, which has been ordered to pay the SGAE the sum of 363,993.89 euros for not paying the corresponding fees for the 2017 and 2018 editions. Starlite opposed the payment of the invoices provided by the SGAE, arguing that the amounts were not itemized and had been unilaterally set. Additionally, the promoter argued that they should be excluded from the general fee because some artists had given their authorization for the public communication of their works.

However, the court established, regarding the abusive nature of the fee, that the festival had not analysed to what extent it was abusive, but simply pointed out its exorbitant nature. Regarding the unilaterality, the judgment indicated that the festival merely requested authorization according to the model of application of general fees without making any effort to negotiate individually the remuneration of the works publicly communicated in its concerts.

Not paying the SGAE: Direct authorization by the artist

Despite these convictions against promoters and festivals, there is one case in which they can save 100% of the SGAE fee. This occurs when the performing artist is the exclusive owner of the rights to the works they perform and agrees for the payment for copyright to be included in their fee.

An example of this was the ruling of the Supreme Court in its Judgment 470/2016 regarding the repeated non-payment by the City Council of Telde between the years 2002 and 2008. This City Council refused to pay the SGAE the copyright fees for the performances of the artists who held concerts in their city. Although the high court ordered that copyright should not be used without the SGAE’s permission, it clarified that this was because it was not clear that these artists were the exclusive owners of the works they performed, as in some cases there were co-authors who had not given their consent. Nevertheless, this ruling set a precedent that was endorsed by the SGAE itself, which clarified in a press release that this criterion could only be applied if the artist was the exclusive owner of the works they performed.

Uncertain future, yet promising

In conclusion, although there are increasingly more rulings by courts and institutions such as the CNMC declaring the abusive nature of the fees and the dominant position of the SGAE, it is not enough to merely assert it. It must be proven, case by case, that the fees applied to each specific festival are abusive and a result of this dominant position.

Therefore, if you have any doubts when organizing a concert or festival regarding the management, payment, and settlement of copyright fees, both with the artist and with the SGAE, you can rely on our assistance. Our experience allows us to offer our clients a fast, tailored service with excellent results. If you need more information or are interested in obtaining a quote, do not hesitate to contact us.

###


ConcertsBrandMusic

---