Proportional remuneration of Performers. The agreement met in France for the remuneration of music streaming

Accord relatif à la garantie de rémunération minimale inscrite à l’article L.212-14 du Code de la Propriété Intellectuelle

The French order of 12 May 2021 transposing Directive (EU) 2019/790 gave organisations representing performers and phonographic producers 12 months to negotiate an agreement on the minimum remuneration guarantee (MRG) for artists whose works are broadcast by streaming services. This agreement was negotiated between the professional associations of producers, the unions of artist and musicians and the collective management organizations. It was finalized on 12 May 2022.

SCOPE OF THE AGREEMENT

The agreement is limited to companies covered by the Collective Bargaining Agreement (“CBA”) on Phonographic Production. It therefore does not apply to the production of phonograms by companies for whom phonographic production is not their main business activity or which are not subject to the CBA on Phonographic Production (e.g., audiovisual producers).

Phonograms that are incorporated in other protected content is not covered by the agreement. The agreement is therefore not applicable to certain productions (e.g., podcasts) and certain exploitations (videoclips).

The agreement is applicable to artists hired under an employment contract subject to the CBA and the French IP Code and covers exploitations in France but also abroad. It shall also apply to foreign artists hired by a French producer but who are not under an employment agreement according to their local social security law.

The agreement validates a difference in treatment between a featured artists and non-featured artists (e.g., a musician or chorist) with respect to the remuneration for the transfer of rights.

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.

FEATURED ARTISTS

The remuneration of featured artists whose transfer of rights is paid in the form of royalties is calculated on the net income received directly and linked to the monetization of the recordings.

The minimum rate is 11% during any rebate period; outside this period, the rate is reduced to 10%.

If the producer has entered into an exclusive licensing contract, the rate is increased to 28%.

The agreement provides that rebates applicable to an album shall not exceed 50% and must be based on net expenses. Marketing-related rebates cannot apply for a period exceeding9 consecutive months.

The agreement validates the principle of rate increases when a threshold is crossed (to be negotiated between the parties).

It also provides for the payment of a minimum advance of €1,000 gross per album and per artist.

Featured artists who do not receive proportional remuneration are entitled to an additional remuneration equal to 20% of the base fee (3 hours recording session under the CBA) per artist and per minute of recording.

NON-FEATURED ARTISTS

For non-featured artists, a minimum lump sum remuneration of 1.5% of the base fee per musician and per minute of recording.

The agreement provides for an additional lump sum remuneration according to the certain thresholds of streams achieved in France:

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.

For each threshold, the additional remuneration for a given phonogram is capped at 10 times the base fee if there are more than 10 musicians.

These remunerations are not based on the actual salary paid but on the base fee (the remuneration set by the CBA for a 3-hour recording session) applicable at the time of payment; they therefore qualify as royalties.

The information on the crossing of thresholds is provided by the service provider in charge of the ratings to producer CMOs which are in charge of collecting the moneys from the producers Payment to musicians is made by their own CMO under a mandate.

APPLICATION OVER TIME

The agreement provides for its application to all new contracts.

For musicians it will apply to any release after 1^st July 2022.

For lead artists, the minimum rate is applicable to releases made as from the effective date of the order, for contracts entered into after 6 June 2017.

This agreement is the first of its kind entered into in France under the new copyright Directive.