Independent management entities: an alternative to collective management organizations?

Spain has recently introduced the new independent management entity (“IME”), providing the impetus for creating new business models based on collective copyright management.

Collective management of copyright has become the cornerstone for new models of content distribution based on access. Behind those touch-and-play features that let us instantly access almost infinite collections of music and video lies a complex web of intellectual property rights that content providers need to navigate.

Our consumer regulations have changed considerably since Beaumarchais, celebrated author of The Barber of Seville, founded the "The Bureau of Theatre Legislation", the very first copyright association, created to safeguard the copyrights of playwrights. The 18^th century author would surely be impressed if knew that blockchain and other technologies now make it possible to verify how works are used and their royalties, employing unalterable data. There is no question that Beaumarchais would be a fan of blockchain. 

Taking into account the digital transformation seen in the entertainment sector and with a view to encouraging innovation and energizing the markets for collective management of rights, Decree-Law 2/2018, of April 14, 2018, transposing the Directive on Collective Management of Copyrights (Directive 2014/26/EU of February 26, 2014), has introduced a new legal figure under which new business models can be created on the basis of collective management, namely, the independent management entity.

What are independent management entities?

Independent management entities are authorized legal persons (commercial entities) with the sole or main objective of managing authors’ economic or similar rights through the right holders’ mandate, to their benefit.

The main features of such entities are: (i) they must be commercial entities; (ii) they must be profit-making entities (iii) they should be independent, that is, neither the IME or the entities controlling it should be owned by right holders or management organizations; (iv) they should manage and administer copyrights entrusted to them through management agreements and for collective profit, either exclusively or through voluntary collective management, which excludes mandatory collective management, as may be assumed from Recital 12 of the Directive (for example fair compensation for private copy or "private copying levy").

Although some have claimed that the advent of the IME could put an end to traditional management organizations, the fact is that the way they are regulated could prove to be a catalyst spurring these entities to develop more efficient management models. Moreover, these entities will not be relinquishing the exclusive management of the numerous fair remuneration rights of mandatory collective management recognized under the Copyright Law.