JASRAC Raided By The FTC

[Mulboyne]

The Nikkei reports (Japanese) that the Fair Trade Commission has raided the offices of JASRAC - the largest administrator of music rights in Japan - on suspicion of violating anti-monopoly laws. Kyodo news reported in English in this way: "The Fair Trade Commission on Wednesday searched the offices of the Japanese Society for Rights of Authors, Composers and Publishers on suspicion of using special deals to monopolize music licensing services for broadcasters, sources close to the case said". The Nikkei article mentions that the nature of the contracts with broadcasters constitutes an unfair barrier to entry to other rights management organizations. JASRAC is perhaps best known overseas as the group which works to remove copyright-infringing videos from YouTube. In Japan, it has become the target of criticism for the heavy-handed way in which it has levied back-dated charges on any establishment using recorded music, ranging from small bars to dance schools. In some cases, businesses have been forced to close because they are unable to pay so today's news will be welcomed if it helps clip the wings of this organization.

[gkanai]

Oooh this one will be interesting. I hope the FTC has more muscle in the back rooms of Japan than JASRAC.

[Gestalt]

This is a most un-Japanese development (disturbing the status quo/Wa and all), Can't wait to see how it turns out.

[Mulboyne]

From the Yomiuri:

...The 2001 enforcement of a law on copyright administration business enabled new organizations to enter the music licensing service market. But JASRAC still dominates the market, and controls the majority of musical copyright in this country. According to sources close to the industry, JASRAC has concluded blanket licensing contracts with NHK and private TV companies. The contract enables TV broadcasters to air or record for airing every piece of music whose copyright is administered by the organization. Under the contract, the organization collects from individual TV stations 1.5 percent of overall sales from their broadcasting business in the previous fiscal year, irrespective of how often individual pieces of music have been used. In fiscal 2006, the organization collected about 26 billion yen in royalties from TV companies.

Although 10 organizations have registered themselves as music copyright administrators with the Cultural Affairs Agency since the new law came into effect in 2001, JASRAC maintains its dominant status in the market because of the massive quantity of music under its control. Therefore, TV broadcasters see little advantage in concluding blanket contracts with other organizations. Although TV stations are able to conclude a different contract under which royalties are paid on a pay-per-use basis, few have adopted the system due to the high costs and large amount of labor associated with keeping tabs on all the music. If a TV station wishes to use a piece of music whose copyright is not managed by JASRAC, it has to make an extra payment to another administrator. The FTC therefore pointed out that the current system functions to solidify TV broadcasters' dependence on JASRAC and hamper fair competitions in the market.

JASRAC completely monopolized the music licensing business for 62 years--under a 1939 law that approved the organization as the sole entity for conducting such business--until the introduction of the new law in 2001. Currently, about 14,500 lyricists and composers commission the management of their copyright to the organization. In fiscal 2006, the organization collected about 111.1 billion yen in royalties, of which about 110.7 billion yen were distributed to its members, according to JASRAC.

[Mulboyne]

Yomiuri: JASRAC criticized as anticompetitive

The Fair Trade Commission has notified the Japanese Society of Rights of Authors, Composers and Publishers that the society will soon be ordered to stop its practice of signing copyright-fee management contracts with broadcasters in a manner that prevents other companies from entering the copyright-protection market, it has been learned. According to sources, the FTC will order JASRAC to review its contractual format whereby NHK and commercial TV stations are authorized to broadcast and record all songs whose copyrights are managed by the society. JASRAC manages the copyright to a large number of music pieces. Since broadcasters can have unlimited use of the pieces if they pay a user fee to the society, making contracts with other copyright management companies increases their costs.

The FTC said the structure of JASRAC's agreement with broadcasters effectively blocks new companies from entering the industry. The commission intends to formally issue an order to the society to stop the practice. The FTC order is not likely to detail how JASRAC should cease making the umbrella agreement with broadcasters, the sources said. It appears the FTC will check the ratio between the number of broadcast music pieces whose copyright is managed by JASRAC and other companies, and will devise a framework for JASRAC to share user fees it receives with other firms. According to the Cultural Affairs Agency, 11 companies have entered the copyright-protection industry since 2001, when JASRAC's monopolization was dissolved thanks to enactment of the law on copyright management business. Since then, however, only two companies have entered the industry's broadcasting segment, where JASRAC's market share is 99 percent.