In the world of intellectual property rights neighboring rights occupy a special place. It is important for phonogram producers to properly understand these rights, as they provide solid legal protection for their investments. In this article, we highlight in detail the neighboring rights of phonogram producers under Belgian law.
What are neighboring rights?
Neighboring rights are intellectual property rights that provide protection for performances that although not covered by classical copyright fall, but which usually trigger copyright law. The Code of Economic Law (CEL) recognizes five categories of rightholders within neighboring rights: performers, producers of phonograms, producers of the first fixations of films, broadcasters and press publishers.
Importantly, Article XI.203(1) WER expressly provides that neighboring rights do not affect copyright. These rights operate complementarily and do not limit each other.
The term phonogram
A phonogram is defined as any recording of sounds of a performance or of other sounds exclusively for the purpose of hearing. This definition is consistent with Article 3(b) of the Rome Convention from 1961 and covers a broad spectrum of sound recordings: music, songs, voices, nature sounds, birdsong, or any other first recording of sounds.
The nature of the medium on which the record is made is unimportant to the protection. Whether it is vinyl, CD, digital files, or future technologies - the protection remains in place.
Who are producers of phonograms?
Under Belgian law and in accordance with the Rome Convention, a producer of phonograms is defined as the natural or legal person who has financial and other responsibility for the enterprise that creates the fixation of sounds. This definition is broad and thus includes traditional record companies as well as independent producers or even individual musicians who finance their own recordings.
Only the first commitment counts
Crucial: Only the producers of the initial commitment of a phonogram have neighboring rights. For example, anyone who would copy an existing soundtrack onto CD would not obtain a neighboring right to this second fixation. Only the producer of the original master tape/master becomes the rightholder.
The economic rationale
The law grants these rights to producers because they bear the costs and risks of producing a sound work. They are responsible for the initial recording, distribution network, marketing, etc. All of these activities involve a significant investment. Without these rights, there would be few candidates to assume the costs and risks.
A key aspect is that it does not matter for protection whether the producer is recording copyrighted works or not. Recordings of non-protected sounds can also fall under this protection, as long as they are a series or sequence of sounds and not an isolated sound.
Important: The issue in determining who is a producer is not about who has the phonogram actual brings about, but to whom that is the organizational and financial responsibility carries. Indeed, the background of this right lies in the investment risk that producers take in realizing recordings. Factors such as who finances the instruments, the studio, the recording equipment, and who bears the production costs are decisive - not who pushes the buttons or actually records the music.
The concept of a phonogram producer thus has a different interpretation than that of a music producer. The music producer is someone who is responsible for the creative and technical process of recording, mixing and producing music. The music producer is more focused on the creative side, while the phonogram producer manages the financial and organizational side of production. In some cases, the music producer may also be the phonogram producer, such as when an artist records and finances his own music.
Who is actually the producer? Modern challenges
In today's music world, it is no longer so obvious that record labels automatically qualify as producers. Because of the many different ways music is produced today - from bedroom producers with home studios to complex collaborations - it depends on the concrete facts and circumstances as to who actually organized and financed the production.
Practical factors which the judge will assess:
- Who bears the cost of studio, instruments, recording equipment?
- Who has organizational control over production?
- Who bears the financial risk of recording?
- Who initiates and coordinates the recording process?
Note: Operating costs such as marketing and promotion after recording count not in determining producership - these do not relate to the manufacture of the phonogram itself.
Presumption of evidence: who is considered the producer?
Article XI.209, § 2 WER contains an important presumption of proof. Unless proven otherwise, anyone is deemed a phonogram producer whose name or identifying acronym is listed as a phonogram producer on:
- The performance (recording) itself
- A reproduction of performance
- At a communication to the public of the performance
This presumption is of great practical value in disputes On the holding of rights.
Multiple rights to a single phonogram
Important: Multiple rights may apply to the same phonogram:
- The copyright of the composer and lyricist on the musical works
- The neighboring rights of the performers (singers, musicians)
- The neighboring right of the producer on the phonogram itself
These rights coexist and must be dealt with separately in contracts and licenses.
The rights granted: a wide range of powers
Belgian law recognizes the producers of phonograms property rights only toe. Producers have no moral rights - this in contrast to authors and performers. These property rights have been harmonized at the European level by Directive 2001/29/EC on the harmonization of certain aspects of copyright and related rights in the information society. Rights include several aspects:
The reproduction right
The reproduction right is at the heart of protection. Under Article XI.209, § 1 WER, only the producer has the right to reproduce or permit the reproduction of his performance, regardless of the manner, form, direct or indirect nature, temporary or permanent character, in whole or in part.
Broad scope: This right gives producers control over any reproduction based on the first capture, regardless of the technical means used (CD, DVD, digital files, etc.). All forms of copy are covered:
- Definitive or temporary reproductions
- Full or partial copies
- Copies for commercial sale or free distribution
- Physical and digital copies
In the Pelham case, the Court of Justice ruled in a judgment dated July 29, 2019 (Case C-476/17) that a phonogram producer can prevent a sound fragment of his phonogram, however short, from being taken over by a third party and recorded on another phonogram, unless that fragment is used in a modified form unrecognizable to the ear. This provides strong protection against unauthorized sampling.
Rental and lending rights
The reproduction right also includes the right to authorize the rental or lending of reproductions of their sound recordings. Thus, the phonogram producer has exclusive control over the rental and lending of phonograms (for example, by video stores or commercial landlords).
Distribution right
Producers have an exclusive distribution right for physical copies of their phonograms.
Consent required: First distribution of physical copies (CDs, vinyl, physical media) always requires the permission of the phonogram producer.
Depletion: However, this right is exhausted upon the first sale or other transfer of ownership by the producer of the reproduction of his sound recording in the EU or with his consent. After this first sale, the producer cannot control how the copy continues to be traded within the EU.
Public disclosure right
Article XI.209, § 1(4) WER grants producers the right to communicate the phonogram to the public by any process. This includes making it available to the public in such a way that it can be accessed by members of the public at a place and time individually chosen by them (such as streaming services).
This public communication right has the same content as the right granted to authors and provides full control over the public communication or online availability of sound recordings.
Protection duration: long-term protection
The duration of protection for phonogram producers is significant and provides long-term protection:
- Basic Rule: The rights expire fifty years after the fixation of the phonogram
- Upon publication: If the phonogram is lawfully published within this period, the rights shall expire seventy years from the date of the first lawful publication
- At public communication: If there is no publication within fifty years but the phonogram is lawfully communicated to the public, the rights shall expire seventy years from the date of the first communication
All protection periods are calculated from January 1 of the year following the fact that the rights arise.
Transferability and licensing
The property rights granted to producers are movable rights that pass by inheritance and are subject to full or partial transfer under the provisions of the Civil Code. In addition, both exclusive and non-exclusive licenses may be granted.
This flexibility in transfer and licensing is crucial to the music industry, where complex contractual relationships exist between different parties.
The "use-it-or-lose-it" principle after 50 years
A special provision in Article XI.210 WER introduces a "use-it-or-lose-it" mechanism. If a producer of phonograms fails to offer sufficient copies for sale or make them available to the public (e.g., via streaming) 50 years after lawful publication or public communication, the performer may terminate the contract.
This right can be exercised if the producer, within one year after registered notice by the performer, does not give effect to both acts of exploitation. When all contracts are terminated, the producer's rights to the phonogram expire.
Additional compensation after 50 years
For phonograms exploited for more than 50 years, the law grants performers the right to an annual additional payment of 20% of the producer's income from reproduction, distribution and making available.
Compulsory license and equitable remuneration: a balancing system
The compulsory license for public performance
Article XI.212 WER contains an important limitation on the exclusive rights of phonogram producers. When a performer's performance, recorded on a phonogram, is lawfully reproduced or broadcast by broadcasting, the producer (nor the performer) may oppose:
- Public implementation: Provided the phonogram is not used for a performance and no admission fee is charged from the audience
- Broadcast: Radio stations may broadcast these phonograms below without prior permission
This compulsory license means that phonograms may thus be used for background music in stores, restaurants, radio broadcasts, etc., without individual permission from the phonogram producer. Practical examples: a restaurant may play music for its customers, a radio station may broadcast songs, a store may play background music - all without having to seek prior permission from each individual producer (and performing artist).
Fair compensation as compensation
As compensation for this compulsory license, Article XI.213 WER grants the phonogram producer (and performer) the right to equitable remuneration for each use in accordance with Article XI.212. This compensation scheme is a crucial component of revenue in the music industry.
Key features of fair compensation:
- Mandatory distribution: The remuneration received is divided equally between performers and phonogram producers (50% each) - this division is of mandatory law
- Non-transferability: The performers' share cannot be transferred to phonogram producers
- Collective collection: The fee is collected by approved management companies
- Universal application: Applies regardless of where the phonogram was recorded
This system ensures that, on the one hand, users (such as restaurants, stores, radio stations) have easy access to music without complex individual negotiations with phonogram producers, while, on the other hand, phonogram producers are compensated for the use of their phonograms.
Limitations and exceptions: a wide range
In addition to the compulsory license for public performance and broadcast discussed above, the neighboring right of producers has several other limitations and exceptions, established in Article XI.217 et seq. WER.
Important: These exceptions can only be applied if all the specific conditions are met. It is essential to check beforehand that all the conditions are met - otherwise the unauthorized use infringes the right of the phonogram producer.
General exceptions
Article XI.217 WER contains a wide range of exceptions, including:
- Quote and critique: For criticism, polemic or review, in accordance with honest professional practice (e.g. excerpts in film reviews)
- News coverage: Short excerpts in current affairs reports on cultural events
- Private use: Reproduction by natural persons for private use without commercial purpose
- Parody and caricature: With humorous purpose, taking into account fair customs
- Cultural heritage: Reproduction by libraries, museums and archives for preservation purposes
- Accessibility: Adjustment of performance for people with disabilities
- Text and data mining: For research purposes
- Private communication: Play in private or family settings, including specific contexts such as retirement homes
Education and research
Article XI.217/1 WER provides specific exceptions for educational institutions:
- Quote for educational purposes
- Cost-free implementation at school activities
- Reproduction and communication for illustration in teaching
- Digital use in secure electronic environments
Lending by libraries
Article XI.218 WER provides that producers cannot prohibit the lending of phonograms by institutions recognized or established by the government, provided that such lending has an educational or cultural purpose.
Orphan works and works out of print or out of print
Articles XI.218/1 and XI.218/2 WER provide opportunities for heritage institutions to digitize and make available orphan works and works that are not or no longer on the market, provided that strict conditions are met.
The role of management companies
An important aspect of the phonogram producer's neighboring right concerns the role of management companies. These organizations play an essential role in:
Collection of equitable compensation
Management companies collect equitable remuneration for public performance and broadcasting of phonograms. In Belgium, these are PlayRight (for performing artists) and Simim (for phonogram producers). The remuneration is shared equally between the two categories of rightholders.
Important: In addition to equitable remuneration for neighboring rights, users must also pay royalties through SABAM for the use of the musical works themselves. Since 2020, through the platform, users can UNISONO (managed by SABAM, PlayRight and Simim) obtain one integrated license covering both copyright and related rights.
Collective management
For phonogram producers who lack the resources to individually manage their rights, management companies offer an efficient solution for:
- Licensing of users
- Monitoring usage
- Collection and distribution of fees
- International cooperation
In Belgium Simim the sole management company for the neighbouring rights of phonogram producers.
Additional fees
Pursuant to Article XI.210, § 4 WER, a representative company of performers is designated by Royal Decree for the collection and distribution of the supplementary remuneration due to performers for phonograms over 50 years old. This is PlayRight.
Issues and pitfalls
For phonogram producers, numerous legal pitfalls lurk. One wrong decision can cost years of revenue or mean the loss of valuable master rights:
- Property disputes: Who is really the phonogram producer? Without clear documentation, you may lose master rights to unexpected parties
- Contractual pitfalls: Full transfer versus licensing can mean the difference between a one-time payout and lifetime income
- The 50-year trap: After 50 years, performers can terminate contracts and claim 20% of your income
- Production Responsibility: Document who has organizational and financial responsibility - not who is actually recording
- Cost sharing: Production costs (studio, instruments) determine ownership - operating costs (marketing) do not count
- International complexity: Different rules by country can threaten your rights in key markets
- Sampling risks: Even shortest fragments are protected - costly breaches loom
- Missed revenue: Without registration with management company Simim, you may miss out on equitable fees
When to seek professional legal advice?
The neighboring rights of phonogram producers are evolving at lightning speed in the digital music world. Specialized legal advice is essential in these situations:
Before things go wrong (prevention):
- Drafting well-drafted production and distribution contracts that protect your interests for years to come
- Contract negotiations where major interests are at stake
- Strategic choices: transfer master rights or licensing? This decision determines decades of revenue
- International expansion - different countries, different legal pitfalls
If things go wrong at all (crisis intervention):
- Property disputes: Someone is claiming your master rights - every day of delay costs money
- Sampling conflicts: Defaults can block your entire catalog
- 50-year breach of contract: Performers want to reclaim lucrative classics
- Infringement procedures: Others use your phonogram without permission
Optimize growth opportunities:
- Acquisition of music catalogs - due diligence reveals hidden risks and opportunities
- Revenue optimization through management companies and complex licensing structures
- Structuring modern collaborations and production models
Conclusion
The neighbouring rights of phonogram producers provide a robust protection framework for investment in the music industry. With rights that can last up to seventy years and extensive opportunities for commercial exploitation, these rights are valuable assets for any music producer.
The complexity of this area of law, combined with rapid technological developments in the music industry and the increasing role of management companies, make it essential to seek specialized legal advice when making important decisions. A thorough knowledge of these rights, including their limitations and obligations, can make the difference between a successful and a problematic career in music production.
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