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Last Updated: Wednesday, 17 August 2005, 16:11 GMT 17:11 UK
EU online music deal closer
CD and online music service
Online music stores have mushroomed in the past year
Belgium and the Netherlands will scrap their restrictions on licensing music to online users, a move that is hoped will help drive sales of downloads.

They have accepted proposals that aim to create an European Union-wide online music rights clearing system.

Anyone interested in offering paid-for downloads currently has to deal with 16 different licensing bodies in the EU.

The plan is to help EU online music services compete with those in the US, where downloading is more widespread.

Last year, people spent an estimated 207m euros (US$248m) on music downloads in the US, compared to 27.2m euros in Europe.

Monopoly

Proposals for an EU-wide licensing system for online music were first put forward by the European Commission, the EU's executive body.

The Commission has threatened to sue the music industry on competition grounds if national bodies did not change the way they enforced online copyright restrictions.

It complained that the rules governing online sales could not be the same as those covering CDs, records and cassettes.

"Copyright licensing procedures based on national territories are difficult to reconcile in a borderless online world," the Commission said.

Previously each country's copyright agency had demanded a cross-licensing deal in any EU member state where its music was being downloaded.

Now the Dutch music copyright agency BUMA, and the Belgian agency SABAM, have said that they will not enforce the so-called "economic residency" clause in the case of online music.

Online boost

The EU said it sees modernising the licensing of music for online services as highly important, and is hoping an agreement can be reached with other national music copyright agencies by October.

The idea is to boost the competitiveness of the online music business across Europe.

"The absence of pan-European copyright licences makes it difficult for new European-based online services to take off," said Internal Market and Services Commissioner Charlie McCreevy when the EU launched its initiative last month.

"This is why we are proposing the creation of Europe-wide copyrights clearance."

As well as dealing with national licensing bodies, online music stores also have to set up systems to collect royalty payments from each EU member state.

A single system governing music rights would save money and boost revenues for artists, according to the EU.


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