Since March 1 of 2005 when the Collective Management of Copyright Regulations formally came into force, registrations of copyright collective management organizations created an upsurge, and approvals were given almost unanimously in 2008 and 2009 by the Ministry of Civil Affairs. Then in 2009, these newly emerged organizations whipped up an IPR protection storm. Over a short span of four years, we have seen how these Regulations are working in the development of copyright collective management organizations in China. 

Xu Chao is one of the main drafters of the Regulations. Even after its promulgation, he keeps a close eye on the development and changes of copyright collective management organizations. In the interview, this journalist was so impressed by his great theoretical knowledge and the special understanding of the practical situation; I almost mistook him for a scholar, instead of an officer. Of course, he is also “wrong” in some aspects.     

“The development of copyright collective management exceeds my expectation”, Xu said at the end of the interview.

China IP: What do you think is the cause and the background for copyright collective management organizations coming up in China?

Mr. Xu: Market is the root cause. To put it specifically, collective management is a special mechanism set up to exercise copyright, and this mechanism is unique for intellectual property. But not all copyright works are subject to collective management. It depends on how the work is used or traded. So we can conclude that the trading type decides whether collective management and its executer – collective management organizations, are necessary. For example, software is not fit for collective management, because its trading is directly realized from suppliers to users, saving any intermediate link. But for musical works, things are different. Take the popular song The Moon in Mid-Autumn (The Moon) for example, it is so popular that people from everywhere in China know well about it, but the remuneration for the authors is only 16 Yuan. Let’s have a deep insight of the reason of the founding of collective management organizations. How much the authors should be paid if 16 Yuan is far away from enough? Maybe several or dozens of times of it is still insufficient given the fact that such a good work as The Moon is really scarce. But on the other hand, the number 16 Yuan is calculated based on the publishers operating costs. The fixed price of publications would go too high for buyers to afford if the publishers raise remuneration to the level it should be. So what’s the problem? The problem is that the investment and return of music works are quite different from that of literary works. The latter are realized mainly through publishing and issue, plus the benefits from the adaption while there are three return investment approaches for music works: firstly, broadcasting in radios and TVs; secondly, the use as background in places like supermarkets and the use in karaoke club; thirdly, recording, the so-called mechanical reproduction. All of the three approaches can be used repeatedly. We may draw a clear conclusion that, the publication of the song should not be the main way paying back to authors. The remuneration of the song can not be too high otherwise it will break the economic law. Copyright owners should demand their benefits in three areas: broadcasting in radios and TVs; background music and mechanical reproduction. Under such circumstances, how is it possible for the author or other copyright owners to charge users? Even if the charging is initiated, in what way should the users pay? There may be tens or hundreds of thousands of songs in one Karaoke bar. How can they find out the author of every song and pay them? This trading type presses for the collective management by an organization, which can help copyright owners maintain the rights granted by law. And it proves that for now, this is the best practice.
 
To a certain degree, collective management is adapted to our national policy to establish an innovation-oriented country and to vigorously develop the cultural and creative industry. No collective management, copyright owners’ right is in the air, and to encourage innovation becomes empty talk.

China IP: What are the functions of copyright collective management organizations?

Mr. Xu: The purpose for us to set up copyright collective management organizations and to promulgate the Collective Management of Copyright Regulations is to provide convenience to users and right owners. We can compare collective management organizations to a one-stop service platform, via which both right owners and users can solve problems. Karaoke bar operators need not search out tens of thousands of authors; nor are composers bothered to go to every corner of the country to obtain evidences and claim rights. To facilitate and to promote trading, this is the significance of copyright collective management organizations.

China IP: Even now, collective management is not well accepted by the public. Why did you formulate such a regulation four years ago?
 
Mr. Xu: Next year will be the 100th anniversary of the promulgation of the Copyright Law of the Qing Dynasty. However, collective management organizations firstly appeared in the 1990s. We must say that in China, Copyright Law is still new to many people, and collective management is strange to them. The legislation of collective management is a gradual process, from ignorant to understanding and finally we know that a collective management system is a must to market economy. It is the same process as we carried out the open door policy and developed a market economy.

China IP: Can we say that copyright collective management organizations are the agencies of copyright owners?

Mr. Xu: This is not true. Copyright collective management organizations are quite different from the agencies in the traditional sense. They have three major differences: Legally, copyright collective management organizations are set up on the basis of trust. It exercises the holding of the properties. But agencies represent a contractual relationship of debt. Collective management organizations may exercise rights in their own names. During lawsuits, they have standing in their own name. Secondly and most importantly, the same kind of works can only be managed by one organization, but they can have many agencies. This is also what we emphasized during the legislation. The third difference is that agencies’ service can be free or chargeable, and can be conducted by companies or by individuals. But collective management is non profit-making and must be performed by companies.      

China IP: Just now, you mentioned that the same kind of works can only have one collective management organization. Isn’t it better to have competition?

Mr. Xu: Different countries have different rules. In the United States, the same kind of works can find several collective management organizations. But in Europe, most countries adopt the “one-organization rule”. This is to save cost. Right owners don’t interface with users directly. There is an intermediator – copyright collective management organization– between them. This will certainly increase the cost, and the additional cost can only be borne by copyright owners. This cost shall not be too high, since the organizations are non-profit making. Therefore, copyright administrations must be involved to perform the supervision role, which will increase governmental cost. Another reason is that collective management organizations are set up to provide “one-stop” services. The “several-organizations practice” runs counter to this principle.

China IP: Will only one collective management organization bring in negative effects, such as monopoly? 

Mr. Xu: We have thought about the negative effects. Since we don’t have any example to follow, we don’t know how it will go. We can only refer to the experiences of foreign countries. In order to prevent malicious monopoly, bureaucracy and government’s undutifulness, we have introduced a supervision mechanism internally, socially and governmentally. Now, we can see that social supervision is functioning.   

China IP: Since collective management organizations represent right owners to exercise rights, and copyright is a private right, why does the government have to be involved?

Mr. Xu: Copyright collective management organization is not a private enterprise in the simple meaning that represents personal interests. Their work concerns the benefits of the public and the society, and sometimes of foreign countries. Charging of Karaoke songs is an example. With the huge number of right owners and users, it has actually come down to social interests. Therefore, the government must perform its supervision role, and started the work from the very beginning of the establishment of the organizations, so as to prevent them from going out of control. In a word, if collective management organizations were agencies, the government would keep the hands off. But now, the government must perform its supervision role to maintain social stability, since the free trading principle doesn’t completely apply here.    

China IP: Regarding the Collective Management of Copyright Regulations, I have a small question. In Part II about the criteria to be satisfied to establish the Regulations, why does “it is able to represent the interests of the relevant right owners throughout the country” have to be a criterion?

Mr. Xu: Actually, this is the most important criteria. It defines the objects that copyright collective management organizations represent, who are not simply the right owners enrolled in the societies or associations, but all relevant owners. For example, when they charge Karaoke bars, they should represent all the right owners concerned, instead of a part of them. Users of musical works need only pay once. On the other hand, collective management organizations are required to give the money collected to all right owners, including those non-members. No discrimination is allowed. Actually, this “representing” also conforms to the “one-stop” service principle. Of course, the “all right owners” requirement can’t be attained 100%. In this high-technological age, one work may involve the interests of too many people. It’s impossible to put all these people’s rights into consideration. Therefore, I think we shall not be too “principlist”.

China IP: These years’ implementation of these Regulations has well justified its legitimacy and social contribution. Do you think there is need for improvement?
 
Mr. Xu: So far, we find one problem – rights sometimes overlap. If two or more societies are entitled to claim rights from the same user, to whom should the user pay? This is also a derivate of the Karaoke issue. You can say the user uses the song, and you can also say he uses the MV made by a video production company. Therefore, both CAVCA and MCSC have the right to charge. Such being the case, shall we give the right to the societies or just one of them? These were the two opinions when we instituted the regulations. Finally, the “both societies” opinion prevailed. We think law should not intervene in charging, so we didn’t specify which one had the right, which means we acquiesced in two claimers. However, after the Regulations were promulgated, we found this regulation was not in compliance with the practical situation of China. It’s always hard to ask people to pay, needless to say to pay twice. More importantly, Chinese people bear grudges against illegal charges. If they are asked to pay twice for one thing, they will consider it an illegal charge. We can’t say this is a problem of the collective management system. It is actually a Chinese characteristic phenomenon, and we must respect this phenomenon. Later, with the intervention of the NCAC, the two societies agreed on which one to charge.
This is a big enlightenment to us. We are in a country of non developed market economy, non developed credit system, non developed fair trading principle, and the lack-of-respected knowledge. We must put these situations in consideration when we institute regulations, and try to make laws in line with the practical situation in China.        

China IP: The earliest collective management organization – MCAC was established in 1992. Why is there such a long time span between the establishment of MCAC and the promulgation of the Regulations?

Mr. Xu: I think this is an interpretation problem of law toward the association. The first Copyright Law after the founding of the new China was promulgated in 1990, where no collective management rule was specified. There was only an enforcement regulation saying that “copyright owners may exercise their rights by the way of collective management”. This is the legal basis of MCAC’s establishment. However, enforcement of this Law gave rise to many problems. The first lawsuit “Suing Jacky Cheung for not paying the musical works used in his concert” confronted two questions: who had the right to sue and who should be sued. For the qualification question, the Supreme People’s Court explained that by entrusting, lawsuits may be filed in the personal name. For the object question, it was not until the WIPO pointed out that the sponsor of the concert, instead of the singer, should be sued that the issue was settled. We had MCAC at that time, but it was not properly interpreted by law. Afterward, many IPR protection actions of MCAC served as precious practical experiences for our legislation. When we amended the Copyright Law in 2001, we stipulated the collective management organization issue in Article 8. Specific provisions on the organization were to be formulated by the State Council. This is how our Collective Management of Copyright Regulations is formulated. Generally speaking, I agree that this collective management form comes a little bit late.

China IP: In 2008 and 2009, especially in 2009, many collective management organizations, MCAC and CWWCS particularly, are busy with their right-safeguarding activities. How would you evaluate their activities?

Mr. Xu: I will certainly give them positive evaluations. I think this is the rule that things develop. Besides societies and associations, Internet video suppliers are also the activists. I think this is a good sign. Firstly, it shows that people begin to realize that they should use copyrighted works, instead of disregarding or even trampling other people’s intellectual works. Secondly, right owners are still in a weak situation. Such a situation cries for right-safeguarding pioneers. No matter how the rights are safeguarded, I consider it an awakening of mind, as long as it does not violate the law. This is also an education toward the public and enterprises. To sum up, I understand them and I support them.
  
China IP: Some people complain that collective management organizations charge too much. What do you think?

Mr. Xu: I want to remind them that they should not infringe upon other peoples’ rights on the excuse of “high” charge. Actually, the amount charged is stipulated by the Contract Law. It is agreed through negotiations by the two parties. When court decides the amount of compensation, it won’t listen to the requirement of one side only. I hope people could raise their IPR protection consciousness, respect intellectual properties, and do not take copyright infringement as “no big deal”.

China IP: Do you have expectations about the performance and achievements of collective management organizations this year?

Mr. Xu: They actually exceeds expectation.

China IP: Can we make such a guess: in the future, that if all people respect copyright and no one infringes, will collective management organizations disappear?

Mr. Xu: I don’t think they will disappear as long as market economy exists.  

(Translated by Hu Xiaoying)