[Guest Post] No Cultural Funding From a Collecting Society at Its Own Discretion and Not for Unauthorised Parties

Key Takeaways

• AG opinion allows up to 10% deductions from royalties
• EU law requires societies to prioritize rights‑holder remuneration
• Fair‑compensation funds cannot finance third‑party cultural projects
• CRMD mandates societies act solely for rightholders’ benefit
• CJEU likely to reject AG’s discretionary funding model

Pulse Analysis

The dispute centers on VG WORT’s practice of diverting a portion of the fees it collects for private copying and public lending into its Fund for the Promotion of Science. While the German AG argues that the Collective Rights Management Directive (CRMD) permits such deductions, the opinion rests on a broad interpretation of intellectual property as a tool for cultural development. This reading conflicts with the EU Charter’s framing of copyright as a property right that must primarily protect the economic interests of authors and performers.

EU law, particularly Articles 11(4) and 12(4) of the CRMD, coupled with the InfoSoc and Rental and Lending Rights Directives, imposes a strict duty on collecting societies to act in the best interests of their members. The directives limit deductions to amounts objectively necessary for rights management and forbid discretionary allocations to third‑party cultural initiatives unless they directly benefit rights‑holders. The AG’s suggestion that up to a 10% cut can be used for broader cultural projects runs afoul of these provisions, as established CJEU case law requires fair compensation to flow to rights‑holders without diversion.

A forthcoming CJEU preliminary ruling will have far‑reaching implications. Should the Court side with the critics, collecting societies will need to restructure their funding models, ensuring that any cultural or educational support is channeled through mechanisms that demonstrably benefit rights‑holders. This outcome would reinforce the primacy of remuneration in EU copyright policy and limit the ability of societies to self‑allocate revenues for public‑interest projects, reshaping the financial landscape of cultural promotion across member states.