LEGAL ASSESSMENT FOR SUBSCRIPTION-BASED DIGITAL PLATFORMS (SVOD) UNDER THE TURKISH COPYRIGHT LAW (FSEK) AND AGREEMENTS WITH MUSIC COLLECTING SOCIETIES
Video on Demand (VOD) platforms have existed for more than 20 years worldwide and become popular in recent years in Turkey. It is expected for such platforms to increase their effects and density in the media business in the following years and become even more popular than the classic FTA (Free to Air) channels in the industry. This causes an inevitable consequence that there are many issues to discuss in terms of the practice of such platforms from Turkish law perspective nowadays.
In this article, the features of SVOD platforms (a special type of VODs), and whether these types of platforms that are not classical broadcasting organizations need to get permission by making license agreements with music collecting societies within the scope of Turkish Copyright Law (FSEK) will be evaluated and the current problems at this area will be discussed.
1.What is SVOD?
“SVOD” is essentially an abbreviation of “Subscription Video on Demand” and is translated into Turkish as a subscription-based digital platform. In SVOD practice, its subscribers are able to watch the platform’s original (contents that platforms generally produce jointly with other production companies and broadcast on their own platforms as first-run) and library (contents that have been previously broadcasted on cinema, FTA broadcast or other types of platforms) contents provided that they subscribe to the system. The most well-known global SVOD platforms are Disney+, Netflix, HBO Max, Hulu, Amazon Prime, while those operating locally in Turkey are BluTv, TV+, Mubi, BeIn Medya, Gain and Exxen.
The most distinctive feature of SVOD platforms, unlike other VOD platforms, is that all content can be watched without repetition limits with monthly/yearly payments, and the broadcasts do not contain any advertisements. Although some platforms offer packages containing advertisements (such as Exxen, which offers package selection with/without advertisements), they should be considered as SVOD in legal definition, since they are essentially membership-based ones.
SVOD platforms are not considered among the "broadcasting organizations" in the classical sense specified within the scope of FSEK. These platforms are also the ones required to obtain broadcasting licenses from the RTÜK (Turkish Radio and Television Supreme Council) and are essentially subject to RTÜK’s administrative control. Although there are some debates on the legal definition of such platforms, as a conservative approach, it becomes beneficial to consider them likewise classical broadcasting organizations, while evaluating them within the scope of FSEK rules. Even though it is a known fact that RTÜK does not directly apply its classical restrictions (applied to the FTA channels) to these platforms, this article will examine the issues within the scope of FSEK rather than RTÜK practice.
2. Music Collecting Societies and the Rights that They Own
Article 42 of FSEK orders that “Authors and related rights holders and those persons who reproduce and distribute nonperiodical publications by way of acquiring powers to exercise economic rights by contracts concluded in accordance with article 52 of this Law [or] by way of exercising rights on literary and scientific works in accordance with article 10 of this Law, may set up more than one collecting societies in areas which shall be determined pursuant to regulations and uniform statutes to be prepared by the President, in order to protect the mutual interests of their members, the management and pursuit of the rights granted by this Law and the collection and distribution of fees to the rightholders”.
Music collecting societies, which are a specific type of such societies established within the scope of the given legal definition, protect the common interests of their members and provide the administration and follow-up of the copyrights of their members, the collection of royalties, and the distribution of such royalties to the right holders with certain tariffs. Musical professional associations in Turkey are declared as MESAM (Turkish Musical Work Owners Professional Association), MSG (Turkish Professional Association of Musical Work Owners Group), MÜYOR-BİR (Turkish Music Performers Association), MÜZİKBİR (Turkish Phonographic Producers Association), MÜ-YAP (Turkish Phonographic Industry Society), MÜYA-BİR (Turkish Phonographic Producers Association) and TSMB (Performing Artists and Musicians Collecting Society).
The rights that music collecting societies are able to use in favor of their members are limited to the rights transferred by their members to the societies’ favour. FSEK states the financial rights of the right holders as “right to adapt”, “reproduction right”, “dissemination right”, “representation right” and “right of public broadcasting through signals, sound and/or image transmission devices” under the numerus clausus principle. Among these rights, there is no doubt that the right to disseminate will be used directly by the right holder. Among the remaining rights, it is clear that the music collecting societies use the representation right and right of public broadcasting in practice. Regarding the right to adapt, it is accepted that this right cannot be exercised by connecting societies, especially in terms of synchronization (for example, placing a musical piece behind a movie scene) which is frequently applied in the industry. The Supreme Court has clearly stated the mentioned fact in its recent decision and stated that agreements with connecting societies will not be sufficient where synchronization is applied. In this issue, music collecting societies also recommend signing a separate agreement with the edition companies and taking their permission in cases where such a synchronization process will be made in practice.
3. Is it possible for music collecting societies to request tariff-based Royalties from SVODs?
Article 43/1 of FSEK orders that “Radio-television organizations, cable and satellite broadcasting organizations and organizations that shall carry out broadcasting and/or transmission by using technical means now known or to be developed in the future, are obliged to obtain prior permission from right holders regarding opera, ballet, and similar staged works that they shall use in their broadcasts”. Again, Article 43/2 of the Law orders that “For works, performances, phonograms and productions other than staged works, these organizations are obliged to obtain permission from the collecting societies of the relevant field, by concluding a contract in accordance with article 52, to make the payments for such broadcasts and/or transmissions to such societies and to inform such societies of the lists of works, performances, phonograms and productions that they have used”.
In accordance with Article 43/2, it is clear that radio and television organizations need to sign an agreement with music collecting societies and obtain the related permissions. As mentioned above, although SVOD platforms are subject to RTÜK legislation and practices, they are not considered as television establishments in the classical sense. The discussion starts at this point, and there is uncertainty about whether SVOD platforms should necessarily make agreements with music collecting societies, just like terrestrial broadcasting channels, under the relevant article of the FSEK.
Although SVOD platforms are not radio/television organizations, in our opinion, they are the ones “broadcasting and/or transmitting” the visuals/sounds to the public and should be included under the definition of "organizations that shall carry out broadcasting and/or transmission by using technical means now known or to be developed in the future " mentioned in FSEK 43/1. We are of the opinion that the wording of the relevant article was written with the possibility of such technical and technological developments, and the purpose of the legislator at this point is to include all kinds of public transmission institutions within this scope. Although it is debatable whether broadcasting only to the “members” makes this issue a little bit complicated in terms of “public” transmission, it is still quite possible that in a possible dispute, legal authorities will vote in favor of collecting societies and include SVOD platforms within this scope.
There are also controversial points about the royalties (tariff based prices) that music collecting societies should apply at this point. For example; in the 2022 tariff of MESAM and MSG, a fee of 9% of the subscriber revenue or a minimum of approximately Tl 17 million has been determined for SVOD platforms with a minimum of 100 thousand subscribers. How fair this is, however, is clearly debatable. First, music collecting societies are able to make discounts on these tariffs, and the agreed prices are determined by mutual agreement of the parties to be much less than those specified here. While this is the case, it is not clear why the collecting societies set their tariffs at this level mentioned above. On the other hand, in European practice, collecting societies such as MESAM and MSG, which protect the rights of direct right holders (not the ones protecting the rights of phonogram producers), demand 2.5% of the average subscriber income from SVOD platforms. Although prices in Turkey are demanded as to be close to the European practice, this situation is proportionally much higher than the royalties demanded in classical terrestrial broadcasts in Turkey. In our opinion, this situation seems contrary to the principle of equal treatment (in terms of many areas of law) and legally harms the practice.
In addition, the percentage of local content used in the libraries of SVOD platforms should also affect the prices stated here, and it would be wrong and unfair to proceed with the assumption that the entire library of these platforms is local content. However, music collecting societies only aim to agree on a price as high as possible (by approaching SVOD platforms like organizations that make commercial gains from music broadcasting), regardless of the level of local use of the content.
On the other hand, when we look at the subject in terms of collecting societies, we believe that there are some unclear parts, as well. Since the global structures of the SVOD platforms mentioned here greatly affect the revenue items, and the musical works used are used not only in the structuring of the SVOD platform in Turkey, but also in the structuring in different regions of the world, the issue of how to calculate the revenues of these platforms is controversial.
In this context, it is controversial how appropriate it is to determine a price tariff based on the number of subscribers/income of these platforms only in Turkey, and we believe that this practice will become clear in the coming years.
4. Conclusion and Suggestions
In accordance with the issues described above, it will be healthy for the SVOD platforms to reach an agreement with the music collecting societies listed here in accordance with FSEK 43/2, such as conventional FTA channels.
Of course, the situations mentioned here have not yet reached a clear practice and are clearly open to interpretation. However, acting in agreement with music collecting societies in a field such as the media sector where astronomical economic valuations are made and where there is a risk of paying high compensations for the slightest violation of rights or penal sanction due to copyright infringement will keep these companies safe until the issue is more clarified. Music collecting societies also try to solve the problems by signing agreements with these platforms in practice.
On the other hand, music collecting societies should evaluate this issue in a more holistic manner rather than approaching the issue only at the level of royalties, and they should approach with more moderate and acceptable conditions in order for these platforms to maintain their existence in Turkey efficiently.
Finally, much clearer rules need to be introduced regarding SVOD platforms. It is clear that the piecemeal regulations cause more problems in the practice related to these platforms. In this sense, the introduction of detailed provisions regarding SVODs and all other VOD platforms, not only under the protection of RTÜK, but also within the scope of FSEK and other relevant legislation will ensure that problems are quickly resolved in practice.
Uğurcan Tekin, LL.M
Partner - Attorney at Law / Trademark Attorney
