The European Commission announced Thursday that it wants to spur the growth of a Europewide market for online music services by making it easier for new providers to get licences to sell songs over the Internet.

The move could end current restrictions, where consumers in one European country are prevented from buying downloads from the cheapest provider because laws prevent companies offering services across the whole of the European Union.

The Commission, which proposes new legislation and regulates to ensure fair competition in the 25 member EU, said that the main obstacle to the growth of legal online music services was the difficulty companies face in getting licences to offer music across Europe.

Territorial model hinders growth

At present, online music providers have to apply for licences in each of the 25 member states, dealing with collecting societies that are in charge of securing royalties for artists and music firms.

Internal market commissioner Charlie MacCreevy said: "The absence of pan-European copyright licences made it difficult for the new European-based services to take off. This is why we are proposing the creation of Europe-wide copyright clearance."

In a study published on Thursday, the Commission said that entirely new structures for cross-border management of copyrights were needed and that the most effective model for achieving this was to enable copyright holders to choose a collecting society to manage their work across the EU. It believes that introducing competition among collecting societies, which enjoy actual or effective monopolies in many EU member states, would increase earnings for copyright holders by lowering administrative costs and allowing the most efficient societies to compete for artists.

The Commission is expected to present a proposal for a directive in the third quarter that would end the current situation, in which copyright holders have no choice but to register with their national collecting society. The directive would allow artists and content providers to choose which society managed their work.

”Years of toil”

The initiative was welcomed by representatives of European online music download sites.

"After years of toil, we're pleased that the Commission has recognized the problem in the online music licensing regime," said Lucy Cronin, executive director of the European Digital Media Association (EDIMA), which represents e-commerce companies and music labels.

The current system, based on national licensing and collecting societies, is no longer appropriate for digital services, Cronin said. EDIMA's preferred solution was for right-holders to be allowed to choose which collecting society represented them, creating competition among the different national organization to attract content providers. This could also benefit consumers, she said: making it easier to get pan-European licences will increase the amount of music available over the Internet as copyright holders seek to increase their revenue.

The IT industry argues that the lack of an easy-to-use, one-stop shop licensing system has held back the development of the European market for online music services. According to figures from the Business Software Alliance, which represents around 30 leading IT vendors, the market for online music sales in the EU was only a tenth of the US market in 2004, at €28 million to €207 million across the Atlantic.