Six-monthly reporting, remuneration adjustment and protection of authors (AGCOM Resolution No. 95/2024)

As the legislation seeks to balance the interests of authors, publishers and users while ensuring fair remuneration for content creators, one of the most important developments concerns transparency and reporting obligations.

The Resolution imposes new transparency obligations on publishers, including a reporting obligation, and specifies that the relevant information must be provided to authors at least every six months. The information to be disclosed must include:

• The identity of the parties involved in the exploitation of the work.
• The ways in which the works are exploited.
• The revenues generated by the exploitation of the works.
• Specific data concerning non-linear audiovisual media services (including figures for purchases, views and subscribers).

For example, in the publishing sector, any publisher that previously provided only generic annual sales reports (or, in the worst cases, no report at all) will now have to implement a management system capable of collecting and providing a detailed six-monthly report. The report must include the number of copies sold, revenues generated from sales, income received under sublicensing agreements and information concerning secondary users.

In the event of non-compliance, publishers that fail to comply with their transparency and reporting obligations may face administrative fines of up to 1% of their turnover in the most recently closed financial year. In cases of serious infringement, AGCOM may also suspend or order the cessation of the publisher’s activities.

For completeness, AGCOM Resolution No. 95/24/CONS focuses on several key areas:

• Assistance in reaching contractual agreements for the licensing of audiovisual works on video-on-demand platforms.
• Implementation of information obligations at least every six months.
• Mechanisms designed to ensure fair and adequate remuneration, including the possibility for authors to request an adjustment.
• Criteria for determining the representativeness of organisations authorised to enter into extended collective licences.
• Procedures for resolving contractual disputes.
• Definition of the criteria for fair remuneration of authors and performers in connection with the transfer of rental rights.

In short, AGCOM Resolution No. 95/24/CONS completes the regulatory framework and increases transparency in the publishing sector, fostering an environment in which authors’ rights are better protected and their works more effectively valued. Moreover, as we have seen, the Resolution completes the regulatory process for Italy’s implementation of EU Directive 2019/790, known as the “Copyright Directive”.

What new rights does the Regulation give authors?

Resolution No. 95/24/CONS introduces significant safeguards for authors, ensuring greater transparency and fair remuneration for the exploitation of their works. Let us look more closely at how the new rules strengthen these rights through specific provisions of the implementing regulation.

One of the key aspects of the Regulation is the obligation imposed on publishers to provide authors with detailed and up-to-date information on the exploitation of their works.

Article 5 of the Regulation provides that authors and performers are entitled to receive up-to-date, relevant and comprehensive information on the exploitation of their works and the remuneration due. This information must be provided by licensees or assignees of the rights at least every six months, unless otherwise agreed between the parties, subject to a maximum interval of one year.

The information to be provided includes:

• Identity of the parties involved: Details of all parties concerned by assignments or licences, including secondary users (Article 5(2)(a)).
• Methods of exploitation of the works: A description of the ways in which the works are commercially exploited (Article 5(2)(b)).
• Revenues generated: Information on revenues deriving from exploitation of the works, including advertising and merchandising revenues (Article 5(2)(c)).
• Specific data concerning non-linear audiovisual media services: Figures relating to purchases, views and subscribers (Article 5(2)(d)).

These transparency obligations allow authors to monitor the commercial performance of their works and help ensure that their remuneration is adequate and proportionate.

Another fundamental safeguard, already introduced by Article 110-quater of the Italian Copyright Act, provides that: “In any event, the failure to provide the information […] shall constitute a legal presumption that the remuneration is inadequate in favour of the rightholders.” This means that, where a publisher fails to provide the required information – i.e. the report – the remuneration is presumed to be inadequate and the author is therefore entitled to seek additional remuneration.

Article 6 of the Regulation introduces a contractual adjustment mechanism designed to ensure that authors and performers receive fair and adequate remuneration. More specifically, the provision states that, without prejudice to the provisions of collective agreements and taking into account the specific circumstances of each case and the particular characteristics and remuneration practices of the different sectors, authors and performers, either directly or through collective management organisations or independent management entities, are entitled to receive from the party with whom they entered into an agreement for the exploitation of their rights, or from that party’s successors in title, additional fair and appropriate remuneration over and above that initially agreed, where the latter proves to be disproportionately low in comparison with the revenues subsequently generated by the exploitation of their works or performances, taking into account all possible forms of revenue deriving from the exploitation of the work or performance, under any title and in any form, including the making available of phonograms online.

In determining whether remuneration is disproportionately low, all relevant revenues generated by the exploitation of the work from 7 June 2021 onwards are taken into account, including revenues from merchandising and from exploitation of the work in any form. Consideration is also given to the costs incurred in producing and exploiting the work, the contribution made by the author or performer, the particular characteristics and remuneration practices of the different content sectors, the specific circumstances of each case and any other relevant factor.

This right applies primarily to lump-sum remuneration, as specified in paragraph 4: “The contractual adjustment mechanism referred to in paragraph 1 applies only where the author or performer receives lump-sum remuneration.” If the remuneration initially agreed is disproportionate to the revenues generated by the work, authors may request an adjustment.

In the event of disputes concerning information obligations or the contractual adjustment mechanism, Article 14 of the Regulation provides that the parties may refer the dispute to AGCOM for resolution: “Applications for the settlement of disputes must be submitted using the forms available on the AGCOM website and accompanied by the relevant supporting documentation. The competent AGCOM Directorate shall schedule a hearing within 60 days of receipt of the application.”

This gives authors an official and regulated procedure through which disputes with publishers can be resolved, helping to ensure that their rights are adequately protected.

In addition, it should be remembered that Article 110-septies of the Italian Copyright Act gives authors the right to terminate the agreement and recover the rights in their works in the event of non-exploitation:

• An author or performer who has exclusively licensed or transferred rights relating to a work or other protected subject matter may, in the event of non-exploitation, seek the total or partial termination of the licence or rights-transfer agreement, or revoke the exclusivity granted under the agreement. The provisions of the Italian Civil Code concerning termination of contracts shall apply.
• Paragraph 1 shall not apply where the failure to exploit the work results from circumstances that the author or performer can reasonably be expected to remedy.
• In the case of a collective work, the termination referred to in paragraph 1 must be sought by all authors and performers whose contributions to the work or performance are of major significance.
• Unless otherwise provided by contract or by law, the work or performance must be exploited within the period specified in the agreement, which may not in any event exceed five years, or within two years of the work being made available to the publisher or producer. Failing this, the author or performer shall grant a reasonable period within which the licensed or transferred rights must be exploited. Once that period has expired, the author or performer may revoke the exclusivity of the agreement or terminate the agreement pursuant to paragraph 1. In the case of a collective work, paragraph 3 shall apply to the granting of the additional period and to termination of the agreement or revocation of exclusivity.
• Any contractual provision derogating from the right to seek termination or revocation referred to in paragraph 1 shall be void unless it is contained in a collective agreement.

This is an essential right for authors, allowing them to recover their works and exploit them elsewhere where publishers fail to make adequate use of them.

Penalties for publishers that fail to provide six-monthly reports

Resolution No. 95/24/CONS introduces significant penalties for publishers that fail to comply with the new transparency and reporting obligations. The financial and legal consequences can be serious, reflecting the importance of proper copyright management. Let us look more closely at the main consequences publishers may face in the event of non-compliance.

Publishers that fail to provide authors with detailed reports may incur financial penalties. Article 23 (Penalties) of the Regulation provides that: “In the event of a breach of the communication and information obligations referred to in Article 5, the Authority shall impose the administrative financial penalties provided for under Article 110-quater(4) of the Italian Copyright Act. The provisions of Article 41 of Legislative Decree No. 35 of 15 March 2017 shall remain unaffected.”

These penalties may amount to up to 1% of the turnover generated in the most recently closed financial year preceding notification of the alleged infringement. Together with the possibility of suspension or cessation of activities in the most serious cases, this provides a strong deterrent against non-compliance.

Under Article 110-quater of the Italian Copyright Act, as noted above, the failure to provide the relevant information gives rise to a legal presumption that the remuneration is inadequate in favour of authors. This means that the agreed remuneration may be challenged as insufficient, giving authors the right to request an additional payment.

Let us consider the hypothetical case of a publisher that fails to provide the required information.

The author, having received no detailed reports concerning revenues and the exploitation of their work, decides to refer the matter to AGCOM. Following an investigation, AGCOM may establish that the publisher has failed to comply and impose an administrative fine of up to 1% of the publisher’s turnover. AGCOM may also decide to suspend the publisher’s activities for a period of six months, with a significant financial and operational impact on the business.

Naturally, where the presumption that the remuneration is inadequate applies, the author or authors will also be entitled to additional royalties and damages, including compensation for non-economic loss.

Authors vs Publishers: what will change when the Regulation enters into force?

The implementing regulation represents a significant shift in the industry’s regulatory framework. Despite authors’ scepticism, our experience suggests that they now have a set of rules at their disposal that will enable them to respond effectively to unfair conduct by publishers. Let us therefore consider how authors and publishers can best prepare themselves to ensure compliance and protect their respective interests.

Authors must be aware of their rights and of the new provisions introduced by the AGCOM Resolution and the implementing regulation of the Copyright Directive.

• It is essential for authors to request detailed reports at least every six months, as required by Article 5 of the Regulation. These reports must include complete information on revenues, methods of exploitation and the identity of the parties involved.
• Authors should carefully analyse the information received to determine whether their remuneration is adequate and proportionate. Where discrepancies arise or remuneration appears inadequate, the contractual adjustment mechanism under Article 6 of the Regulation may be activated.
• If publishers fail to comply with their transparency obligations, authors may refer the dispute to AGCOM, as provided for by Article 14 of the Regulation. It should also be remembered that, as already provided by law, in cases of non-exploitation of works – and not only in those circumstances – authors may seek termination of the agreement pursuant to Article 110-septies of the Italian Copyright Act.

Publishers must take practical steps to comply with the new regulatory requirements. Our experience has shown that proactive and transparent management is essential to avoiding disputes. Here are some practical recommendations for avoiding penalties:

• Publishers should implement management software capable of collecting and processing the data required for six-monthly reports, particularly where lump-sum agreements are involved (which are no longer permitted). These systems must be capable of generating detailed reports that satisfy the transparency requirements imposed by the Resolution.
• It is very important that publishers’ staff are properly trained on the new rules and transparency requirements, and that internal procedures are established for collecting, verifying and providing information to authors. These procedures should be clear, properly documented and readily accessible so that the information can be made available to the regulator or, in the event of a dispute, at the request of a court.
• Working with qualified law firms can simplify the compliance process and help resolve potential issues or disputes before they arise. Our law firm provides advice on contract review, dispute management and dedicated training.

Our firm has extensive experience in this field and provides assistance to both authors and publishers. We are able to provide targeted support to ensure compliance with the implementing regulation introduced by Resolution No. 95/24/CONS, including reviewing licence agreements, revising critical provisions and proposing amendments designed to protect our clients’ interests.

In the event of a dispute, the firm can also assist any client, whether an author or publisher, both in out-of-court negotiations and in court proceedings, as well as in proceedings before AGCOM.

What are the risks for a publisher that fails to comply with transparency obligations and royalty payments?

It is important to emphasise that the transparency and reporting obligations laid down in Article 110-quater of the Italian Copyright Act have been in force since 22 June 2022. The deadline for compliance has therefore already passed and, thanks to the implementing regulation, the applicable penalties and adjustment mechanisms are now clearly defined.

A publisher that fails to comply with its transparency obligations and does not provide detailed reports risks significant administrative penalties, as provided for under Article 23 of the Regulation. Penalties may amount to up to 1% of the turnover generated in the most recently closed financial year preceding notification of the alleged infringement. Moreover, in cases of serious infringement, AGCOM has the power to suspend the publisher’s activities for up to six months or, in the most serious cases, order their cessation.

AGCOM Resolution No. 95/24/CONS and the Regulation annexed to it require publishers to make a considerable compliance effort, which will undoubtedly affect their business models. Nevertheless, transparency and fairness in copyright management can no longer be postponed: the time to comply has come. Our experience in this field and in handling legal disputes makes us an ideal partner for navigating these new challenges.