Last year, European Commissioner for Competition Neelie Kroes raised questions about the strange state of the European music market. "Why is it possible to buy a CD from an online retailer and have it shipped to anywhere in Europe, but it is not possible to buy the same music, by the same artist, as an electronic download with similar ease?" she asked. "Why do pan-European services find it so difficult to get a pan-European license? Why do new, innovative services find licensing to be such a hurdle?"

This year, she intends to do something about the problem, which has resulted in low growth rates for digital content sales. Kroes, who has already taken on Microsoft and Intel, wants to move Europe's digital music business toward a common market that crosses country borders. If a company like Apple wants to launch an online music store, it shouldn't need to open dozens of separate shops that can each serve only one country. Instead, a single set of licenses ought to be good enough to provide service across Europe.

We're a long way from that vision, but Kroes said today that progress was being made. French licensing society SACEM and music label EMI have both agreed in principle to allow their works to be licensed more easily across Europe.

Kroes, who has been chairing the Online Commerce Roundtable at which such issues are discussed, said today, "There is a clear willingness expressed by major players in the online distribution of music in Europe to tackle the many barriers which prevent consumers from fully benefiting from the opportunities that the Internet provides."

This "willingness" isn't surprising, since Kroes has held out the possibility of regulation or legislation should voluntary agreements fail to bear fruit.

Sugar water and SACEM

SACEM's involvement has at least a symbolic importance, as it was the world's very first collection society. Organized in Paris in the 1850s, SACEM came about after composer Ernest Bourget stopped by a cafe with a friend in 1847. The cafe orchestra was playing a set of pieces and surprised Bourget by suddenly playing one of his brief tunes.

As one history of collecting societies puts it, "When the waiter presented the composer with the bill for the sugared water that he and his colleague had consumed as the fashionable luxury drink of the period, Bourget refused to pay, claiming that the orchestra had repeatedly played his music—without paying anything: and so sugared water in return for playing his piece."

A Parisian court upheld Bourget's claim that he deserved compensation for the performance of his works, and the world's first public performance right was born. SACEM was created soon after to collect these royalties on behalf of composers like Bourget.

But has the music business kept up with the times? Kroes doesn't think so. "Collecting societies and music labels have come a long way since 1851, the time of Bourget and his sugared water," she said last year, "but the world has changed around them. Artists have changed, distribution has changed, and consumers have changed. There is a perception, though, that the collecting societies and the music labels have not."

The collecting societies didn't help matters last year, when the International Confederation of Societies of Authors and Composers said in a statement, "Time and time again, the creator has pleaded that the Commission’s proposed course of action will lead to a calamitous decline in artistic creation, cultural diversity and creators' income." Translation: these border restrictions keep prices artificially high. Which is, of course, exactly the sort of issue that a Commissioner for Competition looks into.

Why it matters

As Kroes tries to drag them into the Internet age, readers might be forgiven for thinking the whole issue to be minor, technical, boring. But the upshot is that many Europeans can only buy digital content from stores within their countries, limiting choice and competition.

When the iTunes Store debuted in the US, people from Key West to Seattle could buy music at the first digital storefront to offer an appealing deal. The legal growth of the online music market owes much to iTunes, but the European situation means that some new EU member states like Bulgaria and Slovakia don't have access to Apple's online store, even today.

That's not great for consumers, who often see piracy as a simpler and more attractive solution, and it's not great for the music business. As the European Commission's new report on the subject (PDF) puts it, "The de facto impossibility to buy IP-protected content from any EU online store is particularly harmful to consumers from the new Member States, who currently have a very limited choice of what music they can legally buy on the Internet, even though the demand for such content is growing."

Refuse to provide simple ways to access legal movies and music, and after a while, it may be difficult to create real markets in such countries at all.