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PARIS-The refusal of the French advertiser association to discuss royalty payments for ad campaign copyrights has touched off a row between cash-strapped agencies and budget-conscious clients.

But while advertisers are unwilling to bend on the copyright issue, they seem willing to compromise on compensation in other ways.

Tempers flared again last month when the national Union of Advertisers resoundingly rejected the French Association of Advertising Agencies' demands for royalty payments.

"I see no legal, economic or professional reason for changing what is a long-established and standard practice in France and throughout the world," said Alain Grange-Cabane, UA vice president. "Most of my members are infuriated by this."

"Negotiating copyright is out of the question," said Hubert Bro, deputy director of advertising, Canon France. "But we could find other possibilities, such as increasing agency commission in the early years of a relationship."

Since late last year, however, when the controversy began, shops have asserted that copyrights remain their best hope for higher remuneration. It was French agencies that inspired others across Europe to step up demands to combat shrinking remuneration.

Agencies argue that budget-minded advertisers are extending the lives of campaigns by transferring them to other countries and running them longer than intended, but the agencies that created them get no monetary benefit.

Many agency executives acknowledge that the demands are aimed mainly at boosting sagging revenues and have little to do with copyrights, but they say the copyright issue is their strongest collective argument.

"You tell me what else we have left to negotiate with advertisers on," asked Philippe Gaumont, president of both FCB France and the French AAA.

The situation is especially dire in France, where last year's media law bans the traditional agency commission and most media-generated revenues. The media law also requires a contract for all agency-advertiser transactions, making a 1961 document the contract of reference for all copyright issues.

This document, written years before TV advertising, provides that advertisers own the copyrights to campaigns they commission.

"We do not think that cessation of copyrights should either be automatic or free," said Jacques Bille, the agency association's VP. "We want to see a fee, conditions and duration of the waiver detailed in a contract."

Mr. Bro said if agencies insist on tying compensation to copyrights, French advertisers may commission their campaigns from abroad, where copyrights are protected.

Inspired by the determined French, many European agency heads are intent on forcing the copyright issue, and the European Association of Advertising Agencies and the World Federation of Advertisers are discussing it.

But the WFA doesn't like the idea either. "We see no basic reason why the situation should change," said WFA President Peter Mitchell, who is also strategic affairs director, Guinness.

A campaign is created only when commissioned by an advertiser, which finances, approves and plays a significant role in defining creative content, he noted. "Unlike a novel or a work of art, campaigns are not spontaneously created. ... It's difficult for me to see why [an advertiser] should not retain the copyrights."

Most agency executives, even in France, privately say they are willing to compromise. Said one European agency official, "We don't expect to create a single, all-encompassing contract on copyrights, but we must establish a strong enough legal argument" for agencies to use in future negotiations.

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