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Music industry welcomes EU committee votes on safe harbour reform

By Chris Cooke | Published on Wednesday 12 July 2017

More safe harbours? Yes, more safe harbours! What of it? Two committees in the European Parliament yesterday voted on their respective responses to the draft European Copyright Directive, including the article dealing with safe harbour and the value gap. And the music industry has generally welcomed those responses.

Wanna recap? OK, recap in one sentence: Music industry says YouTube exploits loophole in copyright law enabled by ‘safe harbour’ to pay lower royalties to rights owners creating a ‘value gap’; wants law rewritten so YouTube is no longer covered by safe harbour. Totally didn’t cheat with the semi-colon.

Article thirteen of the European Copyright Directive could provide such a rewrite in Europe, though the current draft arguably provides enough wiggle room for safe harbour dwelling platforms like YouTube to try to circumvent any new liabilities. The directive is currently going through the motions in Brussels and both the music industry and the tech sector have been busy trying to get article thirteen redrafted to their advantage.

A bunch of committees in the European Parliament have been considering the European Commission’s original draft directive, with the consumer rights committee having already responded, the culture and industry committees voting yesterday, and the all important legal committee – which is leading on this – set to do the final round of responding after the summer break. After that, Parliament will start voting and the Council Of The EU – representing each member state government in the union – will also scrutinise and amend what’s been proposed.

With regard to safe harbour, both the culture and industry committees, in their responses yesterday, resisted calls to abandon or weaken article thirteen, instead seeking to reinforce and further clarify the draft article and the new obligations of safe harbour dwelling services of the YouTube variety.

They also responded to a proposal previously put forward by the aforementioned consumer rights committee that would provide an exception for user-generated content. Which would create a massive new get-out for platforms like YouTube. UK Music’s Michael Dugher recently said of that particular proposal: “This could have a profound impact on the creative community with rights holders having to initiate expensive legal proceedings to establish the actual boundaries of such an exception”.

In relation to that proposal, yesterday’s committees voted in one case against the idea entirely, and in the other to leave such matters to national law within the EU, rejecting the idea that European law-makers should make such an exception compulsory for member states.

Among those welcoming the conclusions of the culture and industry committees on safe harbour reform was Helen Smith from indie-label repping IMPALA who said: “It makes complete sense to narrow the value gap and the parliament has sent a strong message this morning. That’s very good news – recalibrating the digital market in this way is necessary to stop creators, start-ups and citizens being dominated by abusive practices of big platforms who don’t pay fair or play fair”.

On the UGC exception she added: “An exception would send the digital market back ten years by unpicking licensing and creating new complexities in terms of administration and levies. To close the value gap then widen it again with an exception doesn’t make sense and this has been rejected before by both the Commission and member states”.

On the music publishing side, Gadi Oron – the boss of CISAC, representing performing rights organisations from across the world – said: “It is good news to see policy makers in Europe standing up for creativity and culture and voting to close vital loopholes that are harming millions of creators. These two committees have understood the opportunity for Europe to take the lead in making sure creators in the digital market are properly respected and fairly remunerated. We now look for this positive signal to be confirmed in the plenary vote of the European Parliament later this year”.

And finally GESAC, which specifically represents the song right PROs in Europe, said that both committees “sent a clear signal today that they would not tolerate free-riding platforms, and that the solution proposed by the European Commission in September last year was an encouraging first step that needed further clarification. GESAC welcomes this support and is confident that this signal will be taken on board and further developed by the [legal] committee, as its report goes to vote in October”.

It added: “The adopted texts in the [culture and industry committees] would finally make it possible for authors to negotiate fair remuneration with user-uploaded content platforms, due to an unapologetic closing of the current loophole that has allowed so much value to be funnelled from authors to tech giants. GESAC warmly welcomes this development”.

The Copyright Directive is not all about safe harbour though – not even from a music perspective. There is, of course, another article seeking to provide songwriters and artists with more transparency over how their songs and recordings are being exploited in the digital domain. And another that would provide a framework via which artists could seek to amend unfair contracts, mainly where their work proved to be much more profitable than expected at the time they entered into a deal.

Meanwhile, some musicians have also been pushing for a new rule that states that ‘performer equitable remuneration’ is due on streaming income. Performer ER is the money paid directly to recording artists – including session musicians – whenever recorded music is broadcast or played in public.

Record companies argue that Performer ER doesn’t apply to streams, meaning artists get paid via their label or distributor subject to contract, rather than via their collecting society at industry-standard rates. Performer ER on streams was not included in the draft directive, but some in the artist community hoped that it could still be added as the proposals work their way through the motions.

On the songwriting side, there has also been talk of possibly introducing some sort of reversion right for writers who have assigned their copyrights to a music publisher for a substantial period of time, and maybe even life of copyright. Which is something already provided by American copyright law, of course.

For most artist and songwriter groups, safe harbour tweaking is part of a bigger package of necessary copyright reform, sitting alongside transparency and contract adjustment, and possibly ER on streams and reversion rights. For the record labels and music publishers – and the collecting societies in which labels and publishers participate – it’s all been about safe harbour.

IMPALA boss Smith also commented on some of the other proposals doing the rounds in Brussels that could affect music rights in Europe, noting that in the indie label domain the Worldwide Independent Network’s Fair Deals Declaration is already trying to tackle some of the issues. She said that: “Instruments like new unwaivable rights or reversion mechanisms would be like taking a sledgehammer to crack a nut and would create more friction in licensing. [And] our own initiatives like the WIN Declaration address the key issues voluntarily”.

Meanwhile Smith welcomed recommendations made by the culture committee with regard to the contract adjustment mechanism, which would likely limit the reach of the new measure in music.

Depending how it is implemented, this mechanism could mean that session musicians – who are not usually cut into future revenue generated by their work – might be able to go back and negotiate a bigger fee in hindsight if they work for mates’ rates on what turns out to be a big hit. Though a more limited version of the mechanism would mean it didn’t apply in that scenario. Or, indeed, very often at all in music, the measure originating in a bit of German law that mainly had the movie industry in mind.

IMPALA said that it “welcomed limitations to the contract adjustment mechanism introduced by the culture committee”, and that “with some more modifications this article could achieve its original purpose of a ‘best-seller clause'”. Smith herself said: “It is important that we maintain the solidarity model which exists in the music sector and which enables successful releases to support risk-taking and unsuccessful artists”.

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UPDATE 12 Jul 2017, 18.00: Penultimate paragraph updated to clarify the contract adjustment mechanism limitations backed by IMPALA.