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Dissecting The Streaming Inquiry #09: Safe harbour

By Chris Cooke | Published on Thursday 4 February 2021

We are currently reviewing and dissecting submissions made to the UK Parliament’s ongoing inquiry into the economics of streaming.

Based on the five years of research CMU Insights has undertaken with the Music Managers Forum as part of the ‘Dissecting The Digital Dollar’ project, we explain the background to the key debates, helping you navigate and understand each issue and the proposed solutions.

Among the questions asked by the culture select committee in its original call for evidence on the economics of streaming was “Does the UK need an equivalent of the European Copyright Directive?” This is the one element of the inquiry that pretty much unites the music industry with a nice simple “fuck yes!”

Of course, the most newsworthy element of the 2019 copyright directive – which reforms copyright laws across the European Union – was the safe harbour section, what began life as article thirteen and became article seventeen in the final draft.

The copyright safe harbour reduces the liabilities of internet companies whose customers use their networks and servers to infringe copyright. The basic principle is this: the internet company cannot be held criminally or financially liable for that infringement providing it is not directly involved in or aware of the infringing activity, and it has systems in place for removing infringing content and dealing with repeat infringers among its user base.

Quite how the safe harbour works – and where in law it originates – varies from country to country. But in Europe it all began with an EU E-Commerce Directive.

The music industry has various issues with the safe harbour. The specific issue that the copyright directive seeks to deal with is the use of the principle by user-upload platforms like YouTube. The music industry argues that the safe harbour was never intended for platforms that not only allow users to upload content to a server, but which also then aggregate and repurpose that content through a home page, recommendations tool and search engine.

YouTube, of course, has long had licences from the music industry covering much of the music that appears in user-generated videos on its platform. But, the music industry argues, because it claims safe harbour protection, YouTube has a much stronger negotiating hand in licensing conversations than other digital services.

That’s because, if a record label, music publisher or collecting societies refuses to do a deal, their music will still be on the YouTube platform. And YouTube argues it isn’t liable for that unlicensed music because of safe harbour. That means the label, publisher or society would have to request all that music be removed, which is a considerable administrative task.

It’s much easier to agree to a licence that pays a lower rate than you would normally agree to. Except that means a YouTube type service is paying less for music than a Spotify type service. And that’s an even bigger problem if some people are using a YouTube type service as if it was a Spotify type service. The difference in what royalties YouTube type services and Spotify type services pay is dubbed the ‘value gap’.

Through the European Copyright Directive the music industry sought to increase the liabilities of user-upload platforms that are claiming safe harbour protection, so to strengthen the negotiating hands of labels, publishers and societies in any licensing talks.

Doing so would “save music” said the music industry. But those new liabilities would “kill the internet” countered YouTube and its allies.

Although the final version of article seventeen was a big old compromise, it was generally agreed that the music industry got more of what it wanted than the tech sector.

Though with a directive, each EU member state then needs to update its own copyright laws to comply with the new European rules. That is still happening and it remains to be seen quite what impact safe harbour reform has on the way music licensing deals are negotiated with user-upload platforms in the future.

However, despite the UK music industry lobbying hard for safe harbour reform in Europe, Brexit then happened and the copyright directive is not being implemented here. But similar if not more significant safe harbour reform should still happen in the UK, reckons the music industry.

“Despite all the technological and human resources invested by the music industry and other creative sectors to tackle piracy, too often platforms and intermediaries either hide behind safe harbour provisions or take insufficient responsibility for their role as hosts or intermediaries facilitating piracy”, says record industry trade group the BPI in its submission.

It wants the government to include intellectual property concerns – and safe harbour reform in particular – in the proposed new UK legislation tackling so called “online harms”.

“It is important to note”, adds the International Federation Of The Phonographic Industry in its submission in a section mainly considering piracy matters, “that unlicensed uses [of music] take place not only on blatantly infringing services, such as stream rippers and cyberlockers, but also on ostensibly legitimate platforms that claim to rely on online liability ‘safe harbours’ provided to online operators in some jurisdictions”.

“The UK should ensure”, it adds, “that services such as YouTube or the new short form social media platforms that make available music and use music as a key element in their business cannot claim refuge from copyright liability”.

Speaking for the independent sector specifically, the Association Of Independent Music says in its submission that it would like government support to create “a world-leading contemporary UK copyright framework that includes platform liability, so that platforms whose profits derive from inclusion of music content are not able to hide behind ‘safe harbour’ provisions to avoid such liability”.

On the songs side, the Independent Music Publishers Forum states in its submission: “It is crucial that policymakers understand that the ‘safe harbour’ regime can no longer be used to exempt certain online services from the normal conditions of music licensing. The misuse of this ‘exemption’ by some service providers in recent years amounts to robbery”.

“In the EU, the copyright directive, which aims to address this lack of a level playing field, is in the process of being transposed into national legislation of the member states”, it goes on. “It is hoped that the UK government will implement some similar initiatives and/or legislation to address the issue in the UK”.

And songwriter group The Ivors Academy says in its submission: “Platforms that host user-generated content, such as YouTube and TikTok, are hugely successful. There is no reason why, barring the standard copyright exceptions (eg for parody and education) they should not be liable for hosting unauthorised content”.

“UK legislation needs to keep pace with technological developments”, it adds, “and big tech companies have the resources and capacity to ensure that creators’ rights are upheld”.

Needless to say, despite unity on this issue in the music community, some in the tech sector are calling for caution when it comes to the UK adopting EU-style safe harbour reform. Lawmakers should wait and see if article seventeen has any of the unintended consequences predicted by YouTube et al, they argue.

Says YouTube itself in its submission: “While article seventeen is still in the local transposition process (and therefore no tangible effects can yet be ascertained), we are concerned that any overbroad implementation of legislation of that type may lead to vague, untested requirements that could result in online services needing to over-block content to mitigate potentially significant legal risk”.

“Such an overbroad implementation would also risk lowering the revenue to traditional media and music companies from YouTube and will potentially devastate the many creators, artists and songwriters who have built their businesses on our platform”, it reckons.

Of course, we should also note that there were other music-relevant articles in the copyright directive beyond safe harbour reform, most of which deal with issues we’ve already discussed around transparency and fair remuneration.

These articles tend to benefit artists and songwriters more than labels and publishers. And those organisations repping artists and songwriters would like, it probably goes without saying, to make sure those other elements of the directive are also considered by lawmakers in the UK.

The Council Of Music Makers – which brings together the likes of the MU, Ivors Academy, FAC, MPG and MMF – states it simply in its submission: “The broad principles of the copyright directive should be adopted to enshrine the liability of online platforms in UK law and include provisions around greater transparency, improved contract terms and fairer pay for creators and performers”.

You can follow all our coverage of the Parliamentary inquiry into the economics of streaming via this CMU timeline here.