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European Commission publishes copyright reform proposals including transparency and the value gap

By | Published on Thursday 15 September 2016


The European Commission yesterday published a draft new copyright directive which brings together various proposed changes to the European copyright regime stemming from the EC’s much previously reported Digital Single Market initiative.

A lot of the directive deals with copyright exceptions and a new right for newspaper and magazine publishers, though for the music industry it’s the latter part of the proposals that matter, covering, as they do, the obligations of user-upload platforms, transparency over the digital exploitation of rights, and artist remuneration.

As much, much previously reported, for the record companies and music publishers, the Digital Single Market initiative has been a key opportunity to try to prevent user-upload platforms like YouTube (and mainly YouTube) from claiming protection under the so called safe harbours of copyright law. These say the providers of internet services are not liable if and when a customer uses said services to infringe copyright, providing there is a system in place for rights owners to have infringing content removed.

It is because of the safe harbours that YouTube is able to operate an opt-out streaming platform, where anyone can upload videos containing music. YouTube has to have a system in place via which rights owners can have videos containing unlicensed material removed – and it does in Content ID – however it is not liable for unlicensed music on its servers until made aware of it by a label or publisher.

The music industry reckons that safe harbours – which were designed back in the 1990s really for internet service providers and server hosting companies – shouldn’t apply to platforms like YouTube. And it hopes that through the latest round of European copyright reform the safe harbours can be refined so that the Google video site, and similar services, no longer enjoy the protection.

This would force YouTube to either take responsibility for all the music on its site, or to secure blanket licences with the music companies and collecting societies; pretty much like the licences it already has, but with the music industry’s negotiating hand strengthened, likely resulting in a better deal for labels and publishers, more akin to those entered into by opt-in streaming services like Spotify and Apple Music. The difference between the monies paid by opt-out and opt-in platforms constituting the much discussed ‘value gap’.

Early updates on the Digital Single Market project didn’t put safe harbours especially high up on the agenda, but the music industry’s lobbyists have nevertheless secured a section in the proposed directive attempting to tackle this issue, which is an achievement in itself. Though, as is often the way, in its current form article 13 of the directive is sufficiently waffley – including a sentence so long no one will quite remember how it began – that there will be some room for manoeuvre on the side of the platforms.

Says the draft: “Information society service providers that store and provide to the public access to large amounts of works or other subject-matter uploaded by their users shall, in co-operation with rightholders, take measures to ensure the functioning of agreements concluded with rightholders for the use of their works or other subject-matter or to prevent the availability on their services of works or other subject-matter identified by rightholders through the cooperation with the service providers”.

Yeah, tell me what you just read there. Basically, in there is the makings of a new obligation for services that host “large amounts of works” that have been “uploaded by users” to work with rights owners on either licensing deals or content-blocking.

Though specifics are lacking – and much of that YouTube already does voluntarily – though the fact that services might be obliged to work with rights owners in that way could strengthen the negotiating hand of labels and publishers, which is ultimately what they want.

While most of the music industry types commenting only “cautiously” welcomed the proposed directive, often calling it a good “first step”, the fact that Google’s VP of Global Policy identified “worrying elements” in the proposals probably means the current drafting of article 13 is better news for the music industry than it is for YouTube.

Caroline Atkinson wrote in a blog post: “[There are] worrying elements, given that the web depends on users’ ability to share content. Today’s proposal suggests that works including text, video, images and more must be filtered by online services. This would effectively turn the internet into a place where everything uploaded to the web must be cleared by lawyers before it can find an audience”.

While many artists and songwriters share the concerns of the labels and publishers over the big bad value gap, they also have other concerns about the emerging digital music economy. Especially with regard to the lack of transparency around how the music rights companies do deals with and process royalties from streaming services, and over how digital income is shared, with a feeling performers – and especially heritage artists – are getting a bad deal.

To that end, artists and their representatives have been lobbying too, resulting in articles 14-16 of the directive. For the Music Managers Forum, they are the most important elements of the proposals, with the artist management trade group reckoning that there is also a “value gap” between rights owners and creators that also needs sorting out. The latter articles start that process but, like article 13, they are more of a “first step”

The MMF says: “Article 14 introduces the concept of transparency between creators and rights owners, which is to be welcomed. [But] some of the wording is tenuous and we look forward to clarifying it so that creators have certainty”.

It goes on: “Article 15 ensures that creators who signed contracts decades ago can be remunerated in a fair way by seeking extra income from rights owners for uses that weren’t even dreamed of when the rights were assigned. Article 16 recognises that creators have limited funds or will to instigate legal action to enforce Articles 14 and 15 and mandates member states to provide resolution mechanisms instead”.

Pan-European indie label trade group IMPALA, while more vocal on the safe harbours point, acknowledges these elements of the directive too, reckoning that through the Worldwide Independent Network’s Fair Digital Deals Declaration, its members have already made good moves on these issues. Though it did also air some caution, with its chief Helen Smith stating: “Further work is needed to ensure the contract adjustment provision does not go beyond its original intention. We need to be able to maintain our current levels of investment and risk. This is important because 80% of all new releases rely on investment from independent music companies”.

You can read the draft directive in full here. Those proposals now go the European Parliament and the Council Of The European Union for input and amendment, a process that could take just over a year, or something like three years. Once passed, member states then have a set time – one year is currently proposed – to ensure their individual copyright regimes are compliant with the directive.

So nothing is going to happen over night here, and who knows where the digital music market will be in three or four years time, and quite what YouTube’s role will be in the wider scheme of things by then.

And, of course, there’s a definite chance that by the time this directive is passed it will have no bearing at all on a Brexited Britain, though UK artists and music companies will continue to be streamed at a high rate across the rest of the European Union, so the outcome of all this will be of significance to the British music community either way.

Lots of people in the music community had things to say about yesterday’s draft new copyright directive for the European Union, and here they all are, saying things.