Business News Digital Labels & Publishers

IFPI puts ‘safe harbours’ at the top of its copyright action list

By | Published on Wednesday 15 April 2015


The record industry has long included a piracy gripe at the end of any figures it publishes, usually calling on governments to act in one way or another to stop copyright infringement online. But in a telling confirmation of a change in priorities within the music industry, yesterday the International Federation Of The Phonographic Industry wrapped up the presentation of its 2014 figures by focusing on a specific element of copyright law being exploited not by filthy file-sharers and pesky pirates, but by the yobbish YouTube.

2014 was, of course, the year in which growing resentment amongst the music community over the royalties paid by the Google subsidiary resulted in YouTube being routinely bashed at music industry events, often more even than The Pirate Bay and Kickass Torrents. The video site was routinely dubbed the “elephant in the room” in debates over digital licensing and royalty payments, to the extent that the elephant in the room was too obvious to be a metaphorical elephant in the room, and God knows you don’t want an actual elephant in the room.

The labels reckon that YouTube exploits the so called ‘safe habours’ contained within American and European law that are designed to protect internet service providers and web hosting companies from liability for any copyright infringement committed by their customers. This allows services like YouTube to operate an ‘opt-out’ rather than ‘opt-in’ streaming service, where the onus is on the rights owner to request its content be removed, rather on the streaming service to ask for permission to put the content in.

This, the labels argue, gives YouTube an unfair advantage at the negotiating table, because the company already has a rights owner’s content on its servers.

And if the label or publisher refuses to do a licensing deal, it will have to monitor the YouTube servers for the foreseeable future at its own expense to ensure its content doesn’t pop up there. Because while YouTube’s Content ID may be a market leader, it’s not 100% reliable, and still requires management on the rights owner’s part. Which forces the rights owner’s hand, meaning YouTube secures preferential rates, and the labels have less control over how the service works.

Which results, the record industry argues, in what the IFPI calls a “value gap”. The trade group says: “An illustration of this can be seen in comparing the share of revenue derived by rights owners from services such as Spotify and Deezer, and those derived from certain content platforms like YouTube or Dailymotion. IFPI estimates music subscription services have 41 million paying global subscribers, plus more than 100 million active users in their ‘freemium’ tiers. This sector generated revenues to record companies of more than $1.6 billion in 2014”.

It goes on: “By contrast, YouTube alone claims more than one billion monthly unique users and is thought to be the world’s most popular access route to music. Yet total global revenues to record companies generated by certain content platforms including YouTube amounted to just $641 million in 2014, less than half the total amount paid to the industry by subscription services such as Spotify and Deezer”.

Calling for action, IFPI chief Frances Moore said: “The value gap is a fundamental flaw in our industry’s landscape which sees digital platforms such as Dailymotion and YouTube taking advantage of exemptions from copyright laws that simply should not apply to them. Laws that were designed to exempt passive hosting companies from liability in the early days of the internet – so-called ‘safe harbours’ – should never be allowed to exempt active digital music services from having to fairly negotiate licences with rights holders”.

She added: “There should be clarification of the application of ‘safe harbours’ to make it explicit that services that distribute and monetise music should not benefit from them”.

As previously reported, copyright law in Europe is currently under review alongside the so called Digital Single Market, and the IFPI and other music industry groups hope to put the safe harbours at the top of the agenda.

Though YouTube tends to operate according to the rules of American copyright law, even when working outside the US jurisdiction. There the issue isn’t scheduled for active review in political circles anytime soon, though Moore told CMU that she’d be working with her colleagues in the US to seek opportunities to pursue this agenda in Washington too.

But even in Europe the music industry will face opposition. A representative for one “large internet company” told the Financial Times yesterday that the removal of safe harbour provisions “would be absolutely catastrophic for digital services” and that “checking every single piece of user-generated content before it is uploaded to popular internet sites would be impossible”.

Though, of course, the music industry isn’t asking for the safe harbours to be abolished, just that a specific kind of service be excluded from protection: ie those that not only allow users to upload, store and publish content on their servers, but which then aggregate that content and distribute it through their own media platform.

And while YouTube would definitely argue that if it had to check every upload individually it would no longer be a commercially viable operation, harsher rights owners would argue that YouTube – as a music service – was never a commercially viable operation, it was a business built through the deliberate exploitation of a loophole in the law.

To read more on the background to safe harbours and the music industry’s current arguments against them, check the latest edition of the CMU Trends Report. Get your copy by going premium for just £5 a month here.