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Trends: Why the music industry hopes to put safe harbours on the European agenda

By | Published on Wednesday 15 April 2015


With copyright back on the agenda within the European Union, some in the music industry now hope that the so called ‘safe harbours’ – put into copyright law in the late 1990s to provide protection to tech companies – will finally be revised, possibly closing what many rights owners see as a big fat loophole in those provisions that has been exploited by various web firms, from YouTube to Grooveshark and SoundCloud, and digital locker services like MegaUpload.

When people talk about ‘safe harbours’ in the context of copyright law, they are actually usually referring to a bit of American law contained within 1998’s rather grand sounding Digital Millennium Copyright Act. The aim of the safe harbours was to protect the companies who help move content around the internet from liability for copyright infringement, if they inadvertently help a third party distribute or access content without the permission of the rights owner.

As internet usage began to explode in the wake of the world wide web, there were legitimate concerns that if hosting companies and internet service providers were ever successfully sued for copyright infringement because of the actions of their customers, it could open the flood gates and greatly hinder the growth of the net, and the efficient distribution of communication and conduct of business on the web.

There was a risk of this happening because, under copyright law conventions, those involved in the supply chain of infringing content – such as distributors, retailers, market operators etc – could often be held liable for infringement if they knowingly assisted the primary infringers.

What the tech companies needed was similar protection to that enjoyed by the postal service, which generally couldn’t be held liable for delivering infringing content, mainly because it wasn’t allowed to open the envelopes it distributed, so couldn’t see if infringement had occurred.

In theory it was easier for hosting companies and ISPs to see the content they were distributing, though privacy law limited this ability to an extent, and either way, the tech companies, like the post office, argued that they were “mere conduits” in the delivery process, with no active knowledge of or interest in what was being delivered.

To that end the DMCA specifically said that tech companies which aided the distribution of infringing content could not be held liable for that infringement if they did so as a result of “transitory digital network communications, system caching and information location tools”, or if infringing content was “residing on systems or networks at the direction of users”. These were the safe harbours.

In return for receiving this protection, the tech companies were told that they must act to remove specific content or disconnect specific users if made aware of specific copyright infringement by a rights owner, thus putting in place the DMCA takedown notice system that has become a routine part of copyright management today.

At a basic level the safe harbours addressed legitimate concerns and were in the main a sensible piece of legislation. But the burning question a decade and a half later is what kinds of services were expected to use these safe harbour protections when legislators first drafted them at the end of the last century?

Did those legislators really expect blogging and video sharing platforms, and digital locker services, to rely on the safe harbours too in order to reduce their liabilities and therefore their costs? Because the safe harbours have indeed been used by a much wider range of services than just ISPs and conventional hosting companies.

It is the safe harbours that have allowed the rise of the ‘user-upload platforms’, of which YouTube is almost certainly the biggest. These are sites which allow anyone to upload content and, while terms and conditions might forbid the uploading of files without permission from the copyright owner, we know that users do routinely post copyright infringing audio and video onto these sites’ servers.

From the outset YouTube et al have insisted that they, like ISPs and hosting companies, are “mere conduits” in the distribution of this copyright infringing content, and therefore – providing they operate a DMCA-compliant takedown system – they cannot be held liable for routinely hosting and delivering infringing music, movies and TV shows.

But, rights owners often argue, content platforms like YouTube, Grooveshark, Soundcloud et al are quite different from ISPs and conventional hosting companies, and are much more than “mere conduits”, in that as they amass a body of content they become media platforms which, like traditional media services, may make money placing advertising next to content, or charging subscription fees for access to content.

And as these services gain traction they start to compete with those media platforms that are licensing content in the traditional way – ie gaining permission to use content upfront and paying for the privilege – making the existence of unlicensed content on user-upload platforms a problem. But given that the user-upload services claim to be covered by safe harbours, all the rights owners can do is start issuing takedown notices to have their content removed.

But that can quickly become a major task, because we know that as soon as you have removed a bit of content from any one platform, the chances are that another user has re-uploaded it to the same service. Meaning you have to constantly monitor the uploading of content, issuing countless takedown notices as you go, which is why takedowns have become such a big component of the copyright business in recent years.

From the off plenty of rights owners questioned why they should have to be monitoring the rising number of user-upload platforms for infringing content, why wasn’t this the responsibility of the platforms themselves who, after all, were benefiting from all the traffic the presence of uncleared tracks and videos generated? But, said the content sharing sites, safe harbours said they didn’t need to.

Some rights owners went further. Noting that many of these services relied on the copyright infringing content to generate traffic and build user-base, these rights owners argued that it was in the interest of such services to run deliberately shoddy takedown systems, so that they were technically operating within the law, but they could cling on to infringing content as long as possible.

Long enough to ensure another user would have uploaded the same infringing files somewhere else on their networks before any one takedown occurred. The fact that the DMCA provided little guidance on what standards a takedown system should adhere to didn’t really help in this regard.

So, with all these rising grievances, what could be done?

Well, to date very little, other than embracing the takedown frenzy. Lawsuits were filed Stateside against companies who were using safe harbours in this way, and especially those that the rights owners thought were running deliberately shoddy takedown systems. But in the main, the American courts have chosen to interpret the safe harbours widely, while setting the standards for takedown systems pretty low.

Which is why the major record companies have been so nervous to sue the streaming service Grooveshark for straight copyright infringement. This is another service that allows users to upload content, though this time specifically music. As with the other user-upload services, it routinely hosts music without license, all the time relying on safe harbours to avoid infringement liability.

The majors reckon that this company is exploiting a major loophole in the DMCA, but they are not confident that argument would succeed in court, it generally being the job of Congress rather than judges to tackle flaws in legislation.

And so, in the main, the majors have gone legal against Grooveshark on technicalities like the pre-1972 copyright issue, or based on allegations that staff members at the company also upload copyright infringing material – something that makes the safe harbours fall down, and where previous lawsuits against other user-upload services have had some success.

There has also been some debate in the American courts on whether or not so called “willful blindness” should also result in safe harbours falling down – ie where an user-upload service is actively aware of infringement on its networks but turns a blind eye because it’s in its commercial interests to have that content on its platform.

And while this is the closest the rights owners have got to having some success in court, it is still far from an assured way to tackle services you believe are exploiting the safe harbour loophole.

YouTube is probably the biggest of all the user-upload platforms to exploit the DMCA safe harbours, though it would argue that it is the good guy in this domain because of Content ID and its monetisation of content.

Content ID is YouTube’s proprietary system to help rights owners monitor content uploaded to its networks, in theory making it quicker and easier to spot when a user uploads a video and/or music without a copyright owner’s permission. Once a rights owner has logged its repertoire with the system, Content ID tries to automatically spot those uploads as they occur. The rights owner is then given a choice: have the content quickly taken down, or run adverts around the video and take a cut of the revenue.

YouTube would rightly argue that Content ID goes way beyond the obligations of user-upload platforms under the DMCA with regards takedown systems. And that through Content ID, in which YouTube has invested heavily, the Google business has provided rights owners with both an efficient way to control the use of their content on the network, and a new grassroots sync business, whereby rights owners can earn from homemade videos using their content, some of which might generate millions of views and plenty of royalties.

The music industry has, in the main, embraced Content ID, and is increasingly likely to monetise rather than block videos using their songs or recordings. Though that doesn’t mean that gripes don’t remain. Content ID isn’t perfect, and some uploaders know to tweak the soundtracks of their videos in such a way that the automated system is less likely to spot the music being used.

And even when it works, Content ID still puts a big chunk of the responsibility on the rights owner to police the use of their content on the video site. Why isn’t Google paying for that work to be done? Google would argue that more proactive policing on its part would cost too much, and make YouTube an unviable business. Harsher rights owners might counter that that’s because YouTube was always based on a bad business plan that was only ever viable because of the legal loophole it exploited.

And the safe harbours give YouTube another kickback – a stronger negotiating hand when it seeks to enter the streaming music market. YouTube would always argue that while Content ID might require rights owners to invest in resource, it also provides a revenue stream in return, which is true. Providing that rights owners choose to monetise use of their content on the platform.

But what if the rights owners aren’t happy with the royalties that monetisation process pays out? What if YouTube wants to launch a full-on streaming service called Music Key but with more favourable rates than its rivals in that domain, and says that if rights owners don’t participate they’ll not be able to monetise their content on the whole YouTube platform? Which is something Google seemed to do last year.

That would mean rights owners not signing up to the new service would have to continue paying for the resource necessary to manage Content ID, but without any chance of earning revenue out of it. Which is why the indie labels became so vocal about YouTube’s negotiating tactics last summer. At the time those labels questioned whether YouTube’s conduct violated competition law; but they wish copyright law would be more helpful in this regard as well.

Most of the big user-upload and digital locker services operate under American law, even when they aren’t operating in America. The DMCA, of course, has no jurisdiction beyond the United States, though if things went legal in Europe, similar safe harbours exist under European Law, and specifically the E-Commerce Directive of 2000.

And it is this directive that rights owners hope can now be reconsidered as part of the wider review of copyright law, and the bigger debate around the ‘digital single market’, that is taking place in Brussels.

Because while the European Union cannot change American law, it can force debate on the problem of safe harbours across the board, while possibly putting more onus on those loophole-exploiting services that do operate in Europe.

Which is why Mike Weatherley MP, who spent a time as IP Advisor to David Cameron, and who has spoken up on an assortment of copyright issues in recent years, chose to focus on the safe harbours debate in his final discussion paper published as a member of Parliament.

Weatherley told reporters: “The creative industries are huge contributors to our economy so it’s vital, in order to protect them, that the regulations which were set out in 2000 are updated. The broad scope of the Directive results in rights holders losing out … on an industrial scale”.

It’s a viewpoint echoed by the music industry’s trade bodies, which are set to lobby hard on this issue this year. Responding to Weatherley’s paper, the British Academy Of Songwriters, Composers And Authors said that politicians should specifically focus on the safe harbour provisions, “which are being systematically abused by some platforms, and we hope that this is the start of a constructive and collaborative debate on issues that directly impact songwriters and composers”.

And, of course, pan-European indie labels group IMPALA already has this on its agenda for 2015, with its Executive Chair Helen Smith telling CMU earlier this year: “The safe harbour rules were designed to protect neutral carriers. But they have gone wider than that, resulting in a transfer of value, as giant tech and media businesses try and claim protection to frustrate the licensing environment, acting as distributors but claiming the responsibilities of a host. Which results in services that are either not-licensed, or under-licensed, thriving. This is a barrier to the digital single market that should be taken down”.

Whether the European Union will actually review and act on this issue remains to be seen. But after fifteen years of resentment and concern, any action can’t come too soon for the copyright industries.

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