ISM MUSIC JOURNAL MARCH/APRIL 2020
Legal and business EU Copyright Directive In January 2020 the UK government announced that it has no plans to implement the EU Copyright Directive. This important piece of legislation was the result of a lengthy campaign to redress the imbalance of power between the creative industries and technology companies such as YouTube that use User-Generated-Content (UGC).
Above: Sarah Osborn, ISM Head of Services and Operations
Although the UK made a number of reforms to copyright in 2014, the EU Copyright Directive was significant because it sought to close a loophole around digital platforms’ use of ‘safe harbour’. These are the provisions introduced in the 1990s to protect companies such as internet service providers (ISPs) and server hosting companies in the event of customers employing their networks illegally to use or distribute copyright material. It was accepted that although ISPs’ networks could facilitate copyright infringement, they could not be held directly responsible for their customers’ actions. In return for immunity from prosecution ISPs had to offer rightsholders a takedown system for removing infringing material. With the advent of UGC, digital platforms like YouTube grew in popularity and began to rely on safe harbour provisions, arguing that they, too, could not monitor or be held responsible for what users uploaded. This created an imbalance of power, as by relying on safe harbour, music can appear on UGC platforms whether or not the rightsholder agrees, thereby creating an optout service . This eliminates the ability of rightsholders to litigate, forcing them to choose between accepting the licence terms on offer or rejecting them and instead dedicating time and resource to issuing takedown notices. This put UGC platforms at odds not only with the music industry but also with other digital services. Streaming platforms such as Spotify and Apple Music operate on an opt-in basis, meaning that they only make music available once it is correctly licensed. This makes it possible for rightsholders to enter into a commercial negotiation to secure the best deal possible. This imbalance in operating models and associated licensing deals is known as ‘the value gap’.
Article 17 of the EU Copyright Directive (confusingly, Article 13 in the first iteration of the legislation) seeks to level the playing field by limiting the scope of safe harbour for digital platforms. If this had been implemented by the UK government, it would have reduced the value gap by enabling better commercial terms to be secured, leading to more money flowing from UGC to performers, composers and songwriters. Although much of the public debate centred on safe harbour, the Directive also contains a number of other important reforms that are relevant to ISM members, many of which the ISM has been requesting as part of our support for the Fair Terms for Creators campaign. These include provisions to ensure contracts are obliged to offer appropriate and proportionate remuneration; that there is a greater level of transparency, particularly around royalties from digital platforms; that contracts allow creators to renegotiate royalty rates if the original rates agreed turn out to be disproportionately low; and that it is easier for creators to have their rights returned to them if there is insufficient promotional activity by the record label or publisher. Although the timing of the UK’s departure from the EU has meant that the government is not obliged to implement the EU Copyright Directive, its decision not to do so is incredibly disappointing. The ISM is engaged with policy makers on the issue and we will continue making strong representations as to the importance of implementing both safe harbour reform and fair terms for creators. We will continue to update members on this important issue through Music Journal. If you have any queries about copyright law, please contact legal@ism.org for assistance. Sarah Osborn, ISM Head of Services and Operations
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