The European Copyright Directive, safe harbour and the value gap found in the middle of it

August 2017

Internet, digital


The EU’s E-Commerce Directive created the ‘safe harbour’ to protect Information Society Service Provides (ISP) where, subject to certain requirements, they unknowingly provided copyright-infringing material.


Take the YouTube example; due to the scale and amount of content that is uploaded to YouTube on a daily basis, it is almost an impossible task to monitor all content for copyright-infringing material. Therefore, and providing YouTube is doing all that it can in actively monitoring for copyright infringing content, it is protected by the ‘safe harbour’ rules. These rules mean that YouTube cannot be found to be liable for the infringement. However, with all rules there is an exception, the general exception for the safe harbour rules mean that if a ISP is put on notice that it is hosting infringing material it must act efficiently and expeditiously to remove the content, if this does not happen the ISP may be found to be liable.


It has been argued by both the music publishing and recorded music sectors that sites such as YouTube exploit the safe harbour rules. It is said that YouTube uses the safe harbour rules to effectively pay (much) lower royalties to copyright holders and this creates….(you guessed it!) the value gap! The value gap is effectively a tug of war match against the revenue that sites such as YouTube makes from advertising and the like, against the royalties it pays to copyright holders when their content is available on the site. Why is the ‘platform’ worth more then the content?


The proposed Digital Single Market Directive has the value gap in its sights. Article 13 of the proposed directive would provide that ISPs must put measures in place that ‘prevent the availability on their services of works or other subject-matter identified by rightsholders’ by using ‘effective content recognition technologies’. In layman’s terms, the implementation of the proposed Article 13, as it stands, would mean that ISPs are subject to a general monitoring obligation.


However, and as one would expect, the proposed directive has been the subject of considerable lobbying. 104 organisations and entities have made their thoughts be known. The president of GESAC, a representative of 32 authors societies based in 27 EU countries, said the proposal was “encouraging” and that “creators’ freedom of expression can only exist if there is a freedom to create and to be remunerated fairly”. On the other hand, the European Digital Media Association said that the requirements under the proposed Article 13 “would cripple innovation and undermine free expression for millions of EU citizens and businesses”.


Two committees in the European Parliament have now voted on their respective responses to the draft European Copyright Directive, and the music industry has generally welcomed those responses. The Consumer Rights Committee had already responded, and now both the Culture and Industry Committees have now had their say, and with regard to safe harbour, both committees resisted calls to abandon or weaken Article 13, instead seeking to reinforce and further clarify the draft article and the new obligations of safe harbour dwelling services of the YouTube variety. They also responded to a proposal  put forward by the Consumer Rights committee that would provide an exception for user-generated content which the music industry said !could have a profound impact on the creative community with rights holders having to initiate expensive legal proceedings to establish the actual boundaries of such an exception”. In relation to that proposal, yesterday’s committees voted (a) against the idea entirely, or (b) to leave such matters to national law within the EU, rejecting the idea that European law-makers should make such an exception compulsory for member states.

The music industry welcomed the news: Helen Smith the independent label’s IMPALA said: “It makes complete sense to narrow the value gap and the parliament has sent a strong message this morning. That’s very good news – recalibrating the digital market in this way is necessary to stop creators, start-ups and citizens being dominated by abusive practices of big platforms who don’t pay fair or play fair”.

Gadi Oron of CISAC said: “It is good news to see policy makers in Europe standing up for creativity and culture and voting to close vital loopholes that are harming millions of creators. These two committees have understood the opportunity for Europe to take the lead in making sure creators in the digital market are properly respected and fairly remunerated. We now look for this positive signal to be confirmed in the plenary vote of the European Parliament later this year”.

The important Legal Committee will lead the final round of responding after the summer break. The EU Parliament will start the voting procedure with the Council Of The EU also scrutinising and potentially and amending what’s been proposed.


Although, the value gap is not the only issue that the proposed directive seeks to address. There are aims in Article 14 to ensure that authors and performers receive sufficient information regarding the exploitation of their works. This includes being notified of whom has been licenced or transferred the rights and revenues generated and remuneration due. The proposed Article 15 will provide that authors and performers will be entitled to request additional remuneration where the original remuneration agreed is now disproportionately low. Smith also welcomed recommendations made by the culture committee with regard to the contract adjustment mechanism, which would likely limit the reach of the new measure so that in music it would only really apply to session musicians who work at ‘mates’ rates’ on an unexpected hit.


The proposed directive does make one thing clear, the EU has realised that many elements of copyright do need a ‘update’ in order to succeed and that the value gap needs to be lessened. One thing that is not so clear is whom will have the greatest lobbying power, the content creators (including the record labels, artists, music publishers, CMOs) or the ISPs and technology giants.


By Samuel O’Toole –

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