Copyright and the Transfer of Value
The provisions of the proposed copyright directive are intended to update the copyright framework for the digital age and in so doing bring balance to the online market so that creators are better able to control how their works are used and to share in the value they generate. In short, to ensure that user upload platforms, like YouTube, Facebook and SoundCloud properly share the revenues they generate with the songwriters and composers whose musical works they use, addressing the so called ‘transfer of value’ or ‘value gap’
2014: Our CEO’s paper, “Is copyright fit for purpose in the internet era?” - establishing the foundations of ‘transfer of value’
In 2014, our Chief Executive, Robert Ashcroft and economist Dr George Barker co-authored a paper entitled, "Is copyright law fit for purpose in the Internet era?". The paper examined the extent to which rightsholders’ loss of ability to consent to the use of their works online was having a negative impact on the economy as a whole. The paper found that legal uncertainty about the liability of platforms that host user-uploaded content, without the consent of the creators and with little or no remuneration to those creators, was enabling parasitic growth, where one part of the market was growing at the direct expense of another.
The economics paper established the foundations of the principle of transfer of value, which has been at the very heart of the global debate about the relationship between platforms and creators in recent years.
2014: Our submission for reform to EU copyright rules
In 2014, we made a formal submission setting out the case for targeted reform to the EU copyright framework, with a specific focus on clarifying the liability of online platforms. The themes therein formed the basis of a comprehensive engagement programme with senior members of the European Commission and the music industry.
2016: EU Digital Single Market Strategy – proposals to reform Copyright
In September 2016, the European Commission published its Digital Single Market (DSM) copyright reform package including two proposals for changes to copyright legislation.
- A Directive on copyright in the Digital Single Market
- A Regulation laying down the rules on the exercise of copyright and related rights to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes.
Both the proposed Directive and Regulation directly impact the PRS for Music and the wider music industry. As of November 2018, they continue to be subject to scrutiny and amendment by the European Parliament and Council. We expect a final text to be approved and adopted into law by March 2019.
The proposal for a copyright Directive sought to address two issues of specific relevance:
The legal ambiguity around whether, or to what extent, user upload platforms are performing an act of copyright
The removal of rightsholders ability to consent before their works are made available
The Commission proposed solutions to those issue by:
Providing clarity that online service providers providing access to the public are “going beyond just the storage of works and performing an act of communication to the public”; and
Establishing that online service providers, which are performing an ‘active’ role, including the promotion and optimisation for presentation, cannot claim the hosting defence for those works.
However, as the proposed Directive progressed through the Parliament and the Council, the solutions evolved substantially.
The Proposal for a Regulation lays down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions. The proposal primarily sought to achieve two things:
Apply the principle of Country of Origin (CoO) licensing to ‘ancillary online services’, that is to any online service operated by the broadcaster, providing simultaneous access to the linear content, catch-up and ancillary material. BBC iPlayer and ITV Player are examples of ancillary online services. Application of the principle would mean that the copyright acts (communication to the public and reproduction) are deemed to occur solely in the member state in which the broadcasting organisation is established.
Establish mandatory collective licensing for retransmission, where it is an unaltered retransmission not provided by cable or online, from one member state to another, provided by a party other than the broadcaster of the initial transmission.
PRS for Music responded to the Commission’s proposal to express our belief that there was neither a compelling need nor a clear evidence base for the policy objectives set out in the proposed Regulation. PRS for Music acknowledges that there is market demand for multi-territory licensing but advocates industry-led rather than legislative solutions, a prime example being the voluntary Memorandum of Understanding between the European Broadcasting Union and rightsholders.
The regulation is now being debated and amended by the relevant Committees in the EU Parliament and by the EU Council. PRS for Music will continue to promote amendments to minimise any possible extension of country of origin and mandatory collective licensing.
2017: Continued collaboration with EU policy makers
From the time the proposed legislation was published and throughout 2017, we continued to meet with relevant Members of the European Parliament (MEP), the EU Council and the Commission to influence the amendments and ensure our position and concerns were understood.
On behalf of its members, PRS for Music advocated for a clarification of copyright law to ensure that all services that make creative works available online are deemed liable for the use of those works on their site; this would ensure that all services that provide access to music online must take a license and agree terms that represent a market representative rate for the music they use.
What is the transfer of value?
‘Transfer of Value’ is the term used to describe the way in which the value of creative works (music, images, audio-visual) has transferred away from the creators of those works to the platforms that host and monetise them. These platforms, the services that host user-uploaded content, are significant market players that have built multi-billion-dollar businesses by providing access to creators’ works, while paying little or no royalties. At the same time, they are also harming those licensed streaming providers that do pay royalties to creators and are forced to compete with free (ad-funded) services. The net effect is a devaluation of creative works online.
The reason for this is the lack of clarity in the ‘hosting defence’ provisions, better known by the moniker of its US equivalent ‘safe harbour’. These provisions create an exception to copyright for ‘host providers’, which is being wrongfully claimed by certain online platforms.
2018: Creators’ Rights Fight and the Copyright plenary votes
Creators’ Rights Fight campaign
Across June and July 2018, in the build-up to the plenary vote on the proposal for a copyright directive in the EU Parliament, PRS ran the Creators’ Rights Fight campaign. The campaign was designed to encourage and enable creators to play a direct role in the calling on their MEPs to support the version of the copyright directive in question, a version that included changes to amend the copyright framework to be fit for the digital age.
Watch these films which were part of the Creators’ Rights Fight campaign, featuring PRS members speaking about the role of the songwriter and reality of making a living by making music in the digital world.
MEPs did not approve the text in July as they felt they needed more time to understand the proposals.
September plenary vote and our next steps
On 12th September the European Parliament voted by a majority of 212 (438 in favour, 226 against) to approve the proposed Copyright Directive. By voting in favour of the text, MEPs approved significant changes to the original proposals presented by the Commission in September 2016. The amendments include significant improvements to Article 13, the section which addresses the transfer of value.
This is not the end of the process: this approval meant the draft Directive could proceed to the next phase, known as ‘trilogue’, during which the Council, Commission and Parliament representatives work to consolidate the existing proposals into a single text, which will then be subject to final approval by Parliament and Council, most likely in early 2019.