What's Next for Europe's New Copyright Reforms?

ISSUE 8 2019 - DO NOT REUSE
Michael Debets/Pacific Press/LightRocket via Getty Images
Crowds marched in Frankfurt, Germany, to protest the EU Copyright Directive, but to no avail.

The passage the landmark EU Copyright Directive has earned both rave reviews and fresh concerns.

Record labels, publishers and creators welcomed unprecedented legislation that will change how online platforms like YouTube operate in Europe -- and perhaps worldwide -- after the European Parliament voted 348-274 to approve an updated version of the European Union (EU) Copyright Directive.   

While the legislation has been debated for years, it was far from a sure thing. In the run-up to the vote, an estimated 100,000 protesters took to the streets, mostly in cities in Germany and Poland, in opposition to the directive and its core provision, which holds Internet services responsible for copyright infringement on their platforms and, claim critics, amounts to internet censorship.

That measure -- originally in Article 13, but moved to Article 17 in the final text -- will have the most significant impact on the music business by far. By requiring platforms like YouTube to reach "fair remuneration" deals with rights holders, its intent is to close the "value gap" that lets platforms that depend on user uploads pay less for content than services like Spotify and Apple Music. And by making them legally liable for hosting unlicensed content -- with some limitations -- it imposes a "notice and stay-down regime" that would replace the safe-harbor immunity that forces rights holders to play a game of Whac-A-Mole to control their intellectual property.

In practice, this will probably lead YouTube to employ a stricter filtering system than the one it uses now. (The actual text does not mention filters or specify how platforms should block infringing content.) The consequences for YouTube and parent company Google -- which lobbied aggressively against the bill -- could be huge.

"This is the first time anywhere that there has been clarification in legislation that certain platforms dealing with user-generated content are subject to the same copyright rules as other music services," says Helen Smith, CEO of indie label group IMPALA, adding that it will have "a ripple effect around the world." Gadi Oron, director general of the authors and composers' organization CISAC, said the Parliament's actions "lead the way for countries outside the EU to follow."

Now all 27 EU member states -- 28 if the United Kingdom further delays Brexit -- will have two years to transpose the directive into national law. Before then, those countries will need to reapprove the European Parliament's decision -- which traditionally amounts to a rubber stamp, although this legislation has been so contentious that it could be an exception.

"This directive is an important step towards correcting a situation which has allowed a few companies to earn huge sums of money without properly remunerating the thousands of creatives and journalists whose work they depend on," European Parliament Rapporteur Axel Voss says.

It's not clear what the legislation means for the United Kingdom, the world's fourth-largest music market. But most media and tech lobbyists believe that the directive is important enough to change the way some platforms work worldwide.

However, some music executives fear that the final version of the directive contains loopholes that could be used to create new safe harbors for platforms. Chief among them are "lighter touch" exceptions that it grants to small and startup platforms that are less than three years old, with annual revenue of under 10 million euros and fewer than 5 million unique users per month.

"This is not a regulation. It's a directive," says John Phelan, director general of international music publishing trade association ICMP. "And that means there is a large amount of leeway for EU countries and how they put it into national law. The big challenge now is make sure that these services play fair and can't use mitigation or excuses to get off."

Although the media has focused on what was known as Article 13, the directive includes other measures, such as a requirement that labels and publishers regularly and transparently account to performers and songwriters.

After the vote, Google Europe tweeted that the directive "is improved but will still lead to legal uncertainty and will hurt Europe's creative and digital economies ... we look forward to working with policymakers, publishers, creators and rights holders as member states move to implement the new rules."

Beyond music, this shows that governments are growing skeptical of the laissez-faire attitude that has shaped internet regulation so far. "This is the start of democracy reasserting its sovereignty over the internet giants," says songwriter Crispin Hunt, also chairman of the U.K.-based Ivors Academy. "It has significance that goes beyond the beneficial impact for artists and copyright."