Digital and Mobile

Germany Passes Controversial EU Copyright Reforms, Sparking Ire

Bundestag
Kay Nietfeld/picture alliance via Getty Images

View into the plenary hall of the Bundestag during the session on May 20, 2021.

The new legislation "torpedoes the digital reality" of the German industry, says CEO of industry association BVMI.

For more information on how the EU Copyright Directive could change the music business, check out the Billboard Pro Spotlight event "Creators and Copyright," which includes several panels and keynote interviews with ABBA co-founder and CISAC president Björn Ulvaeus and U.S. Register of Copyrights Shira Perlmutter — billboard.com/spotlight

LONDON — Germany’s parliament approved controversial copyright laws that could make it harder for music rights holders to agree to future license deals with clip-focused sites like TikTok and Triller, in spite of strong objections from labels, artists and publishers.

The reforms, passed by the Bundestag on Thursday (May 20), are part of widespread changes to Germany’s copyright laws under the European Union’s Copyright Directive. The European Parliament approved the directive in 2019, with the 27 member states of the European Union given two years to adopt its terms into national law.

Those terms include the requirement for platforms that rely on user-generated content, such as YouTube or Facebook, to make "best efforts" to remove unlicensed content, take concrete steps to ensure it wasn't uploaded again and reach "fair remuneration" deals with rights holders.

Germany becomes the fourth EU member to adopt the Copyright Directive into national law ahead of the June 7 deadline, following the Netherlands, France and Hungary.

Unlike those countries, however, Germany’s legislation includes controversial provisions that opponents say will have “devastating consequences” for the country’s music industry -- the world’s fourth largest with $1.4 billion in total revenues in 2020, according to IFPI.

Thousands of young protestors took to German streets in March 2019 to oppose the Copyright Directive over fears it would lead to online censorship. Its passage provoked a furor among industry executives on Thursday.

The legislation “torpedoes the digital reality of our industry” and “destabilizes contractual relationships” between rights holders and platforms, says Dr. Florian Drücke, CEO of BVMI, the German music industry association.

Germany’s Federal Chamber must still approve the law before it is officially enacted, but that is anticipated to be a formality with no objections expected from government officials. A Federal Chamber hearing is scheduled for May 28. BVMI says it will challenge the ruling in the German and European courts.

"Despite repeated warnings from music and other sectors,” said Helen Smith, executive chair of European independent labels organization IMPALA, “Germany has taken a step back in time for culture.”

Mark Chung, CEO of German artist group the Association of Independent Music Entrepreneurs (VUT) called the reforms “anti-artistic, anti-European and frighteningly impractical.” In a statement, Chung warned that license negotiations will be made more difficult because of the changes, “and many aspects will provoke years of legal wrangling.”

Among the changes is the ruling that platforms using short song clips of under 15 seconds will be considered "minor use" and thus effectively exempt from having to obtain permission or a license from the rights holder. If a rights holder can show that an upload would create significant economic harm, it can request a takedown with what policymakers call a "red button" mechanism; platforms then have a week to comply.

In these “minor use” instances platforms will have to pay collecting societies for their use under a fixed-rate tariff, which would then be distributed to rights holders. (The provision will only apply if there are no other licensing agreements in place and platforms will still be required to seek licenses directly from rights holders).

The new copyright laws also create a new exception around the use of unlicensed works for parody, caricature and pastiche. Rights holders fear that these concessions will fragment the digital market in Europe, making it harder to negotiate fair licensing deals with platforms and suppress growth.

Earlier this month, more than 1,300 German acts, including big names like Rammstein and Helene Fischer, signed an open letter opposing the changes.

“Instead of strengthening authors, artists and their economic partners and limiting the power of the platforms, a complicated structure was drafted out of fear,” Dr. Götz von Einem, a board member of the German Music Publishers Association (DMV), said in a statement, referencing the 2019 protests. He added that the legislation will “pose great challenges for all parties involved.”

Despite their misgivings, music execs have welcomed some elements of the legislation, most notably the key requirement for user generated content platforms like YouTube and Facebook to license content from rights holders. They also support the move to remove infringing material, effectively ending safe harbor provisions.

Other hard-fought gains for rights holders include strengthened "moral rights" for songwriters, artists and author that give them more protection over how their work is used and attributed.

In instances where an artist’s moral rights have been infringed, such as the unauthorized use of their work in a way that might be deemed offensive or derogatory rights holders are able to immediately block the content in question, even if it falls under the 15 second "minor use" category. An earlier draft version of the German law did not include this provision.

The adopted text also includes a "special protection of melodies" provision, which already existed in German copyright law, but had been omitted from earlier drafts of the directive.

Dr. Harald Heker, CEO of German collection society GEMA, which represents more than 80,000 members, said the reforms would bring “more fairness to the digital music market,” but also fell short of expectations around platforms’ liability provisions. “We will have to take care that their interpretation is not to the detriment of creators,” Heker said.