Biz Business 2015
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A range of fresh proposals from the European Commission to create a “fairer environment” for online services has been welcomed by music trade organizations eager to plug the ‘value gap’ between music consumption and the revenues returned to rights holders.

As part of its long-term strategy to create a Digital Single Market throughout the 28 member states of the European Union -- a list that includes the United Kingdom, France, Germany, Spain and Sweden -- the EC has published a package of new draft proposals concerning audio visual services, such as traditional TV broadcasters and video-sharing sites like YouTube, and rules governing e-commerce.

Key tenets of the proposals include establishing “comparable rules for comparable digital services” coupled with an “obligation for online platforms to behave responsibly.”

Geo-blocking -- the practice whereby consumers can pay vastly different sums for the same product or service depending throughout Europe -- is also to be restricted, where justified, under the terms of the draft measures.

The EC proposals did not include any concrete details on its plans to reform copyright, but the documents did confirm that after a lengthy consultation process it will unveil its proposals in the third quarter of this year.

In what can be perceived as a clear nod to assessing the viability of the safe harbour defense, the EC describes this package of reforms as being designed to “achieve a fairer allocation of value generated by the online distribution of copyright-protected content by online platforms.”

The liability of digital platforms distributing illegal content will also be assessed, as will the need for revised ‘notice and take down’ procedures. The Commission says that it will also further encourage coordinated self-regulatory efforts by online platforms in tackling infringing content online. 

The pledge was welcomed by independent trade body IMPALA, whose executive chair Helen Smith said in a statement: “The digital market is characterized by multiple indispensable trading partners and the presence of one multi-level operator who benefits from unprecedented network effects."

"It is important for the EU to take the lead on this," she went on to say, calling the EC’s plans to level the playing field for digital services and tackle the value gap an “essential” measure. “It is the biggest source of friction today in Europe’s online music licensing market," Smith added.

Dr Harald Heker, CEO of German collecting society GEMA, also welcomed the EC’s commitment to pursue a fairer allocation of value from copyright protected content.  

"In the digital world, creative content considerably contributes to the creation of value. To date, it is mainly the platform operators that benefit financially from it, and they either do not remunerate creatives at all, or significantly below value,” stated Heker, citing GEMA’s high-profile dispute with YouTube as an example of how online platforms have exploited the current legal framework to “avoid having to share their proceeds with the creatives.”

“These platforms additionally compete directly with the multitude of licensed providers of digital content, leading to a distorted competition and obstructing a continued development of the digital common market,” the GEMA CEO went on to say, calling for the EC to close any existing legal loopholes. 

He continued: “Platform operators which benefit financially from the exploitation of creative content must no longer be allowed to shirk their responsibilities to remunerate the creators of the works in a an adequate and fair manner."

The EC‘s proposals follow the publication of a report from the European Union Intellectual Property Office (EUIPO) that claims €170 million ($190 million), equating to 5.2 percent of all music sales, were lost in the European Union in 2014 due to music piracy. Of those, €57 million ($63 million) were lost in physical formats and €113 million ($126 million) in digital formats.

“The question of whether piracy reduces or increases sales of recorded music has been the subject of many studies with contradictory results,” commented EUIPO's executive director António Campinos.

“Our study's results are in line with the prevailing consensus and find that piracy reduces the revenue of legitimate industry in both digital and physical formats,” Campinos went on to say.