Look! a Netflix tax!

And while you were distracted by that, you didn’t notice all the extra TV advertising.

While headlines spoke of another big tech tax (a Netflix Tax to add to your iPod tax, Google tax and YouTube tax – see “Fair Remuneration is not a tax”), last week reporting on the new AVMS Directive to be presented by the European Commission on 25 May failed to lead with the fact that the future of TV in Europe is more advertising.

With the new “flexible rules”, product placement and sponsorship are encouraged on all audiovisual media services and broadcasters will be able to cram more advertising into primetime (when there are more eyeballs) and advertising for programmes from the same media group don’t count.  Advertising during films used to be limited to every 30 minutes, but even that has been cut down to 20 minutes.  It’s a massive shift.  The Commission claims that the competition in the sector will prevent any excesses and that more money will flow into production – we’re not convinced.  What we do know is that the integrity of an authors’ work will be put under even more pressure from advertising and that media services’ attractiveness to consumers will decrease.

But of course, don’t worry about that. Worry about the already-met 20% European content quota and the optional financial contributions services like Netflix might have to make.

And definitely don’t look at the new definition for video sharing platforms – responsible for the organisation of the stored content, but with no editorial responsibility over this content to maintain the liability exemptions of the E-Commerce Directive…

JT

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Portability – A question of time

The first copyright proposal of the European Commission is a Regulation to enable temporary access to subscription services from your home country while travelling in Europe. This is the essence of the Portability Regulation.

The Commission decided against (or maybe just postponed) a full on attack on territorial licensing of audiovisual works and went for a very short but focussed 8 article text. The Commission sees a communication win with this one, and rightly so, the Regulation is a gift to consumers, essentially acting as a limitation to authors’ rights. They want to see this adopted quickly.

The Dutch Presidency is happy to oblige and is racing through the text pushing it up to top political level (COREPER) already, leaving some countries struggling to keep up, while others try to form coalitions on key sticking points in the limited time available.

In the European Parliament however, time is seemingly not of the essence. After spending two months agreeing on which committee should lead on the file (legal affairs and not internal market in the end), the committees involved don’t seem to be following the same Dutch speed.

Given that timing seems to be important to the different institutions here, it seems only fitting that one of the key sticking points is time. That is, how long is the “temporary” in “temporary portability”?

The Commission chose to define “temporary” by referring to location only, with no reference to time.

Some Member States are happy with that, others less so. SAA certainly doesn’t feel comfortable with this.

As the character Papou in SAA Patron, Cédric Klapsich’s Russian Dolls said:

“Be careful, because the temporary, sometimes, can last a long time”

Papou : Fais attention, parce que le temporaire, des fois, ça dure longtemps.

A conversation on what we mean by “temporary” is essential. Are expats who have been away from their country so long that they can’t vote in referendums still only away on a temporary basis?

Maybe we can’t agree on a number of days but a definition of temporary that doesn’t refer to time seems pretty weak for a directly applicable Regulation.

JT

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Fair remuneration is not a tax

If there is one thing we know about Big Tech, they don’t like paying tax. Even when it isn’t a tax.

The communication campaign against fair remuneration for authors and performers has started. Big Tech can’t possibly be seen to be against fair remuneration so how can they oppose it?

Tax. If they can dress this remuneration up as a tax, then they think they’re on to a winner:

Deprive authors of their exclusive rights to authorise reproductions and provide them with compensation – call it an iPod tax.

Publishers want to be able to better control the use of their works online – call it a Google tax.

So let’s call “fair remuneration for online exploitation” a YouTube tax. There it is. It’s practically a tax on innovation.

Make no mistake – the whole debate around these “taxes” is about negotiating positions and who gets how much of the pie. YouTube pays relative peanuts for the use of music compared to fully licensed online services because there are enough grey areas in the legislation and business model to weaken the negotiating position of the music CMOs, producers and publishers.

SAA’s 2015 white paper showed that audiovisual authors’ royalties in 2013 from their CMOs represents only 0.37% of industry revenues.  This isn’t all the pay screenwriters and directors receive but it paints a bleak picture.

Something needs to change, and those who may have to pay are against it. Calling remuneration a tax is cynical and simple.  Will it work?

SAA supports an unwaivable right to remuneration for screenwriters and directors, that would be handled on a collective basis. This is not a tax or a levy – it is not an amount set and collected by the government to fund the public budget.

It is a system that defers a market negotiation and makes it fairer in two ways – 1) the negotiation takes place closer to the actual moment of exploitation when the value can more accurately be determined. 2) the negotiation and collection is handled collectively meaning that individual freelance authors are no longer alone in negotiating with much bigger entities.

Being paid fairly for your work is not a tax. In the case of screenwriters and directors, being fairly paid for your intellectual property is not a tax either. There are so many ways to watch films and TV series now and new services are being developed all the time. We need to recognise that an upfront contract signed before a film is even made cannot provide fair and proportionate remuneration to its creators.

Change is needed but let’s not be fooled by alarmist calls of “taxation”.

JT

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The never-ending private copying saga

Previously, two Commissioners have had a stab at resolving the hoo ha around private copying levies and failed.  This new Commission seemed to have recognised that this was one issue where entrenched, opposing industry positions and overly differing viewpoints between the Member States made progress an unlikely result for a Commission focused on being big on big things and small on small things. Radio silence on the issue was broken on 9th December when the Copyright Communication included an action box on private copying levies.

So, what is big? Well, everything is relative of course. In real money terms, the recently published WIPO/Thuiskopie survey put private copying collections in Europe in 2014 at 731million Euros (greatly inflated by collections in Germany which increased 174% due to the conclusion of litigation). However, compared to EU GDP (13 trillion Euros) private copying levy collections are teeny tiny (0.006%).  Compared to the 1 trillion Euro revenues of Digital Europe Members – the organisation leading the charge for the abolition of levies – they are a little bigger, just 0.07%.  For the creative industries as a whole they are more significant, representing 0.1% of CCI Revenues (535 billion Euros).  For individual creators, they can be essential in keeping them going between projects. So, is this really a big issue? How likely is agreement among the Member States?

Not very likely.  The UK is resolutely against levies and compensation schemes in general (failing last year to pass a private copying exception without a compensation mechanism).  By comparison, the governments of Germany and France, the two countries with the largest collections, are staunch supporters of the system. It’s difficult to see the halfway house that would satisfy everyone.

Given the political paralysis, the European Court of Justice is being relied upon to fill in the gaps. Authors’ organisations, without the deep pockets of the tech industries, are made to wait years while courts resolve disputes and clarify points of law.

So, does the Commission really want to take another bite of this cherry?  SAA has always advocated further harmonisation of the system but is faced with a tech industry that is unwilling to negotiate and ready to burn huge amounts of money (more than they have to pay in levies?) in a coordinated and concerted attack on the system across Europe in national legislation and through the courts.

It is unclear who in the Commission has the appetite for this particular topic. The issue hasn’t come up in any of the “digital single market” Commissioners’ speeches.  The copyright unit is already overworked with a shopping list of reforms expected before the summer.

This is a big issue for big tech but I hope that is not what the Commission means when it says it wants to be big on the big things.

JT

 

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Platforms – Mutton dressed as lamb?

There’s something about online platforms that seems to be causing problems with the development of the online market.  The European Commission can’t quite put its finger on it.

Wrapped up in the vocabulary of “innovation” and “disruption” many of the services the Commission has identified are actually doing nothing new.  They’re distributors – buying for one price, hoping to sell enough to make a profit. In the old days they were shops, networks, broadcasters, but in these days of technological awe and wonder they become “platforms”, “revolutionising” the way we watch films and TV.

As far as we’re concerned though, many of these companies, although technologically impressive, are not as revolutionary as they would like us to believe and the Commission already has a range of regulatory tools that it could use. The range of what people call platforms is massive.  In the audiovisual sector alone we could be talking about traditional services (the sort already regulated by the Audiovisual Media Services Directive (AVMSD)), content/service aggregators like connected TVs, and video sharing platforms.

Cloaked in modern, these services try to justify why the rules in place don’t apply to them – copyright, taxation and audiovisual regulations, competition, data protection, enforcement of intellectual property, e-Commerce rules.

Transparency is becoming an increasing problem in the audiovisual sector.  Data gatekeepers make fair negotiations with distributors very difficult and that in turn makes it difficult for authors to follow the success of their works and monitor whether remuneration should be due. So far the online market is bringing very little money into the audiovisual sector and almost nothing to screenwriters and directors. This is one of the reasons why SAA believes that audiovisual authors need an unwaivable right to remuneration, to enable authors, collectively, to obtain remuneration based on the online exploitation of their works.

Europe has long recognised the need to support European audiovisual works – whether in terms of distribution or visibility.  The AVMS Directive, set for revision later this year, includes articles on the promotion of European works. The lack of transparency makes compliance evaluation difficult. Forum shopping enables these new services to set up shop where the requirements are at a minimum, and then a combination of commercial deals to secure prominence along with automated recommendation algorithms challenge the visibility of European works even further.  European works had to fight for visibility in the analogue world. In the digital world it is even harder.

Finally, these platforms can also be intermediaries. In the case of video sharing services, we see services that attach advertising to videos and make recommendations but deny any responsibility for the content they make available through their service. YouTube, one of the internet’s go to destinations for audiovisual works, is not an audiovisual media service according to the AVMSD. It also manages to benefit from the liability exemption provided by the e-Commerce Directive because it just passively hosts videos. This doesn’t make the Commission’s work any easier – this question of scope spills over from the platforms consultation into discussions on the AVMSD, e-Commerce and IPRED.

The Commission is right to consult on the issue of platforms.  Hopefully the responses it receives will show that it already has many of the tools at its disposal (while a refresh of the eCommerce Directive would also help) to gather them into the scope of existing regulations and create a fair, competitive market that brings more European films and TV to a broader audience while remunerating the screenwriters and directors behind them.

You can read a summary of our contribution to the Commission’s consultation here.

JT

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Satellite and cable: inspiration for online?

Just before Christmas the European Commission published preliminary statistics on the responses to the Satellite and Cable Directive (or SatCab as it is affectionately known). The Commission’s Communication on Copyright published on 9th December also made a point of identifying the SatCab Directive review as a possible solution to improving cross-border access to audiovisual content.

As we point out in our contribution (summary here), the Satellite and Cable Directive is an important one for the sector, facilitating the licensing of linear programming for use outside of home markets by direct satellite and cable operators. As we have said before, the Commission’s observation that European works don’t circulate well enough is not new, hence the creation of Directives like Satellite and Cable and Audiovisual Media Services. Other than the cross-border aspect of the Directive, it is also important because it guarantees some of the only exploitation-based remuneration received by screenwriters and directors in Europe.

Satellite and cable – what’s the difference?

An important starting point is to recognise the differences between the two parts of the Directive.

The satellite part recognises an exclusive right for the author to authorise the communication to the public by satellite of their works. However, it considers that the act of communication to the public by satellite occurs solely in the Member State where, under the control and responsibility of the broadcasting organisation, the programme-carrying signals are introduced into an uninterrupted chain of communication leading to the satellite and down towards the earth. This is the Satellite country of origin principle. It enables broadcasters to include their direct satellite broadcasting in their original rights acquisition with authors and other rightholders, taking into account all aspects of the broadcast (such as the number of people reached, language version, etc.) for the amount to be paid. The system was created to provide legal certainty to broadcasters and their satellite operators who, due to the technical nature of satellite broadcasting, couldn’t limit the signals to precise individual territories.

The cable part made it easier and cheaper for cable operators to obtain licences for the retransmission of linear channels from other territories to add to their subscriber packages. It provides authors and other rightholders with a cable retransmission right that may be exercised only through a collective management organisation (CMO), except for the rights of broadcasting organisations. By imposing collective management to the content providers of the programmes (authors, performers and producers), the Directive prevents black holes when broadcasters have authorised their channels to be retransmitted and ensures these content providers are remunerated for the retransmission of their works.

How has that translated in practice?

In practice, the application of the satellite mechanism is very limited as it only addresses direct satellite broadcasting by broadcasters themselves. It does not apply to the most high-profile satellite services that are based on subscriptions and successfully operate out of this model. SAA believes that the fact that most of the satellite business is made outside this framework limits it as a model for other exploitations. In addition, the extension of the Satellite country of origin principle to online exploitations would open the doors to forum shopping and go against the territorial licensing system that ensures the financing of European productions.

On the other hand, the cable system has proved a success as it has given cable operators legal certainty and generated remuneration for screenwriters and directors. SAA believes this model should be source of inspiration for improving online availability of works while guaranteeing fair remuneration for authors. It certainly inspired our own calls for the unwaivable right to remuneration for screenwriters and directors outlined in the second edition of our white paper.

Improved implementation

There are other aspects of the Directive that need looking at too. The Directive has not been implemented in a technology neutral way everywhere, meaning that almost identical services to those provided by cable operators, such as IPTV, are not always required to apply the Directive. This creates unfair competition and needs to be resolved. In addition, SAA opposes the use of “all rights included” contracts and prefers to see screenwriters and directors remunerated for the use of their work by cable operators through their representative CMOs, as provided for by the compulsory collective management system. This is the only way to enable authors to be remunerated wherever their works are retransmitted.

SAA certainly welcomes the Commission’s investigations into the Directive (they have also commissioned a study) and encourages the Commission to look at the cable part of the Directive more closely as part of their thoughts not only on how to improve cross-border access to audiovisual content, but also on how to ensure authors receive a fair share for all exploitations of their works.

CD & JT

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The long-awaited Commission copyright action plan

Since my previous post on the leaked version of the Commission communication, not much has changed in the final version of the communication on a modern, more European copyright framework adopted on 9 December 2015. The final goal is still the full harmonisation of copyright in the form of a single copyright title, in spite of it being purely unrealistic taking into account European cultures, and the road to it is cross-border access for all types of content across Europe. The language still reflects a very ideological vision of what the EU is about and its role in the copyright field.

This is in sharp contrast with the concrete actions proposed: while the text suggests a revolution is needed, the Commission only tables a proposal for a regulation on cross-border portability and quite limited additional steps for 2016 and beyond in the form of a review of the Satellite and Cable Directive taking into account the results of the public consultation which closed on 16 November 2015, leveraging the Creative Europe programme, adapting some of the exceptions in the field of education and research, ‘follow-the-money’ mechanisms and a new public consultation on the IPR enforcement Directive, as well as future measures to ensure fair remuneration to authors for the use of their works online.

This contrast is both worrying (is the Commission schizophrenic or trying to hide its real nature?) and encouraging: having revolutionary rhetoric but reasonable actions is better than the other way around. It might also show the evolution from the martial declarations on broken copyright to concrete actions which do not challenge the main features of the copyright system. We at the SAA have decided to recognize and value the evolution in the Commission’s position even if there seems to be a little way still to go. It does not mean that we agree with the full plan – we made some important reservations in our press release – but we want to be constructive partners: partners who do not hesitate to express concerns and disagreements, but partners who are committed to the dialogue and are result-oriented.

As regular readers of our blog will know, our main focus is the authors’ remuneration for the exploitation of their works online. We are happy to see that this issue is included in the communication as part of the section on a well-functioning marketplace and the sharing of the value of the online distribution of works among the various market players and rightholders. Action is foreseen by Spring 2016. The communication is quite detailed on the issues around the definition of the ‘right of communication to the public’ and on the relationship with the liability exemptions of the E-Commerce Directive used by some platforms to claim their non-engagement in copyright-relevant acts. It is less developed on the lack of bargaining power of authors and performers when licensing or transferring their rights. The communication mentions different mechanisms proposed by stakeholders to solve the problem: “regulation of certain contractual practices, unwaivable remuneration rights, collective bargaining and collective management of rights”, but does not make any choice on the most relevant mechanism or the most efficient combination of them.

This is fine at the stage of the communication adopted on 9 December 2015 as no concrete and in-depth discussion have really started yet. ‘Fair remuneration’ was not on the agenda of the Commission when they entered into office. At political level they did not even know there was a problem. The issue has been pushed by a handful of authors’ organisations, including the SAA, who have succeeded in transforming their political plea into a commitment for action by the Commission enacted in the communication.

The real work starts now. The discussion on ‘fair remuneration’, like the one on platforms (public consultation), is multi-faceted and raises different challenges depending on the cultural sector. Authors’ needs vary depending on whether they are working in the music, book or audiovisual sectors because the sectors are organized in different ways and make different use of copyright rules. This will be the main challenge of this work stream if it is to deliver relevant and efficient measures by Spring 2016 to ensure authors receive remuneration for the use of their works online. SAA has made proposals for the audiovisual sector and is committed to promoting them constructively in any forum the Commission puts in place, to avoid such eagerly awaited action fizzling out.

CD

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