The Digital Copyright Directive - a short Q&A

What is it and why is it grabbing the headlines?

The latest copyright legislation to come out of Brussels – it provoked furious lobbying during its passage through the European Parliament, pitting the interests of content owners against those wishing to see easier access to content online.  The Directive will, among other things, increase harmonisation of copyright rules across EU Member States, introduce a controversial new copyright for ‘press publications’ (dubbed the ‘link tax’), increase the liability of large content sharing services such as YouTube and Instagram for copyright infringement on their platforms and give authors, artists and performers new rights to re-open contracts where the remuneration is too low.

What stage is it at?

The Directive will appear in the EU Official Journal shortly and will come into force 20 days after that.  Member States will then have 24 months to implement it into their national laws.

Will it survive Brexit?

Not in the UK - on the assumption that the UK leaves the EU within 24 months. However, if there is a deal and a transitionary period beyond the 24 months it may be incorporated into UK law. In any event, it will remain relevant to any business, UK or otherwise, operating in the rest of the EU. It is also possible that the UK will decide to adopt some of its provisions in order to remain in step with the EU27 post Brexit.

What is the ‘link tax’

This refers to the original proposal to give press publishers additional rights to claim royalties for the use of certain news content online, referring to the idea that news aggregators, news monitoring and similar services often link to such content. The “press publisher’s right” has, however, been significantly watered down in the final version of the Directive, and, among other things, hyperlinks are now excluded. The right has been cut down from 20 years to two and has also been limited to press publishers established in the EU (EU27 after Brexit). The right was introduced in response to a feeling that traditional press publishers, which originate stories, were losing out online. However, it remains to be seen whether press publishers will, in practice, pursue additional payments relying on the new right or prefer to co-operate freely with news aggregators and news monitoring services to enjoy the promotional benefits this offers.

What is the ‘value gap’?

The ‘value gap’ has been widely used to describe a perceived imbalance between the rights of those who create content, such as authors, film makers and musicians, and the Big Tech companies, which are instrumental in exploiting it online.  A key provision is Article 17 of the Directive, which requires Member States to ensure that large online content sharing providers (OCSPs), which store, organise and give the public access to user-uploaded material for profit, must negotiate licences for content on their sites. Policywise Article 17 is a response to the EU Commission’s assessment that, in practice, such platforms are now a main source of content online.  However, acknowledging the difficulty of ensuring that there are relevant authorisations in place for material uploaded by users, OCSPs will not be liable under the Directive if, among other things, they have made best efforts to obtain authorisation and to ensure the unavailability of specific works notified to them. (Less stringent rules apply to smaller platforms.) While it has been welcomed by many content owners, Article 17 has attracted fierce criticism on the basis that it introduces a monitoring obligation by the back door, may require OCSPs to use upload filters (already used by some) and restrict users’ freedom of opinion and expression. For OCSPs there is also likely to be significant uncertainty in knowing when they have done enough to avoid liability.

How will authors, artists and performers benefit?

Authors, artists and performers will, among other things, generally be entitled to receive “appropriate and proportionate” remuneration when they assign or license their rights to exploit their works, for example under publishing and recording contracts, and to receive information about revenues generated and royalties due at least once a year.  They may request additional remuneration under their contracts if the payment originally agreed was disproportionately low compared to the revenue eventually achieved, and are granted a right to revoke the contract if there has been no exploitation of their work, unless this is predominantly due to circumstances which the author, artist or performer could have been expected to remedy themselves. These provisions may also be seen as relevant to the “value gap”, trying to ensure that the creators themselves will receive a fair return, and they will override the contractual provisions in the contract. Member States will have considerable flexibility on how to implement these provisions: they represent a risk which may need to be taken into account in the context of acquisitions in the creative industries in particular.

New mandatory copyright exceptions

Differences in copyright exceptions between the Member States can be a barrier to the single market where they result in a need to comply with different rules in different Member States. The existing Copyright Directive[i] sets out an exclusive list of permitted exceptions which the Member States may choose to adopt.  The Digital Copyright Directive goes a step further and introduces a number of mandatory exceptions which all Member States must respect.  These include exceptions for data mining, an exception for copyright works used in cross border teaching and a ‘cultural heritage’ exception making it easier for libraries and archives to make copies of works in their collections for the purpose of preserving them.    

Does the Directive strike the right balance?

There are wide differences between different stakeholders as to what the effect of the Directive will be. Some have expressed fears that internet platforms may be discouraged from hosting user-generated content at all, or that upload filters may fail to respect freedom of expression or block the dissemination of parodies and memes. Others, including European Newspaper Publishers Association and Sir Paul McCartney are reported as supporting the Directive.  Perhaps the last word should go to Axel Voss, the MEP who sponsored it, who is quoted as saying:

“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.”

It remains to be seen whether the Directive really will have such a significant impact.