Tuesday, 27 June 2017

Ancillary copyright would be a poison, not a cure

One of the most perplexing elements of the European Commission’s copyright proposals relates to what’s known as ancillary copyright, or neighbouring rights for press publishers. Billed as a way for journalists and their publishers to make more money from online journalism, it’s an attempt at protectionism that would end up severely harming competition and innovation in the EU news industry.

While copyrights reside with the journalists themselves, Article 11 of the proposed overhaul would give press publishers the ability to demand fees from online companies such as Google for what’s described as the “exploitation of their content”. In practice, as we’ve seen with ancillary copyright laws in Germany and Spain, news outlets would be able to demand that Google pay them for using snippets of their text and thumbnails of their pictures when linking to their articles in Google News.

According to the Commission’s wording, this is “necessary to guarantee that authors and rightholders receive a fair share of the value that is generated by the use of their works and other subject-matter”. Nobody can argue against the idea that creators and their sponsors should be fairly rewarded for their work and investment. However, ancillary copyright is anything but fair. Worse, it’s demonstrably counterproductive – at least, as far as innovation and the public interest are concerned.

Traditional press publishers’ core problem with the internet is that it’s exposed them to lots of competition. Smaller publications can easily set up business, with relatively low costs of production and distribution. Crucially, they don’t need to invest in the expensive marketing that nourished their older, larger rivals. If someone’s searching online for the latest news on a topic that interests them, they will see smaller publications’ articles presented alongside those of more traditional publishers – exposure comes not through marketing, but through relevance and usefulness. This is great for smaller publishers, and less great for their legacy competitors who no longer benefit so much from their years of brand awareness.

The first ancillary copyright law appeared in Germany in 2013, following a great deal of lobbying by large press publishers, in particular Axel Springer, which has a lot of influence with German politicians. It’s a vaguely-worded law that doesn’t properly define how long a text snippet must be to command a fee. It was also passed in such a rush, ahead of that year’s federal elections, that the German government didn’t have time to notify it to the Commission, as they should have due to its impact on information society services.

When the large German publishers tried to use their newfound right to demand fees from Google, the company simply stopped using snippets of their article text and thumbnails of pictures in Google News. The impact was quick and brutal – Springer itself lost 40 percent of the traffic to its articles via Google Search and 80 percent of the traffic from Google News. It turns out that people want to know a little about the article they’re about to visit, before they click on the link that will take them there.

The publishers had little choice but to grant Google a temporary waiver from having to pay them ancillary copyright fees. They complained to the German antitrust authority that Google had used its market power to bully them into granting this free license, but the watchdog sided with Google – just because the company has a search monopoly, that doesn’t mean it needs to reproduce snippets that will cost it money. The German publishers, via their VG Media rights-collection proxy, have also tried to throw their weight around in arbitration courts and in the Berlin regional court, but so far to no avail. Apart from the fattening of lawyers’ wallets, the only result of note has been the Berlin court asking the Court of Justice of the European Union to weigh in on the issue of the lack of notification to the Commission back in 2013 – an issue that could sink the entire German ancillary copyright law, if the CJEU decides the German government broke the rules in its haste to please the publishers.

In 2014, Spain passed its own ancillary copyright law, again at the urging of its large press publishers. This time, there were no free licenses; the law was so tightly phrased that publishers were forced to demand fees from Google, whether they wanted to or not. As a result, the firm shut down Google News in Spain. And as a result of that, Spanish press publishers lost an estimated €10 million, with smaller publishers faring the worst as their main bridge to news consumers disappeared.

It’s worth noting that several Spanish news aggregation startups, such as Planeta Ludico and NiagaRank, had to shut down due to the country’s ancillary copyright law. And in Germany, aggregation startups didn’t benefit from the free license that Google got. While such laws may be mostly intended to extract money from Google, the industry’s big beast, they have a disproportionate impact on startups that lack Google’s ability to weather such setbacks.

Google doesn’t generally make money from Google News itself, because it doesn’t place advertisements in the service (though it does of course place ads in its main search service, where results are sometimes augmented with Google News results). In contrast, ancillary copyright destroys the entire business model of small aggregation startups. CEDRO, Spain’s equivalent to VG Media in this arena, recently decided that aggregators should pay €0.05 per user per day in ancillary copyright fees – for the popular local aggregation startup Menéame, this works out as 20 times the company’s turnover. Obviously, this is completely untenable for a small business.

So, given the German and Spanish experiences, what is the push for ancillary copyright actually trying to achieve? On the face of it, the aim is to get Google to pay publishers for sending readers to their articles. This is in itself a very strange idea, as publishers get to make money from showing ads to those readers, but let’s take it at face value for a moment. Even if Google were to continue to use those snippets, and if it started to pay those fees, the law would kill its small, European competitors in the news aggregation space – no-one would invest in them, because their businesses would haemorrhage money. Wealthy Google, if it stayed in the space, would end up dominating the EU news aggregation market even more than it does now.

But this isn’t going to happen. Google is not going to start paying anyone to link to their online content, because that would be the beginning of the end for Google’s core business model – a win-win situation where the company benefits from being the gatekeeper for the public’s attention, and linked-to sites benefit from the traffic Google freely sends them.

Günther Oettinger has claimed that the might of a pan-EU law would force Google to open its coffers, but he’s wrong. Nobody can force a company to engage in a line of business that will lose it money. If pushed, Google would undoubtedly do across the EU what it did in Spain: shut down Google News. This may benefit the traditional press publishers that hate online competition – and perhaps this is why they, with their vast offline marketing budgets, have lobbied so hard for an EU ancillary copyright law. But it would cause infinite harm to smaller European publishers and the innovative European startups that are trying to develop cleverer ways of connecting publishers with their readers.

There are many flaws in Article 11 as proposed – its vague wording could penalise social media users; there’s no guarantee that journalists themselves would benefit from the fees; and it could lead to the last two decades of journalism becoming less accessible to the public. But even if the wording were tweaked, the basic concept remains fundamentally flawed. Nobody would benefit, apart from the handful of large press publishers that are trying to turn back the clock to protect their bottom lines.

There’s no doubt that the news industry is in crisis, nor that digitalisation is largely to blame. It’s a deeply complex problem, and solutions are urgently needed. But ancillary copyright is not one of those solutions. If anything, it would hold back the innovation that’s so desperately needed to rescue the industry – innovation that might come not from Google, but from the bright minds in the EU.

David Meyer is a tech writer and commentator who's based in Berlin. He's been covering technology for over a decade, with a particular focus on fundamental and consumer rights.