Article 11: Driven by Rhetoric, not by Arithmetic
In the European Commission’s original “Proposal for a Directive of the European Parliament and of the Council on copyright in the Digital Single Market”, the main rationale for the introduction of an ancillary copyright – also known as the snippet or link tax – is economic. The explanatory memorandum states: “The organisational and financial contribution of publishers in producing press publications needs to be recognised and further encouraged to ensure the sustainability of the publishing industry.” The key question then becomes whether Article 11 of the copyright directive, “Protection of press publications concerning digital uses”, will achieve that stated goal of ensuring the sustainability of the publishing industry.
Unusually for proposed legislation, there is already reliable data about how effective the ancillary copyright is in terms of providing additional revenue to publishers. Since both Germany and Spain introduced their own national versions of the snippet tax some years ago, we can consider the real-world results that have flowed as a result.
One source of information comes from VG Media, the European collecting society of commercial media enterprises, based in Germany. It has just published its latest annual accounts, available on the Bundesanzeiger site. In 2017, VG Media had a turnover of around €46 million. Of this, €30,000 (or 0.065%) stems from the Leistungsschutzrecht (Germany’s ancillary copyright). It’s hard to draw conclusions from a single figure, but we have the amounts for previous years too. For the financial year 2016, the turnover was €43 million, and the ancillary copyright brought in €708,000 (1.65%). That much larger figure was due to a “one-off” payment according to VG Media. In 2015, the turnover was €45 million, and the snippet tax brought in €8,000 (0.018%). Back in 2014, when VG Media’s turnover was €73 million, the very first Leistungsschutzrecht payments represented €6,000 of that (0.008%).
To err on the safe side, we can take the best year’s atypical figure of €708,000 as being a generous overestimate of the monies that VG Media earns from Germany’s ancillary copyright each year. The income must be divided among the shareholders of VG Media, which are publishers and broadcasters. That means individual publishers will receive only a fraction of that €708,000. To err once more on the side of extreme caution, let’s nonetheless assume that all of that goes to the largest publisher in Europe, Axel Springer, to determine what impact it would have. According to its 2017 annual report, Springer’s turnover was €3.56 billion. So even if all of the Leistungsschutzrecht payments at their highest level were paid exclusively to Springer, it would still represent only 0.02% of the company’s revenue. The actual percentage is almost certainly worse than this, since we have assumed unrealistic best-case situations.
This calculation shows why the idea that the ancillary copyright will “ensure the sustainability of the publishing industry”, as the European Commission claims, is absurd. Extra payments amounting to 0.02% of a company’s turnover will not make the slightest difference to its viability. Even if the figure were ten times greater – 0.2% – ancillary copyright would still not save the publishing industry from decline.
A study on “Strengthening the Position of Press Publishers and Authors and Performers in the Copyright Directive”, which was commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the Legal Affairs (JURI) Committee, and published in September 2017, agreed with this view. It wrote: “We are doubtful that the proposed right will do much to secure a sustainable press. Once one understands the causes of the decline, one can immediately see that, however successful, a right targeted at aggregators is not likely to achieve much.”
Another study, entitled “Online News Aggregation and Neighbouring Rights for News Publishers” was carried out for the European Commission. It was never officially published because its conclusions are completely at odds with the assumption behind Article 11 of the proposed copyright directive: that online aggregators like Google are harming the publishing industry. The study found “no evidence that online aggregators have a negative impact on original newspaper publishers’ revenue.”
Moreover: “On the contrary, the evidence shows that aggregators may actually be complements to newspaper websites and may help consumer discover more news and boost the number of visits.” In other words, online sites that use snippets of news titles are boosting the number of visitors to the publications’ Web sites, and thus increasing their revenue and sustainability, rather than decreasing them.
German and Spanish publishers have learned this the hard way. As the European Commission’s suppressed report puts it: “After an initial rejection and chilling effect on traffic to their websites, German publishers agreed that news aggregators could take their content without remuneration. Spanish publishers did not have that option and suffered a decline in traffic.”
Despite these inarguable facts – that publishers in both countries with a snippet tax have suffered, not benefited, as a result – the Bulgarian Council presidency not only wants to keep Article 11, but to make it even worse. The revenue figures from VG Media confirm that the ancillary copyright makes absolutely no sense if you look at the basic arithmetic – and that’s even before all the other serious downsides are considered.
The problem here is that the main EU publishers aren’t actually concerned that much about receiving money from ancillary copyright, since they know the sums would be vanishingly small – which also means that the promised “benefits” for EU journalists are negligible too. Publishers are more interested in using the rhetoric of “sustaining” newspapers to achieve their real goal: to attack and hobble the US Internet behemoths that have succeeded where traditional media companies failed because of the latter’s stubborn refusal to adapt their businesses to the new digital reality.
It’s time for MEPs to assert themselves against reckless hijacking of the legislative process by certain parties. The European Parliament must bring back some much-needed rationality by rejecting Article 11 completely. If it doesn’t, the EU project risks being seen as even more undemocratic by the region’s already disillusioned citizens.
Featured image by Alexas_Fotos.