sabato, 18 agosto 2018

(English) #CopyrightWeek – EC Withholds © Evidence (Again)

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[Note: This analysis is being published in the context of the 2018 #CopyrightWeek, in light of the theme of 17 January on ‘Transparency”, which revolves around the idea that: “whether in the form of laws, international agreements, or website terms and standards, copyright policy should be made through a participatory, democratic, and transparent process”.]

On 17 January, the #CopyrightWeek theme is ‘transparency’. The starting point is that “(…) copyright policy should be made through a participatory, democratic, and transparent process”.

That is, in a perfect world. In reality, ideology, rather than evidence, has been guiding the European Commission’s (EC) proposal for a Directive on Copyright in the Digital Single Market.

EC Withholds © Evidence (Again)

Those who start to scratch the surface, such as Julia Reda – German Member of the European Parliament for the Greens/EFA Group – and Corporate Europe Observatory (CEO), are uncovering how the EC carefully cherry-picked the evidence that supports their ideological policy choices, whilst withholding evidence going against them. The EC officials must have confused policy-based evidence making with evidence-based policy making.

Just before the 2017 Winter break, MEP Reda uncovered another attempt of the EC to swipe evidence under the carpet. Officials from the EC’s Directorate‑General for Communications Networks, Content and Technology (DG CNECT) where caught in the act, when they ‘kindly’ reminded a researcher of the EC’s Joint Research Centre (JRC) to not publish a study, contradicting the EC’s policy choice, on the highly debated press publishers’ right (Article 11) at the request of their hierarchy.

Following MEP Reda’s exposure of this charade, Vladimír Šucha, JRC’s Director-General, had a sudden urge to send the random tweet below into the world to defend the publication criteria upheld by the JRC. This message was then conveniently re-tweeted by Roberto Viola, DG CNECT’s Director-General.

The goal of the JRC is actually to “supports EU policies with independent scientific evidence throughout the whole policy cycle”. However, here independence only seems to go as far as hierarchy allows it to go, as the EC itself acknowledges that the JRC is not independent of the Commission’s internal processes”.

This raises the question: how many JRC studies remain unpublished because other EC officials consider the results not to be ‘robust’ enough. Robust clearly being a synonym for ‘presenting evidence supporting the EC’s internal policy choices’.

Ignorance is Bliss

The EC prides itself for its commitment to ‘evidence-based policy making’. In its Better Regulation Agenda the Juncker Commission explains that “applying the principles of better regulation will ensure that measures are evidence-based, well designed and deliver tangible and sustainable benefits for citizens, business and society as a whole” (p. 3).

However, the EC is very ‘picky’ about which evidence can guide them. The case at hand is a perfect illustration. An earlier and shorter version of the JRC study that MEP Reda dug-up was already shared with DG CNECT in March 2016. The same document was then also shared in June 2016 with the EC’s Inter-Service Steering Group (which includes other European Commission departments than DG CNECT, as well as the EC’s legal services) preparing the copyright reform proposal.

The study, which finds no benefit to introducing an EU-wide ancillary copyright – or press publishers’ right as it was dubbed in Article 11 – was thus available to numerous EC officials involved in the internal discussions on the proposals and EC’s Impact Assessment, well before the the official publication of the actual reform proposal on 14 September 2016. However, this study was apparently put aside, and the EC followed through with its intention to introduce an EU-wide press publishers’ right.

This should not come as a surprise. In September 2017, MEP Reda already exposed that the EC withheld a €369.871 study on the impact of piracy since May 2015, as its results do not support the ‘voluntary’ private policing and filtering duties that it is trying to force upon online platforms under Article 13.

The EC also deemed that it was much easier to neglect all the opposing views that citizens submitted to their public consultation on the role of publishers in the copyright value chain and on the ‘panorama exception’ (March-June, 2016).

In a response to a 2017 Parliamentary Question by S&D MEP Nessa Childers, EC Vice-President Andrus Ansip, explained how easy it is to wave away results that go against your policy ideology, as he pointed out that: “the Commission adopts a cautious approach to quantitative data, as responses to consultations are generally not statistically representatives of a target population”.

The EC’s strategy on copyright policy is clear to us: ignorance is bliss. However, this blatant disregard of scientific evidence and citizens’ views neglects the impact copyright policy has on citizens’ daily lives, as Glyn Moody noted in one of his editorials:

“(…) everyone who uses the Internet is profoundly impacted by copyright every moment they are online, and often when they are offline too. Changes to the key directive covering this area are, above all, a public policy issue affecting 500 million people, rather than purely the domain of the copyright industry.”

The EC’s attempts to withhold evidence and its contempt for citizens’ opinions are quickly diminishing the legitimacy of the policy making process. Moreover, these efforts also strip away the ability of the other EU institutions, namely the European Parliament and the Member States in Council, to take decisions that are grounded in sound evidence. This is especially detrimental at a time when Member States are being forced into taking political decisions on the press publishers’ right and upload filtering on online platforms, which will change the face of the Internet.

MEP Reda’s crusade isn’t over yet. The JRC study was shared again with DG CNECT in October 2016, requesting their feedback by mid-November 2016. It took DG CNECT until 12 June 2017 to provide comments. In that 8 month time-span, they produced a brief antithesis of the study, depicting what they identified as weaknesses and discrepancies, in an attempt to put down any arguments that could contest their policy choice.

In the period from October 2016 till May 2017 there was a sudden radio silence between the JRC and DG CNECT on this study. This ‘gap’ caught MEP Reda’s interest, as she filed a ‘confirmatory application’ to request the EC to double-check if all available documents were actually released. The EC has now until 23 January to respond to this request.

MEP Reda also took-up this opportunity to write a letter [PDF] to European Commission President Jean-Claude Juncker, Vice-President Andrus Ansip, and Commissioner Mariya Gabriel, to remind them of the fact that “the paramount principles of this [copyright] debate should be transparency and integrity”. In this letter, she also urges the EC to “take a much more proactive role in the dissemination of its own findings and to abandon any attempts to withhold or distort such findings, regardless of whether they are considered supportive of the Commission’s plans or not”.

“the paramount principles of this [copyright] debate should be transparency and integrity” – MEP Julia Reda

However, it should be noted that within the European Parliament (EP) similar evasive maneuvers are attempted in order to steer the debate in a specific direction.

During a recent hearing of the EP’s Legal Affairs (JURI) Committee, the JURI Secretariat judged that it was good practice to invite Professor Thomas Höppner to present evidence against the outcome of an independent academic study that it had commissioned through a tendering process. This whilst knowing that Professor Höppner’s main occupation is his litigation work at lawfirm Hausfeld, where he represents, amongst other clients, a number of German newspaper publishers who are grouped in the Bundesverband Deutscher Zeitungsverleger (BDZV) . Professor Höppner just recently filed an application on behalf of the BDZV against Google’s appeal of the €2.42 billion fine it was slammed with by the European Commission. Lead EP Rapporteur, MEP Axel Voss – German EPP Group Member, came to the defence of Professor Höppner, as MEP Voss stated to POLITICO that it was normal for professors to take on legal clients. The question of the normality of European Parliament Committees inviting such professors as ‘experts’ in a debate presenting a clear conflict of interest is however still to be questioned.

Now let’s look at why the EC actually tried to sweep this study under the carpet.

Contrary to some policy makers’ belief, newspapers do actually benefit from news aggregation platforms and a press publishers’ right is worth ZERO

The JRC study takes an economical approach in order to uncover why news publishers failed to monetise the neighbouring right introduced in Germany and Spain. Some of its key findings are that (pp. 25-26):

  • “(…) newspapers actually benefit from news aggregation platforms in terms of increased traffic to newspaper websites and more advertising revenue.”;
  • News platforms that display ads share between 70 and 100% of ad revenue with newspaper publishers. That explains why publishers are eager to distribute their content through aggregators.”; [Note: “While Facebook Newsfeed is ad-driven Google News is ad-free.” – p. 3]
  • “Research also shows that the question of indirect ad revenue from news content generated in general search can be addressed by modifying the length of text snippets in search.”;
  • “There is no evidence that the production of news articles has decreased, despite the fall in the number of newspapers and in revenue.”;
  • “the German and Spanish cases show that the law can create a right but market forces have valued this right at a zero price.”;
  • “(…) news aggregators promote diversity because they facilitate access to news across different sources.”; and,
  • “(…) the online news industry is far from stabilized yet and that there is wide scope for further innovation in exploring new revenue sources that go beyond that traditional choice between ads and subscriptions”.

 

A key question: Do News Aggregators Add or Take Revenue Away?

“Aggregators (…) generate additional traffic to news publishers’ websites and thereby may increase rather than reduce their online revenue” – JRC study (p. 9)

The study believes that one of the basic questions in this debate is “whether re-routing content through online news aggregators platforms increases or diminishes ad revenue for news publishers on their own website”. It considers that this “is an empirical question that cannot be settled by economic theory or legal reasoning”, and only data can bring the answer.

Based on the available empirical evidence to date the answer is that (p. 9):

Aggregators are complementary rather than competing services to newspapers’ original websites. On balance, they generate additional traffic to news publishers’ websites and thereby may increase rather than reduce their online revenue

In their brief antithesis of the study, DG CNECT brings up the EC 2016 Eurobarometer survey to try and claim that “47 % [of users] (…) browse and read news extracts on these websites without clicking on links to access the whole article in the newspaper page, which erodes advertising revenues from the newspaper webpages”.

This is an argument that they keep on repeating, both in their impact assessment and in public debates. However, it’s a non-argument at multiple levels.

First, the wording of the question put forward and the answering options create a certain bias in the responses.  Question 17 of this Eurobarometer survey asked: “When you access the news via news aggregators, online social media or search engines, what do you most often do?”

The participants were offered three options but could only choose one:

  • Browse and read the main news of the day, without clicking on links to access the whole articles. (47%)
  • Click on available links to read the whole articles on their original webpage. (45%)
  • You never access the news via news aggregators or online social media. (6%)

In other words, aside from the fact that multiple answers were prohibited, the participants were asked what they “most often do”, not what they “DO” or “DO NOT”. Moreover, most people would probably click on certain links and not on other, depending on the time they have an their interests. Finally, this question actually shows that 94% of the users actually access or have accessed news through news aggregators or online social media!

Second, even the JRC rebuts their argument that, in case the survey findings were reliable, that this “erodes advertising revenues from the newspaper webpages”, as they respond that:

“The empirical evidence cited in the first part of the paper proves the contrary: there is no substitution effect, the quantity effect dominates. This results in an expansion of revenue.”

“modification of the Spanish intellectual property law creates new market access barriers, both for existing news aggregators and for new service providers” – Spanish Competition Authority

A market failure?

The study also tries to assess if there is any kind of market failure. To do so, it looks at the assessments of both the German and Spanish competition authorities, who already addressed the possible abuse of market dominance by Google Search and Google News to assess the need for an intervention by them or the national regulator (p. 18ff). However, both national competition authorities did not perceive a market failure.

  • The German competition authority (Bundes Kartel Ambt [BKarA]): “Google eventually asked all publishers to sign a written contract with a zero price license under the ‘opt-in’ clause. All newspaper signed in order to allow Google News and Google Search to continue linking to their news articles. The news publishers then filed a complaint at the German competition authority about the alleged abuse by Google of its dominant position in the German market. The competition authority (…) ruled that there was no need for action. (…) Although the news publishers are not remunerated for their contribution to the platform, the BKarA still considers this to be a market, though with a zero price.”
  • The Spanish competition authority (CNMC): “The CNMC concludes that there is no indication of a market failure in news aggregation because news publishers do not seem to actively oppose news aggregators. Consequently, there is no reason for regulatory intervention in that market. Moreover, the intervention through the modification of the Spanish intellectual property law creates new market access barriers, both for existing news aggregators and for new service providers.”

 

The zero price point: A byproduct of the copy-paste news model

The study concludes that “the German and Spanish cases show that the law can create a right but market forces have valued this right at a zero price” (p. 25). The study also points out that (p. 21):

“In Google News there are no ads and only publishers and consumers. Neither of them pays. However, publishers receive benefits from additional traffic and ad revenue on their own websites. (…) even a zero price, does not affect their participation because they still get benefits – as the empirical evidence suggests.”

This zero price point seems to be a byproduct of the free news model and the fast news cycle, as the study observes that “news has become so ubiquitous on the internet that few consumers are willing to pay for it” (p. 23). This can be linked to the fact that “widespread practice among online news publishers to closely watch and copy immediately from each other” (p. 22).

Interesting in this context is the reference the study makes to research by Julia Cage (Sciences Po), Nicolas Herve (Institut National de l’Audiovisuel [INA]) and Marie-Luce Viaud (INA), who analyse the speed and modalities of online news dissemination, and found that (p. 17):

“on average, it takes two hours for information published by an online media outlet to be published on another news site, but less than 45 minutes in half of the cases and less than 5 minutes in 25% of the cases. At least half of online dissemination is copy-and-paste and does not follow rules for citing and crediting. Information is costly to produce but cheap to reproduce.”

This could be the main reason why some newspaper publishers are asking party for a neighbouring right, as copyright is too complex with its originality criteria, a threshold many news articles would not meet nowadays. But then again, if originality is discarded as a criteria, can we truly claim that quality journalism is the objective?

Moreover, newspaper publishers also have to recognise that the Internet has enabled the ‘unbundling of newspapers’, in print editions news is packaged, whilst online “consumers have more choice in making their own selection of articles online as they can freely move between different newspapers”.

They study also notes that “the volume of freely available content is huge”, and as a result “the price of online content goes down as the volume of free supply increases” (p. 14).

A deal with the Devil or not?

The study explains that “news aggregation platforms are a Faustian deal between platforms, publishers and consumers” (see p. 24).

  • The upside: “The platform offers an increase in audience reach for news publishers; it offers consumers a reduction in transaction costs and access to a wide variety of articles. In return, it increases its ad revenues.”
  • The downside: “(…) the loss of editorial control and brand recognition for publishers and more dependence on search rankings for consumers”.

The result: “publishers may perceive the deal as unfair because news aggregators run profitable business models built on their content while publishers’ revenue is under pressure”. The study points out that publishers “would not gain from refusing the deal because there are no better alternatives for the time being” (p. 24)

Especially, the smaller and more innovative publishers acknowledge the benefits of being listed on news aggregation platforms. Carlos Astiz, Chairman and spokesperson of the Innovative Media Publishers Coalition, explained in a recent editorial that:

“It is difficult to see, in the proposed ‘neighbouring right’, what large publishers claim to need: a legal tool for sharing revenues and distribute costs amongst players in the media industry. On the basis of existing examples or previous experiences, I only see restrictions to linking and sharing content in juxtaposition with the power of larger players to extract more money for themselves. If those [large publishers] could cope with less online presence, smaller publishers cannot.”

He adds that:

“In an age where the access to true, fair, and balanced information is becoming more and more important, is imperative that our politicians do not support a measure which will have the direct opposite effect. The financial gain for a select few is not worth destroying the free flow of and access to information for all European citizens.

The study observes that news aggregators help lower search costs for consumers, which in return “enables news publishers to reach a much larger audience, mainly low opportunity cost consumers deep down the long tail who would not have bought a printed newspaper or taken the time to read full-length articles” (p. 22). This in return “may give original news publishers new audiences that they would otherwise not reach” (p. 9).

“The financial gain for a select few is not worth destroying the free flow of and access to information for all European citizens” – Innovative Media Publishers Coalition

Conclusion: Copyright is not the magic bullet

As evidenced above, extending the scope of copyright by way of introducing a new neighbouring right for newspaper publishers is not the magic solution legislators had hoped it to be. Moreover, the study warns that “extending copyright protection to all forms of digital reproduction may defy the purpose of copyright as an instrument to promote innovation, not necessarily to maximize revenue of the rights holders” (p. 15).

It is clear that newspapers have to find a model that works for them and their readers. This is a challenge that will not and cannot be solved by allowing some large newspaper publishers to turn copyright into a tool to pursue additional gains and protect and sustain their current business model to the detriment of the whole of society.

The real challenge for news organisations is providing their audience with quality content and services, as the Reuters Institute for the Study of Journalism, at the University of Oxford, points out. They observe that “a growing number of news organisations across Europe have challenged the assumption that people will not pay for digital news and are developing pay models”, and that “research suggests that some people across all age groups, including younger media users, are willing to pay for quality content and services online that they find valuable and useful“.

The news publishers advocating for this right claim that this will help fund quality journalism, but no one can hold them accountable to this claim, as a neighbouring right is just there to reward a financial investment, no more, no less. Moreover, at the current value of zero, this right will not help to achieve quality journalism.

Here actually, the news publishers’ main target, Google, is already providing some form of (coerced?) support, as it set-up the ‘Digital News Initiative (DNI)’, a partnership between Google and publishers in Europe to support high-quality journalism through technology and innovation. Through this initiative Google already awarded more than €90m to more than 460 Projects in 29 European countries.

The JRC study actually suggest that more collaboration could turn out to be a ‘winning strategy’ for both news publisher and aggregators. As this could “lead to new business models that generate more revenue for news publishers and responds better to consumer preferences for news qualities and subjects” (p. 26).

However,  the road to collaboration could prove to be bumpy, as Marc Zuckerberg just recently announced that users’ Facebook feeds will contain “less public content like posts from businesses, brands, and media”, which implies that their news feed will be less dominated by newspaper publishers’ content. Perhaps this is just Facebook anticipating that the press publishers’ right could become a reality if the European Parliament and Council do not succeed in bringing common sense into the debate. Or perhaps it is yet another illustration of the fact that social platforms’ main purpose is after all social interaction between their users, which includes but is not limited to the sharing of content…Or maybe it’s just the confirmation that the value is closer to zero than some might hope.


What others are saying

 

Herman Rucic is Senior Policy Manager in the secretariat of the Copyright 4 Creativity (C4C) coalition. He is Senior Policy Manager at N-square Consulting since September 2010.