Thursday, 18 July 2024

EP Study: © Reform Won’t Cut It for Journalists & Creators

The European Parliament (EP) published a study [PDF] on ‘Strengthening the Position of Press Publishers and Authors and Performers in the Copyright Directive’ that was commissioned by the EP’s Policy Department for Citizens’ Rights and Constitutional Affairs at the request of the Legal Affairs (JURI) Committee.

The study analyses the press publishers’ right (a.k.a. ancillary copyright – Article 11) and the fair remuneration provisions (Articles 14-16) in the proposal for a Directive on copyright in the Digital Single Market [2016/0280(COD)]. It was authored by copyright Professors Lionel Bently and Martin Kretschmer, and a number of consultants from the Technopolis Group: Tobias Dudenbostel, María del Carmen Calatrava Moreno, and Alfred Radauer. It is expected that the study will be presented by its authors during one of the upcoming JURI Committee meetings.

Spoiler alert: In short, the report considers that the proposed publishers’ right will miss its impact of securing a sustainable press, but considers there is some value to providing a presumption of rights to the benefit of publishers of press publications as proposed by former Rapporteur MEP Comodini Cachia and by the Estonian Presidency Council in its Option B draft (see our report here). Moreover, the report is critical of the European Commission’s (EC) lack of ambitions around the fair remuneration of authors and performers.

The Press Publishers’ Right (a.k.a. ancillary copyright – Article 11)

On the press publishers’ rights, the authors have succeeded in producing the most concise conclusion possible, as based on their analysis they state that (p. 42):

“In the light of the criticisms and evidence, our recommendations would be for JURI to adopt the recommendations contained in the Draft JURI Report of March 10, 2017.”

In other words, they suggest to the JURI Committee to adopt the proposal of former MEP & Rapporteur Therese Comodini Cachia, who put forward a presumption of rights to the benefit of publishers of press publications, that entitles them ‘to defend in their own name the rights of authors and seek remedies in respect of works published in their press publication’ (AM18 & 52). Interesting to note, is that the Estonian Presidency recently also put a similar proposal on the table.

In their view, they are “doubtful that the proposed right will do much to secure a sustainable press” (p. 37), and consider that “the implications of Article 11 for the re-use of snippets are, in [their] opinion, extremely serious” (p. 40). They explain that “though the evidence does not support a new right, it does support the introduction of a presumption of this sort” (p. 38).

The Lack of Evidence to Support a Press Publishers’ Right

The report stresses the fact that “there is little evidence that the decline in newspaper revenues has anything to do with the activities of news aggregators or search engines” (p. 18).  They add that “experience with versions of right in the two national jurisdictions, Germany and Spain, have not provided evidence of significant additional remuneration streams for press publishers” (p. 19).

The Press Publishers’ Right’s Impact on Hyperlinks

On the press publishers’ right’s impact of on hyperlinks, the report warns that (p. 42):

If the ancillary right is adopted, it seems clear that some hyperlinking will be implicated. The Parliament needs to decide whether it wants to “save the link” to press publications in all circumstances, or leave the matter to the changing interpretation of the CJEU. If it prefers to clarify, it needs to decide on precisely which links it wants to treat as immune.”

The Proposals to Extend the Scope of the Press Publishers’ Right

Proposals have been floating around to extend the press publishers’ right in different direction, from including print to covering academic journals.

On the proposals to extend the right’s scope to cover print next to digital uses, the authors considers that they “see no concrete need to extend the new right in these ways”, as they explain that (p.39):

“Bearing in mind that we are still very much at the experimental stage, with little experience of the two national laws, we would caution strongly against any such extension.”

On the proposals to extend the right’s scope to cover (academic) journals the report warns that “there are real dangers (…) that extending the right to journals would undermine the operation of open access policies” (p. 38).

Other Policy Options to Support a Sustainable Press

The report also highlights that there are other options to support a sustainable press, as it gives the example of one Spanish publisher who remarked that the printed press in Spain is only taxed 4%, while the digital press is taxed 21%, so ensuring both enjoy the same fiscal benefits could be a good start.

The Fair Remuneration in Contracts of Authors and Performers

The authors put forward some tentative conclusions around authors and performers contracts (see pp. 83ff). They describe the EC’s proposals to ensure fair remuneration of authors and performers as ” less controversial than those for press publishers” (p. 50), butunambitious“, especially from the perspective of the existing legislation in the EU Member States, as the authors assessed the laws in 7 Member States (Denmark, France, Germany, Netherlands, Poland, Spain, and the United Kingdom) to if Articles 14 to 16 would have any added value.

Looking at the  cultural economics literature, the authors find that “many of the (financial) problems that face authors relate to the structure of the markets, and will not easily be rectified by legal intervention” (p. 8).

The EC’s Impact Assessment Proves to be ‘Light’ (once again)

The authors explain that “there is a well established literature in cultural economics that analyses the economic organisation of cultural markets, the dynamics of cultural consumption, and in particular the labour markets of creatives”, and that “the findings of this literature indicate that, empirically, it is difficult to adjust the bargaining outcome in cultural markets” (p. 53).

The report is critical of the EC’s ‘homework’ on these provisions, as they note that the facts above are “an omission in the preparatory work for Arts. 14, 15 and 16 of the Directive, and in the Commission’s Impact Assessment, that it fails to reflect on this knowledge”. Moreover, they denounce the fact that “it is not even acknowledged that there is a body of detailed empirical studies on the economics of artists’ labour markets accumulated over a period of more than 20 years” (p. 53).

One of the notions that the authors stress from the existing body of research is the fact that the cultural sector highly revolves around bestsellers, leading to “a winner-take-all distribution of earnings”, as the “top 10% of creators receive a disproportionally large share of total income (for literary authors: ~70% of total income; for composers/songwriters: ~80% of total income[)]”, whilst “at the same time, medium (typical) earnings of creators are very low.” (p. 54)

The Transparency Obligation (Article 14)

The report believes that the transparency obligation of Article 14, would “improve the formal rights of authors in the UK and add a general obligation to the sector specific approach in France and Spain”. However, the obligationdoes not go as far as many laws that also expressly entitle authors to audit or verify the information, nor does it preclude contractual terms that seek to limit their obligation” (pp.71-72).

The report also pinpoints two important issues around this transparency obligation, namely:

  1. Should the right be limited to situations of recurring contractual remuneration?
  2. Should the obligation be imposed further down the chain from the initial contracting party?

On the 1st issue, the authors propose that a differentiation could be made between “‘recurring payments’ where the party is obliged to render accounts and ‘lump sum’ cases, where the party is obliged to render accounts only if the creator requests them”.

On the 2nd issue, they suggest that “one solution might be to allow the creator to request accounts from such sublicensees, and the creation of a corresponding duty on such third parties”, as they point out that “there are circumstances where the initial contracting party may not know about the exploitation by someone further down the chain”.

Finally, it’s worth noting that the authors express their support for one of the JURI Committee amendments (AM 62), which requires the reporting to be accurate, and to include details of promotional activities, as they consider it uncontroversial and because models for such a rule can be found in Danish, French, German and Polish laws.

The Contract Adjustment Mechanism (Article 15)

The authors consider that the contract adjustment mechanism, or so called ‘best-seller clause’,  “would improve the formal position of authors in the UK and Denmark, and performers in Spain and (some) performers in France”, but that ” it is not as ambitious as the general provisions on entitlement to equitable/proportional remuneration recognised in France, Germany, the Netherlands and Spain” (p. 72).

The authors consider the EC’s proposal “it is, at best, ambiguous”, and warn that (p. 84):

“While we are sympathetic to the criticism that the Commission should have considered a more ambitious menu of author-protective measures, it did not do so. Introducing dramatic changes via Parliamentary amendment has the potential to cause considerable, unnecessary and unwanted disruption to a field that is both complex, as well as economically and socially important. None of the proposed amendments look sufficiently carefully thought-through to warrant support at the moment.”

Creative Commons and Associated ‘Open’ Licences.

The authors suggest that “it would be sensible to make it completely clear that [transparency and contract adjustment provisions] do not apply to Creative Commons and associated ‘open’ licences“. In this context, they suggest that (p. 84):

“The German model provides that the provisions (of Article 32) do not apply where a creator grants ‘an unremunerated non-exclusive exploitation right for every person.’ This seems like a good model. The same language might be used to clarify that no accounting obligation arises under Article 14 in such cases.”

The Dispute Resolution Mechanism (Article 16)

The report explains that a general alternative dispute resolution (ADR) mechanism is something that they did not encounter in 6 out of the 7 Member States they analysed, except for Spain. However, ADR is permitted in these other Member States, there are just no specific legal provisions for it (p. 71).

The authors thus consider that “it is not clear that this is really an issue that justifies harmonization”, as “such mechanisms are only starting to emerge in Member states”. They propose that “a clause be introduced to clarify that contractual provisions derogating from the obligations should be null and void (unless agreed through collective representation)”, and explain that “useful examples of such clauses already exist in Danish and German laws” (p. 85).

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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. [All content from this author is made available under a CC BY 4.0 license]