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Impact assessment on the modernisation of EU copyright rules – use of protected content by online services

It is a problem, because rightholders have no or limited control over the use and the remuneration for the use of their content by services storing and giving access to large amounts of protected content uploaded by their users.

The functioning of the online content market place is complex. There has been a progressive shift from ownership to access-based models. Today, copyright protected content is no longer only distributed directly by a digital service provider to end users. Instead, access to online content often takes place at the end of a process in which several parties participate. As a result, rightholders do not always have control over the way their content is distributed online.

Such user uploaded content services often provide the public with large amounts of protected content. In addition to giving access to the content, these platforms provide functionalities such as categorization, recommendations, playlists, or the ability to share content. These services use copyright protected content in order to attract and retain users to their websites thereby increasing the value of their services. Access to such content is generally “free” for users and the service draws its revenues, directly or indirectly, from advertising and user data.

While some of the providers of these services have de facto become major actors of online content distribution and have substantial number of users and significant market valuations rightholders are not necessarily able to enter into agreements with them for the use of their content. This affects rightholders’ possibility to determine whether, and under which conditions, their content is made available on the services and to get an appropriate remuneration for it.

Some online service providers refuse to negotiate any agreement, which means that despite the availability of copyright protected content on these platforms no revenues are generated for rightholders for the use of their content. Refusals of agreements have above all been reported by rightholders in the music and images sectors. At the same time, some online service providers have argued that rightholders have requested terms that they considered unreasonable for the type of service they provide.

In some cases, platforms have offered rightholders agreements for a share of the revenue generated by advertising placed around their content. However, these agreements have been reported by some rightholders to be different from copyright licensing agreements as the platforms argue that they are not under a legal requirement to negotiate with rightholders and that they enter into such “monetisation agreements” on a purely voluntary basis. Rightholders argue that this alleged absence of legal requirement impedes fair negotiations.

The negotiation position of rightholders is affected by the fact that they are not in a position to keep their content away from these platforms. When uploaded content is infringing, they can only ask the platforms to take down the content, in each individual case, which leads to significant costs for them and appears insufficient to them given the large scale of uploads. At the same time, some platforms have voluntarily taken measures to help rightholders in identifying and monetising the use of content on their services, in particular through content identification technologies.

While some services have claimed high rates of successful content identification, the identification of some types of content, such as bootleg remixes and DJ sets, or more generally of content that has been transformed or differs significantly from the original content, may be very challenging.

Also, it has been reported by rightholders that the functioning and efficiency of the technologies remains generally opaque for them (for instance with regard to changes implemented by the service or reasons why some content has not been identified). In parallel, it has been argued that content identification technologies may lead to “false positives” (i.e. situations where content is wrongly identified and removed).

The situation described is also said to result in a decrease of the value of copyright protected content. Several broadcasters for example have started legal actions against different online platforms that disseminate their programs online claiming that these platforms are actively exploiting the content and benefitting financially from it. They consider that these services limit their ability to monetize certain types of content on other services.

Besides rightholders, other online content service providers (those that acquire a licence from rightholders and distribute protected content directly to end users) are affected by this situation. They find themselves at a competitive disadvantage – they negotiate and conclude licences with rightholders in order to operate their services while online platforms distributing user uploaded content have no or very limited content acquisition costs.

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