SWD IA on the EU copyright modernization – impacts of baseline and first option for fair remuneration of authors and performers

Baseline

The problem of information asymmetry is not likely to be resolved by market developments, including self-regulation, or MS legislation. Problems for creators as regards lack of information on the exploitation and revenues generated by their works will continue in a number of MS and the cross-border aspects of the problem will not be addressed.

At the same time exploitation – particularly online exploitation – is expected to become more complex and varied, involving new intermediaries and forms of use. This risks making it even more difficult for creators to understand and monitor the exploitation and the revenue flow, resulting in an increased information asymmetry. Under the baseline scenario the weaker bargaining position of authors and performers is not likely to improve overall which entails a risk of non-appropriate remuneration.

This option would not generate any direct compliance costs for contractual counterparties, unless such costs arise from self-regulation or individual MS intervention. The costs linked to the differences between transparency requirements in MS relevant for those parties active in several MS will remain.

Without any EU intervention, the contractual counterparties of creators would benefit from the information asymmetry, especially in MS and sectors where there are no transparency obligations at all. The fragmentation of the internal market would continue.

In a market where conditions for fair remuneration are not optimal, creators may dedicate less time to content creation and creative professions would become altogether less attractive which is detrimental to cultural diversity.

This option will not have a direct impact on copyright as a property right (although problems for the effective exercise of this right by creators will continue and therefore there would be an indirect impact on the medium to long term). Weak bargaining position of creators may also prejudice their freedom of expression through artistic creation. This option would have no impact on the freedom to conduct a business of contractual counterparties.

Option 1

Recommendation for MS and stakeholders’ dialogue on improving transparency in the contractual relationships of creators

A recommendation would act as guidance to those MS which plan to take steps towards ensuring more transparency. This option could result in positive developments, even though it would not ensure a similar level of transparency in all MS and in all sectors. Those MS that take action are not likely to do so consistently, but this option could provide more flexibility to MS to adapt their legislation.

The effects of a recommendation will depend on the extent to which it is followed by MS. It will also provide an opportunity for creators to push for changes at national level through the stakeholder dialogue. The effects on compliance costs will depend on the extent to which the recommendation is followed in MS.

Contractual counterparties are likely to face different costs in different MS. A recommendation may reduce the fragmentation between different national legislations to some extent but still would not create a level playing field for businesses in the EU.

The impact of this option on fundamental rights would depend on the take-up of the recommendation by the MS. Impacts on copyright as a property right and on the freedom of expression may range from neutral to positive (e.g. if MS action result in a better bargaining position of creators and an more efficient enforcement of their rights). At the same time, there may be some limited negative impacts on the freedom to conduct a business, depending on the obligations imposed at national level.