Article 13: Music industry optimistic that re-drafted text can still crush YouTube ‘Value Gap’

The global music industry was left disappointed last weekend, following the European Council’s latest round of debate on the controversial ‘Article 13’.

The provision, set within the European Copyright Directive, seeks to ensure that major digital platforms face legal responsibility for copyright infringement on their services in Europe.

In turn, hope large music rightsholders, this will improve the leverage of labels and publishers during their royalty negotiation with YouTube – and, therefore, help close the ‘Value Gap’ between what the video service pays per-play versus competitors like Spotify and Apple Music.

However, on Friday (January 18) it emerged that eleven European nations, including Germany, Sweden and Italy, had rejected the latest draft of the Directive’s text – with some reportedly voicing concerns over the strictness of Article 13’s pro-copyright agenda.

This came ahead of a scheduled European Council meeting in Romania on Monday (January 22), ostensibly aiming to approve the draft Directive. The meeting was subsequently cancelled.

Meanwhile, music industry reps have themselves bemoaned the fact that the latest draft of the Article doesn’t, in their view, go far enough to protect copyright.

As we stand today, then, the European Copyright Directive has somewhat stalled. It does, however, remain within the ‘trialogue’ period of back-and-forth, whereby the European Parliament, Council and Commission must all sign-off a final version of the text.

So what’s going on? Are hopes of Article 13 quashing the so-called ‘Value Gap’ fading fast? Or is there still reason to believe that the music industry’s initial jubilation over the clause may still carry the day? What’s going to happen to the Directive?

One person who’s definitely in the know is John Phelan (pictured). Phelan is Director General of the ICMP, which represents the major music publishers, including Sony/ATV, UMPG and Warner/Chappell, as well as the majority of indies around the world.

ICMP has been intimately involved in the pro-Copyright Directive lobbying efforts, on Article 13 as well as other issues, since the beginning – and they’re certainly not giving up the fight.

Here, Phelan tells MBW why the potential outcome of the Copyright Directive remains positive – but he says the industry still has work to do to obtain its ideal conclusion…

What happened last Friday – why did new member states reject the latest version of the Directive, and what does that mean for the music industry?

Friday’s events were not a vote against Article 13, nor an end point. It was more a case of the EU28 governments saying “we’re not yet ready as an EU28 to codify our formal, final position on Article 13”.

Eleven countries said that Thursday’s version [of the draft Directive] from the Romanian Presidency approach was desperately deficient. Frankly, I think everyone agrees on that.

Can you outline what the music industry lobbyists’ biggest issues are with the current draft – and what needs to happen to fix them? How likely do you feel you are to achieving these objectives?

There’s no doubting the huge hurdles in the final furlong. Big Tech’s messaging towards ever more election-aware MEPs – that of ‘Article 13 will ban memes, burden business and break the internet’ – are still being employed by vicarious organisations. It’s unprecedented in Europe in scale and scope. That’s a whole other conversation.

Politically, the Council in this endgame is asking high-level, and not unreasonable, questions. Bear in mind it’s comprised of 28 diversely political governments. The key questions include how to tailor a final text with no serious risk for start-ups. Another major unresolved issue revolves around users – do they need a legal exception to copyright norms?

“The key questions over Article 13 include how to tailor a final text with no serious risk for start-ups.”

Our message is: we’re all about micro-businesses and startups. Licensing them is our companies’ day to day, hence the more than 200 licensed DSPs now all across Europe. A clear clarification under Article 13 that copyright applies to user upload services is actually in existing MSEs’ interests, not fears – it would mean a clear legal system for all services and not construct a commercial ceiling on their desired growth.

Legislators need to be clearly cognisant of the risks posed by carve outs from Article 13. Users have nought to fear. Music needs listeners and we’re a licensing focused industry.

If Europe solves the Value Gap in law it means not only a better return for musicians, but more music for users. This law must not make what is legal today under copyright illegal tomorrow.

The likelihood? Legislating in Europe is the most demanding of tasks at the best of times. It’s unique in where we work in that it involves 28 countries under one umbrella. When it comes to “the most contested law in living memory”, in the words of a European Parliament spokesperson, that complexity multiplies.

Europe simply hasn’t seen anything like this before. We want a clear solution to the Value Gap, but we won’t support an unclear final stab at it.

What’s the next step, and how optimistic (or otherwise) are you generally feeling about the version of Article 13 that may eventually pass?

Next step is the EU Presidency hitting the Article 11 and Article 13 redrafting drawing boards on behalf of the EU28 governments in Council. That’s already underway this week.

When the EU28’s politicians approve this text they merge it in a final trilogue meeting with high-level negotiators from the other two institutions of European Commission and Parliament. The end product of that meeting is intended to be a ‘done deal’ of a Directive presented to the European Parliament for a vote. That’s classic trilogue in a nutshell: three texts have to become one. We have two, the third is imminent.

“Three texts have to become one. We have two, the third is imminent.”

Bear in mind there are other provisions to Articles 11 and 13, many of which are sealed and would be positive for music publishers. Our feedback from Member State governments has been constructive. We believe it’s key that rightsholders are not overly burdened. There’s zero need to reverse the copyright wheel in Europe, only a need to put it in motion for upload services too. That’s getting a fair hearing. But no-one is in any doubt of the remaining technical challenges.

The whole industry is working on this. We’ll only agree to a boat which floats.

Anti-Article 13 MEP Julia Reda (pictured) encouraged her supporters (and, by association, Google/Alphabet) to ‘keep up the pressure’ last week – suggesting their lobbying was having an impact on European decision-makers. What’s your view?

Some governments which didn’t agree to Friday’s Article 13 text are ardent advocates of a Value Gap solution. That goes to show the emphasis right now is a sensible one of ‘Let’s get this right, not call a halt’.

Let’s call a spade a spade: Friday was a procedural delay in order to see if a deal is achievable given 28 countries’ complex set of interests. I get the distinct impression some of those crowing loudest over the weekend were engaged in classic misdirection from the anti-copyright protests planned for Saturday, which gathered paltry numbers. We saw a similar exposure of the fallacy that there is a mass objection to copyright in August last year before the September vote on the Parliament’s text.

“Copyright is not a dirty word, it’s creators’ paycheck.”

The evidence shows that the majority of real people in this debate are behind [finding a solution to] the Value Gap. Thousands of artists, of all genres, art forms and nationalities are involved. It’s they who Europe needs to deliver for. Copyright is not a dirty word, it’s creators’ paycheck. That’s the uppermost reason we’ll remain constructive with all governments to see what can be done. From there we’ll evaluate what’s on the table.

We’ll all see in the coming weeks. In any scenario, music isn’t going anywhere. It’ll continue to evolve digitally and daily.Music Business Worldwide

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