Music to YouTube’s ears: Article 13 in disarray as European Copyright Directive stalls

Just four months ago, the music industry was claiming a major legislative victory over YouTube in Europe.

The European Parliament voted through a draft version of the new European Copyright Directive in September last year, complete with the controversial Article 13 provision – which aims to force user-upload services to face legal responsibility for copyright infringement on their platforms.

Since then, however, this celebratory spirit has crumbled, with music rights organizations admitting that recently proposed versions of the Copyright Directive “[do] not meet the original objective of Article 13” – namely “correct[ing] the distortion of the digital market place caused by User Upload Content (UUC) services”.

Making matters worse, on Friday (January 18), Europe delivered another major blow to the music industry’s hopes.

Member states of the EU were due to gather in Romania to approve the latest draft version of the Directive, but, instead, eleven countries reportedly voted against it – many citing concerns over Article 13, as well as the similarly contentious clause, Article 11 (dubbed the ‘link tax’ provision).

The Directive’s scheduled approval meeting tomorrow (January 21) was outright cancelled as a result.

The Directive’s opponents this time around included Germany, Belgium, the Netherlands, Finland and Slovenia – who were all against previous version of the text – plus Italy, Poland, Sweden, Croatia, Luxembourg and Portugal.

The most crucial new opponent to the draft was Italy, whose recently-elected populist government is reportedly not impressed with the strictness of the Directive’s copyright proposals.

Despite the cancellation of the European Council’s would-be approval on Friday, the ‘trialogue’ phase of the Directive’s potential passing – which aims to draft an agreement which gets the thumbs up from each of the European Parliament, Commission and Council – remains in play.

If a compromise on a new draft can’t be found before the end of February, however, the legislation faces an uncertain fate, and could even possibly be scrapped.

Julia Reda, European Parliament Member and a vocal opponent of Article 13, wrote with some glee on her blog that Friday’s rejection of the latest Directive draft will make an adoption of the Copyright Directive before the European elections in May “less likely”.

She added: “The Romanian Council presidency will have the chance to come up with a new text to try to find a qualified majority, but with opposition mounting on both sides of the debate, this is going to be a difficult task indeed.”

Reda suggested that the result showed “public attention to the copyright reform is having an effect” on the attitudes of politicians.

“Keeping up the pressure in the coming weeks will be more important than ever to make sure that the most dangerous elements of the new copyright proposal will be rejected.”

Julia Reda, MEP

One of the leading consumer-facing lobbyists on the matter has, of course, been YouTube – which is warning its 1.5-billion-plus monthly users of the supposed “unintended consequences” that Article 13 could have on their freedom to enjoy the site.

British recorded music trade body the BPI has accused YouTube of “carpet-bombing propaganda” tactics in the latter’s fight against Article 13 – suggesting that the Google/Alphabet platform is “trying to scaremonger the EU into reversing decisions” with its public lobbying efforts.

YouTube Music, meanwhile, has just been unveiled as a key sponsor of the UK industry’s annual tentpole event, the BRIT Awards – which is owned by the BPI.

“Keeping up the pressure in the coming weeks will be more important than ever to make sure that the most dangerous elements of the new copyright proposal will be rejected,” noted Reda, a member of the Pirate Party in Germany.

One possible knock-on effect of a stalled Article 13 would be its potential impact on the valuation of Universal Music Group.

The LA-based company, which was recently valued at $33bn by Deutsche Bank, owns the biggest combined recorded music and publishing company in the world. Its parent Vivendi is looking for a buyer of up to 50% of UMG by the end of this year.

In a note to Vivendi watchers today (January 20), Exane BNP Paribas Media specialist William Packer noted that the failure of Article 13 would create a “small negative” for UMG, but stressed that the music company was still clearly the jewel in the crown at Vivendi – which Exane continues to view with an “outperform” rating.

Exacerbating the feeling of disunity around Article 13 is the fact that some major movie and sports trade organizations are calling for the current version of the provision to be omitted from the Europe Copyright Directive – or, at least, only applied to the music sector.

Groups including the Premier League, La Liga and the Motion Picture Association wrote in an open letter last week that they were “extremely concerned about the direction of ongoing trilogue discussions on Article 13 (the so-called Value Gap provision) of the proposed Directive on Copyright in the Digital Single Market”.

It claimed that “the proposal would further muddy the waters of jurisprudence in this area in light of the German Federal Court of Justice (Bundesgerichtshof) referral to the CJEU in a case involving YouTube/Google and certain rightholders, addressing this very issue”.

“We are extremely concerned about the direction of ongoing trilogue discussions on Article 13.”

Sports and movie trade orgs

It added: “Some of the options proposed for discussion at trilogue level… wrongfully undermine current law and weaken right holders’ exclusive rights by, among others: creating a new liability privilege for certain platforms that have taken specific steps to avoid the availability of infringing copyright content on their services (but have failed to do so effectively), and conditioning protection of copyright online on right holders bearing the full burden of identifying and notifying copyright infringing content to platforms.

“These would constitute gifts to already powerful platforms, and would de facto constitute the only real change to the current status quo in legal terms, thus improving the position of platforms, but not of right holders.”

It concluded: “If… any new safe harbour/’mitigation of liability’ would be part of a final trilogue agreement, we would respectfully urge you to disapply the entire value gap provision to our respective sectors. This could simply be achieved by making Article 13 specific to musical works and phonograms.”Music Business Worldwide

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