June 21, 2016:Safe harbour reform must benefit artists as well as labels warns IAO

Safe harbour reform must benefit artists as well as labels warns IAO

Artists have been prominent in this year’s debate around YouTube and reform of ‘safe harbour’ legislation on both sides of the Atlantic.

See this week’s open letter to US Congress signed by Taylor Swift, U2 and Paul McCartney (among others) for the latest example of artists’ voices coming to the fore.

However, European artists’ body the International Artist Organisation (IAO) has today warned that any reform of safe harbours must not just benefit labels, and called for more transparency in the deals between those rightsholders and YouTube.

Neither platforms not labels should be able to use contractual gymnastics to remove value from the table and deny the stakeholders further down the value chain their fair and legitimate share from the use of their works,” said Paul Pacifico, IAO president and CEO of the UK’s Featured Artists Coalition.

“Yes we must pull together to ‘increase the size of the so-called cake’ as we are constantly told, but to ignore how that cake is being cut at the same time would be to ultimately take the artists’ slice off the table.”

The IAO has sent a letter outlining its concerns to senior European Commission politicians, including president Jean-Claude Juncker, VP of digital single market Andrus Ansip and digital economy and society commissioner Günther Oettinger.

The letter contrasts labels’ demands from YouTube with artists’ demands from labels, following a recent request from industry body the IFPI for artists’ support as it campaigns for safe-harbour reform in Europe.

The labels are seeking transparency, a fair share of value and a duty of care from the platforms; almost exactly the same things that artists have been campaigning for across the value chain,” wrote Pacifico in the letter.

He went on to back the labels’ key arguments: that the “value gap” between music consumption on YouTube and the revenues it generates for rightsholders and creators is a concern; and that its licensing status is “confusing”.

However, the IAO’s letter is as much about the relationship between labels and artists, as Pacifico went on to explain.

It is interesting to observe the Labels now making very similar demands from YouTube that artists have been asking of all stakeholders in the digital market,” he wrote.

“When we have made our demands previously, the Majors have consistently stated that care must be taken here not to allow the legislative process to be hijacked as a proxy for commercial negotiations between counterparties.”

However, the IAO is unhappy with the current state of affairs: that because of NDAs signed between labels and digital services, “meaningful progress with individual companies towards a fair and transparent market cannot be discussed with artists”.

“We have recommended to artists across the globe that they support the labels in their quest to review value-gap legislation on safe harbours both in Europe and the USA. However we must be careful to make sure that this review includes the whole value chain and that the results are not just to pass value one link down the chain where it stops with the majors,” claims the letter.

“Artists have always been told to support our intermediaries when lobbying – that we will be ‘looked after’ if only we play along. We were not looked after in the wake of the copyright term extension campaign and we must make sure that this travesty is not repeated in the current copyright review.”

The letter also reiterates the four “pillars” that the IAO would like to see as the core of copyright reform in Europe: transparency through the value chain; a fair share of value being generated by music; a duty of care from intermediaries; and “updated remuneration rights” reflecting changing digital-music behaviour.

“The IAO has long campaigned for these four pillars to be at the heart of the copyright review,” wrote Pacifico. “The major labels have now called for three of them to help resolve the value gap from their perspective, but the fourth – remuneration rights – must not be forgotten.”

The full text of the IAO’s letter is below:

————

Dear President Juncker, Vice-President Ansip and Commissioner Oettinger

Artists and the Value Gap

London, 20 June 2016

Recently the IFPI, which represents the Major Labels in the music industry (Universal, Sony, Warner), has sought our support for a letter reinforcing their arguments on the ‘Value Gap’.

The Labels are seeking Transparency, a fair share of value and a duty of care from the Platforms; almost exactly the same things that artists have been campaigning for across the value chain.

The Value Gap concerns the zero or extremely small payments for the exploitation of copyrighted works when platforms use ‘safe harbour’ exceptions to copyright law in all or part of their service offer.

It is difficult to argue against the Value Gap and the headline figures are stark. YouTube is the largest platform and therefore this debate is often characterised as the ‘YouTube Question’.

Usage on YouTube is indeed vast and in terms of functionality it is all too close to services which pay up to ten times more. YouTube argues that there are key and fundamental differences in their consumer proposition that justify their business model as not comparable with what the record labels call ‘fully licensed’ services. YouTube states that it is ‘fully licensed’. This is clearly confusing.

From the creative perspective, two things are clear:

First, that in spite of the unique promotional opportunities given by YouTube as a platform, the proportion of commercial content usage on YouTube is difficult to reconcile against the proportion of revenue that usage delivers back to artists.

Second, it is interesting to observe the Labels now making very similar demands from YouTube that artists have been asking of all stakeholders in the digital market.

When we have made our demands previously, the Majors have consistently stated that care must be taken here not to allow the legislative process to be hijacked as a proxy for commercial negotiations between counterparties.

However with digital, we have entered into a world of value-share business models as opposed to the buy- sell world of physical retailing and this requires a level of trust that has changed the dynamic in the market and that needs legislative help to build.

If we are sharing the value we collectively generate then neither platforms nor labels should be able to use contractual gymnastics to remove value from the table and deny the stakeholders further down the value chain their fair and legitimate share from the use of their works.

As an artist organisation, we are told in bilateral conversations on both sides of the Value Gap that Non Disclosure Agreements (NDAs) around the Labels’ licenses mean that meaningful progress with individual companies towards a fair and transparent market cannot be discussed with artists.

Equally in discussions at trade body level, we are told that competition law prevents a ‘whole of market’ solution.

This makes it clear to us that legislative intervention is absolutely necessary at this stage if the true opportunity of the digital economy is to be opened up to consumers in a way that does not fundamentally prejudice all creators building careers today.

We have recommended to artists across the globe that they support the Labels in their quest to review value- gap legislation on Safe Harbours both in Europe and the USA.

However we must be careful to make sure that this review includes the whole value chain and that the results are not just to pass value one link down the chain where it stops with the Majors.

Artists have always been told to support our intermediaries when lobbying – that we will be ‘looked after’ if only we play along. We were not looked after in the wake of the copyright term extension campaign and we must make sure that this travesty is not repeated in the current copyright review.

Yes we must pull together to ‘grow the cake’ as we are constantly told, but not to address how that cake is being cut at the same time would be to cut the artists’ slice out of the picture.

We are interested that the Major Labels have now demonstrated that the problems they encounter are illustrative of those in the wider value chain and we very much hope this helps us come to a common view as to the best way forward for both Labels and artists as well as platforms and of course consumers.

It is ever-more clear that for a healthy commercial and cultural future for Europe, the copyright review must have at its heart:

1. Transparency through the value chain where we have a financial interest
2. A Fair Share of Value being generated by our work
3. A Duty of Care from our intermediaries through the value chain
4. Updated remuneration rights to reflect the realities of consumer behaviour in digital

The IAO has long campaigned for these 4 pillars to be at the heart of the copyright review.

The Major Labels have now called for 3 of them to help resolve the Value Gap from their perspective, but the fourth – remuneration rights – must not be forgotten.

Without these we face a digital future in which it is very difficult to see how creators can build sustainable careers.

The International Artist Organisation is an umbrella body that brings together the Music Artist Organisations of 10 countries across Europe representing over 15,000 artists

The FAC (UK)
CoArtis (Spain)
GramArt (Norway)
Dansk Artist Forbund (Denmark)
GAM (France)
FACIR (Belgium)
Domus (Germany)
Musikerforbundet (Sweden)
CAFM (Croatia)
Muusikkojenliitto (Finland)

Yours sincerely,

Paul Pacifico
President
International Artist Organisation

Stuart Dredge
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