The music industry has cautiously welcomed the European Commission’s new proposal to address copyright in the digital single market.

However, the IFPI has warned that it is only “a first step” in the process towards tackling what it sees as the “value gap” between usage of music on services like YouTube, and the revenues flowing to rightsholders and musicians.

Meanwhile, Google says there are “things to like” in the proposal, but has claimed that some aspects “effectively turn the internet into a place where everything uploaded to the web must be cleared by lawyers before it can find an audience”.

Today’s proposal was never likely to deliver a knockout blow for either side in the value-gap dispute: there is still plenty of lobbying and arguing in store in the coming months.

The proposal includes an obligation for services hosting large amounts of user-uploaded content to create “appropriate technologies” to identify copyrighted content, and to provide rightsholders with more information on how that technology works and how effective it is.

YouTube, of course, already has its ContentID technology for this very purpose. The most interesting part of the EC’s proposal comes when it comes close to backing the rightsholders’ claims that the rise of UGC services has had a negative impact on their businesses.

“Online services providing access to copyright protected content uploaded by their users without the involvement of right holders have flourished and have become main sources of access to content online,” outlines the proposal.

“This affects rightholders’ possibilities to determine whether, and under which conditions, their work and other subject-matter are used as well as their possibilities to get an appropriate remuneration for it.”

There is joy for rightsholders who have argued that YouTube and similar services – like pre-licences SoundCloud – should not qualify for safe harbour protection because they are not “neutral and passive intemediaries” in the way they host music for their audiences.

The proposal refers to Article 14 of the EU’s E-Commerce Directive, which sets out this immunity:

“In respect of Article 14, it is necessary to verify whether the service provider plays an active role, including by optimising the presentation of the uploaded works or subject- matter or promoting them, irrespective of the nature of the means used therefor,” explains the new proposal.

The EC’s digital single market VP Andrus Ansip elaborated on this in a press conference this afternoon. He pointed to music industry figures showing 68 million paying subscribers for music-streaming, generating €2bn a year for rightsholders and creators.

“At the same time there are some other platforms supported by advertising. Those platforms have near to one billion users per month, but they are contributing just €0.6bn to musicians,” said Ansip.

“Of course, some of those platforms supported by advertising, they say that ‘We don’t know what is happening there on our platforms. We are just neutral intermediaries’. In fact, we have to make it more clear where those platforms act as neutral intermediaries, and where we have to say sorry, you are selling new products using somebody else’s content, but without remuneration.”

Content ID isn’t a get-out clause for YouTube, either. Ansip pointed to the difference of opinion between YouTube, which says that the music industry chooses to monetise more than 95% of its Content ID claims, while the IFPI has claimed that according to labels and publishers, Content ID fails to identify 20%-40% of their works.

However, Ansip seemed to be thinking more of non-YouTube services when he pointed out that content identification technology does not have to be expensive. “Yes, YouTube invested $60m to create this Content ID tool, but one platform is paying just $500 a year [for similar technology],” he said, citing a recent meeting with Audible Magic as proof that there are solutions out there.

Responses have been coming in from the music industry, starting with the IFPI, which has stressed that today’s announcement is just “a good first step in the process” of tackling the infamous “value gap”.

“Notably, the proposal confirms that user uploaded content services that promote and monetise music should be covered by the same copyright rules as other on-demand services,” claimed the IFPI in its response sent to journalists.

“Today’s proposal is a good first step towards creating a better and fairer licensing environment in Europe. Importantly, it confirms that user uploaded content services such as YouTube, which are the largest source of on-demand music, should not be able to operate outside normal licensing rules,” said CEO Frances Moore.

“However, there is a lot more to do to make this a workable proposal. We look forward to working on this in the coming months with the Parliament and Member States.”

BPI boss Geoff Taylor also welcomed “the clear acknowledgement from the Commission that we need a level playing field for digital music” before returning to a familiar theme that “UGC platforms such as YouTube are building huge businesses using music and other content while paying only a fraction of the royalties paid to artists and labels by services such as Spotify and Apple Music”.

Taylor’s call for the EU and British government to “fix the fault-line that lies at the very heart of the digital music market” shows how the impact of today’s proposal will only become clear as European countries start to implement it.

The UK’s “Brexit” from the EU, whenever it comes, will only complicate this process of fault-line fixing. Even so, Taylor said that “it is very encouraging that the EU has begun the process of doing so”.

PRS boss Robert Ashcroft has also provided his views, using PRS’ favoured phrase of “transfer of value” to describe the business at hand, rather than the IFPI-coined “value gap”.

“PRS for Music welcomes the Commission’s recognition of the critical ‘transfer of value’ issue and we acknowledge the clear intention to redress the current imbalance of interests between user upload platforms and rightsholders,” said Ashcroft.

“The law must clearly establish that those user upload platforms that provide search and other functionality, as distinct from being mere hosts of content, require a licence from rightsholders. The European Commission’s proposed new copyright Directive provides the framework for this essential legal clarity.”

The Independent Music Publishers Forum (IMPF) took a different line, openly criticising today’s copyright package for not going far enough.

“The provisions designed to address the issues are not sufficiently robust or concise and the package does not give adequate direction to member states,” said president Pierre Mossiat. “Without clear regulatory guidance the interests of big business will continue to jeopardize the livelihoods of songwriters all around Europe.”

“This much anticipated Copyright Package, while a step in the right direction, has quite some way to go to achieve the level of compensation for the use of their work that songwriters and indie music publishers, the core small businesses in the creative music field in Europe, need.”

Google has published its response to the proposal as a blog post, welcoming some parts while criticising others.

“There are things to like in the proposal. We’re pleased to see the Commission mandating more transparency and data sharing for artists and rightsholders, an important step to building fairer and more effective copyright marketplaces. This should empower European creators to connect more effectively with their audiences and better understand how they are rewarded,” wrote Caroline Atkinson, VP of global policy for Google.

“We’re reassured that the Commission has recognised that content-management technologies like YouTube’s Content ID play an important role in tackling the unauthorised use of protected content (although we’d caution against rigid requirements that smaller and start-up companies may find hard to implement).”

What’s not to like about the proposal for Google, though? “Today’s proposal suggests that works including text, video, images and more must be filtered by online services. This would effectively turn the internet into a place where everything uploaded to the web must be cleared by lawyers before it can find an audience,” claimed Atkinson.

“Under the rules of the European eCommerce Directive, that’s not how it works. Platforms are not obliged proactively to monitor what users upload—but must act when notified of an infringement. Through Content ID, YouTube blocks or monetizes content that has been claimed by a copyright owner according to their instructions. This is an important distinction, without which many hosting services simply could not exist.”

Google matched the IFPI in describing today’s proposal as a “first step” in the process of modernising Europe’s copyright law.

“Today’s proposal is a first step towards a better functioning marketplace for European creators and consumers–but the appropriate balance has not yet been struck,” wrote Atkinson. “It’s vital to preserve the principles of linking, sharing and creativity on which so much of the web’s success is built, and we’re keen to play our part in the discussion.”

In his State of the European Union address earlier in the day, EC president Jean-Claude Juncker stressed the body’s commitment to creators.

“As the world goes digital, we also have to empower our artists and creators and protect their works,” said Juncker. “Artists and creators are our crown jewels. The creation of content is not a hobby. It is a profession. And it is part of our European culture.”

Even so, the devil in the detail of this protection will only become evident in the months ahead.

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