EU Copyright: Bank assessment

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Following votes taken by the European Parliament Legal Affairs Committee regarding online copyright rules in Europe, Investment bank Exane/BNPP, in its note to clients June 21st, has offered its observations, saying: “In a way, this new set of laws (if adopted) could be somewhat of a ‘GDPR’ moment for online publishers and platforms. We expect the final vote to happen in the coming months as the directive goes through its ‘Trialogue negotiation process’. In short, if it goes ahead in its current form, we see this new directive as positive for Music companies – namely Vivendi, and negative for any publisher that has large traffic in Europe, most notably Schibsted (NR) or Axel Springer (NR).”

The bank says there are essentially two key elements in the proposals:

1/ Article 13 stipulates that online publishers and platforms will have to pre-emptively check the copyright of uploaded content. YouTube has been moving toward this: in plain English it means filtering the content that is uploaded, and eventually either block it (if no agreement from copyright holder) or remunerate it (by example by sharing online ad revenues). Facebook has also signed agreements with the majors and created filtering tools to better remunerate the use of music.

“On the positive side,” says Exane, “We expect Facebook and Google/YouTube to become growing source of revenues for the Music industry, and to adopt more favourable approach to copyright – this has already started to happen with new deals signed in recent months, but we think the revenue upside is still largely ahead of the majors.”

“On the negative side, the ‘uploading filtering’ will apply to anyone/any content. This means that memes or User Generated Content uploaded to publishers that don’t have the sophisticated filtering capabilities of Google/FB could be illegal. Many observers argue that such law will “kill” the open internet culture. For instance, a number of political parties, university of public interests YouTube channels have been taking down by Google because its algorithm detected copyright violations.”

2/ Article 11 offers new copyrights for News sites. The article asks that any use of journalistic content, even a link, be remunerated and/or require a license, the same way radio station require license to broadcast music. The idea is to avoid giving Google (most notably) a free ride in offering snippets of contents and direct access to articles at “the expense” of news publishers

What does it change? “On the positive side, in theory, it could mean that the likes of Google, Facebook or LinkedIn will provide news and web publishers with more revenues in order to offer news links when a consumer search for a news,” says the bank’s report. “However, recent attempts to install such rules have completely backfire: Spain adopted such regulation late 2014 prompting Google to close Google News, resulting in double digit decline to publishers website.  Similarly, Axel Springer, one of the largest publisher in Germany battled Google News in 2014-15. Google removed Axel Springer news links, leading to a decline of 40 per cent of Axel Springer articles in Google Search results.”


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