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The Copyright Directive | Addressing the Transfer of Value Gap

The Copyright Directive’s journey began in 2016, when the European Commission issued its draft Directive on Copyright in the Digital Single Market. This proposal formed the basis for discussions and drafts in the Council of the EU and in the European Parliament.

The European Union Parliament adopted the Directive on Copyright for the Digital Single Market on Tuesday, March 26, by a vote of 348 in favour, 274 against and 36 abstentions.

The directive will positively transform music creators’ rights throughout the EU. The reforms are an opportunity to address pressing issues for creators in the Digital Single Market and will promote the growth of European creative and cultural industries (CCI) – a major driver of Europe’s economy.

One of the biggest achievements of this new piece of legislation was addressing the ‘Transfer of Value’ problem. Transfer of Value, also known as the value gap, refers to the funnelling away of value from creators and into the hands of a number of online platforms.

The Copyright Directive was a priority issue for all European creators because it directly affects their rights and the day-to-day use of their work.

IMRO welcomes with the outcome of the vote, which demonstrates commitment at both an Irish and European level to value creativity, as well as technology. It represented a historic moment for Irish music creators and the broader European cultural sector, meaning that the creators who work hard every day and who share their output with the world to enjoy, will now be paid fairly for their work.

Previously, platforms such as Youtube were relying on legal loopholes to avoid paying music creators a fair renumeration for exploiting their works. The Copyright Directive closed-up these loopholes and it says that these platforms must use their “best efforts” to obtain a music licence so that music creators’ works are not infringed and that they are paid fairly for their creations.

The openness of these loopholes and the urgency of transposing the Directive has been made patently clear in the Court of Justice of the EU (CJEU), where the Advocate General has recently issued his Opinion in Joined Cases C-682/18 and C-683/18, in which he has advised the CJEU to rule that, under EU law as existing prior to the adoption of Directive 2019/790 (the DSM Directive), platforms like YouTube and Uploaded are not liable for the making available of infringing user-uploaded content.

The wider discussions and commentary surrounding the adoption of the Copyright Directive has made a profound difference to how the creative community is viewed by our regulators and our parliaments. They finally realised that the status quo couldn’t be allowed to continue because creative earnings were rapidly diminishing. The traditional sources of income simply aren’t there anymore for creators. The tech industry, nevertheless, has built vast fortunes and empires on the back of using creative content for free.

Music creators are not saying we don’t want them to use our content; what they are saying is please do disseminate it as widely as possible, but it’s entirely fair and reasonable that we get fair payment for it. That’s the argument in a nutshell. Very few musicians today can afford to ignore internet platforms. To be at all viable they must have a digital presence and yet, that very presence is cutting off their ability to be sustainable within the music industry. Irish music provides political and cultural capital on the world stage and forms an integral part of our national identity and contribution to European culture.

Over the past decade, user uploaded content platforms have become the most popular way for people to access music and other creative works. This has its advantages, such as allowing creators to share their work far more widely than ever before. However, the downside is that these same creators were not being remunerated fairly, if at all, for their work, leading to a huge market imbalance that threatened their livelihoods.

For a long time, platforms hid behind the loophole of being unaccountable hosting services. Despite their significant market share and the huge amounts of money generated – from advertising and other means – by providing access to creative works, platforms were failing to share this profit fairly, if at all, with the creators.

The result was that big platforms grew, and in the process became household names, but at the expense of creators, who found themselves struggling to live off of their work. The Transfer of Value also threatened the sustainability of the whole creative sector by distorting the market for legitimate online businesses. Businesses that cleared rights from creators, paid their taxes and employed people in Europe were at a disadvantage up against the free-riding platform services who captured the larger share of online traffic and revenues while hiding behind the ambiguity of the rules to avoid remuneration of creators and rightholders. Article 17, formerly Article 13, of the Copyright Directive directly addresses the Transfer of Value.

Correcting the Transfer of Value was the main focus of the creator community in the recent copyright reforms. More than 50,000 creators signed the petition asking to fix this problem and many of them visited Brussels and Strasbourg to tell their story directly to their representatives in the European Parliament. With the adoption of the new Copyright Directive, creators are now content that a balanced and fair solution will be provided whereby:

  • Creators have clear legal basis to ask that platforms get a licence for the use of their works.
  • Consumers are better off, because they are now legally covered when they upload content, and provided with legal guarantees against arbitrary removal practices of the platforms and safeguards to protect their fundamental rights.
  • Legitimate online services and European start-ups will benefit from a more level playing field that isn’t so heavily distorted by tech giants.

Irish music creators and performers are amongst the biggest proponents of free speech in Europe. The directive in no way curtails free speech, and the directive has strengthened fair use exceptions such as review, parody and pastiche. “Memes” will not be banned. All the Copyright Directive means is that creatives are paid fairly for the use of their work. If a platform refuses to obtain a licence for using and profiting from someone else’s creative endeavours, the Directive has mechanisms in place which ensures that the copyright material is removed from that platform. This is not a curtailment of internet freedom or freedom of speech, it’s about protecting the constitutional property rights of Irish citizens. 

All member states must transpose the new rules in their national law by June 2021. We hope that Irish legislators will set an example for their EU counterparts by not diluting or amending the Copyright Directive in any way that disadvantages our creative community. Ireland’s music industry alone, employs over 13,000 people across the country and contributes €700 million to the economy. This vital directive will protect our songwriters, our artists, and our creators by ensuring they are paid fairly for their hard work.

Once the directive is transposed, the real action – negotiations between creators and platforms – can begin. One of the main objectives of this directive is to rebalance the contractual relationship between rights holders (creators, artists, producers…) and platforms such as YouTube, Facebook, Vimeo or Dailymotion. The platforms will have to negotiate fairly and equitably with rights holders. They cannot use a take-it-or-leave it approach, so creators will get a fairer share of the revenue their works generate online.

At IMRO, we believe music matters. We protect music and promote music, not just for the benefit of our members, but for the benefit of society.

Cultural and Creative Industries (CCIs) are the third biggest employer in Europe and key to the EU’s digital economy and growth. Creators are at the heart of this sector, which also plays an essential role in building a European identity while sustaining social cohesion. Recent achievements of the EU institutions have gone a long way to strengthening copyright and creators’ rights.

CCIs account for almost 4.4% of EU GDP, 5.3% of the EU’s total GVA, and provide more than 12 million jobs. They attract young workers, rely heavily on local workforces and contribute to regional development. CCIs also employ 2.5 times more people than the car industry, 5 times more than the chemical industries and 6 times more than the telcos.

Cultural and creative works are the main raw material of digital economies, driving the creation and growth of a number of digital sectors. Example: growing consumer interest in enjoying creative works such as music and film whenever and wherever has driven the growth and take-up of telecom operators, smart phones and online sharing platforms.

The CCI ecosystem heavily relies on IP rights that ensure the fair remuneration of creators and reward investments in talent, the arts and culture.

We look engaging with all in Government and the wider political system, and across industry, to ensure the Copyright Directive is transposed into Irish law as it is currently framed and to further the cause of music creators in Ireland.

This is a crucial foundation for music policy in this country – creators must be paid for their work.

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