Fix the value gap – a reply to Michael Geist

January 9th, 2017 by Barry Sookman Leave a reply »

Here is an Op-ed of mine that ran earlier today in the Hill Times. The post below includes endnotes not in that article.

In his Hill Times Op-ed (Canadian copyright reform requires a fix on the fair dealing gap, Dec. 5, 2016) Michael Geist takes issue with the need to address the “value gap” that is hurting Canadian artists, writers, and other members of the creative class. He argues instead that Canada faces a need to address a “fair dealing gap” in our copyright laws. There is no such need and his arguments don’t withstand scrutiny.

Over 2000 Canadian creators have signed a joint letter to Heritage Minister Joly as part of a Focus On Creators coalition campaign lamenting a condition that has come to be recognized widely as a “value gap” and demanding that it be addressed.[1]

The creators are concerned about what was recently described by Jonathan Taplin in an article in the New York Times as the “enormous reallocation of revenue” which “has taken place, with economic value moving from creators of content to owners of monopoly platforms” such as Google and Facebook which have “built their advertising businesses as ‘free riders’ on content made by others”.

Geist did not deny that there is a value gap. However, he summarily concluded that “the ’value gap’ has nothing to do with legislative change” (emphasis added). This is clearly wrong. Online providers of services such as YouTube and Facebook would unquestionably be liable for substantial copyright infringements but for the safe harbours established around the world including in the U.S. under the DMCA. These legislative exceptions – which were pushed for by technology companies precisely to limit their liabilities – have enabled technology companies to avoid paying licensing fees (or fair market value fees) for which they would otherwise have been liable.[2]

Calls for the value gap to be addressed are coming from many quarters internationally. The U.S., for example, has been holding Congressional hearings on whether the safe harbours in the DMCA need to be changed. The drafters of the DMCA safe harbours law did not anticipate that technology platforms would build their businesses free riding on unlicensed content or the overly broad interpretation the U.S. courts have given the safe harbours that enabled this to happen.

In the EU, the European Commission has a Proposal for a Directive on Copyright. It includes provisions to make hosting providers like YouTube pay their fair share of royalties for music they make available. There is also a proposal for a new right for press publishers to authorize the uses of their publications to facilitate online licensing. The European Commission made it clear that rightsholders under current law “face difficulties when seeking to license their rights and be remunerated for the online distribution of their works”. It “is therefore necessary to guarantee that authors and rightholders receive a fair share of the value that is generated by the use of their works and other subject-matter.”

Calls to address the Value Gap in Canada came recently in a speech by Music Canada President Graham Henderson entitled “The Broken Promise of a Golden Age”. Geist inaccurately claimed that this speech criticized the WIPO Internet Treaties. However, there was no claim that the treaties or their implementation in Canada was unbalanced. The speech explained that the problem was with the quid pro quo for implementing the treaties. It started in the U.S. where technology companies insisted on the enactment of safe harbours from liability in return for implementation of the WIPO Treaties. This became a template implemented around the world – including in Canada – and “led to an unfair balance favouring technology companies” which in turn resulted in a “value gap” – a gross mismatch between the volume of content enjoyed by consumers and the revenues being returned to the creative community.

Geist claims that “the Canadian and U.S. digital copyright experiences…are very different”. He says “Canada did not implement the U.S. DMCA notice-and-takedown system nor grant safe harbours from liability in 1998.” “Rather, it ultimately gave the industry what it asked for”.

It is true that we didn’t modernize our copyright laws until 2012. But, when we did, the 2012 amendments included the same categories of safe harbours for network providers, hosting providers and search engines as exist under the DMCA, although the wording and conditions associated with each differ. The amendments resulted in the creation of new, broad exceptions, some without precedent anywhere.

Geist doesn’t say what “industry” got what “it asked for” in Canada. But, contrary to what Geist asserts, artists, writers, performers, publishers, copyright collectives and others in the creative class consistently opposed the broad exceptions enacted in 2012 as part of the quid pro quo for implementing the rights needed to ratify the treaties.

Geist used his inaccurate claim about imbalances in the treaties to argue for a change in Canada’s copyright protection for technological protection measures (TPMs), measures that were enacted in order to ratify the treaties and to support innovative digital business models. Geist says they are “among the most restrictive in the world and badly undermine the traditional copyright balance in the digital world”. He says there is a need for a fair dealing exception to address an imbalance.

Geist is wrong. The anti-circumvention prohibitions in our copyright law for TPMs are in line with those of our trading partners. In fact, they are less protective than the laws in many other countries, including the Member States of the European Union. Under EU law, Member States must prohibit the circumvention of access and copy control TPMs. Our law only prohibits circumvention of access control TPMs. Thus, it is permissible in Canada to circumvent a copy control TPM for fair dealing purposes, contrary to what Michael Geist suggests.[3]

Geist also neglects to point out that Canadian law provides two safeguards unique in international law to ensure balance in our TPM laws. First, it permits the government to establish exceptions by regulation where a TPM could adversely affect the use of a work including where a TPM could adversely affect a fair dealing. Second, the government has the power by regulation to require the owner of a copyright to provide access to a work to a person who is entitled to the benefit of an exception where the copyright owner is not making it possible to exercise the exception.

These powers under our copyright laws are broader and more flexible than what exists anywhere else in the world. Thus, even if there was a problem, there would be no need for any legislative change to address it.

There is no need to re-open the copyright TPM provisions. There is a need, however, to address the value gap.

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[1] The joint letter stated, in part:

The carefully designed laws and regulations of the 1990s were intended to ensure that both Canadian creators and technological innovators would benefit from digital developments. We hoped that new technology would enrich the cultural experiences for artists and consumers alike. Unfortunately, this has not happened. Instead, our work is increasingly used to monetize technology without adequately remunerating its creators. Income and profit from digital use of our work flow away from the creative class to a concentrated technology industry. Allowing this trend to continue will result in dramatically fewer Canadians being able to afford to “tell Canadian stories,” much less earn a reasonable living from doing so.

[2] See, Daniel Adrian Sanchez, Is YouTube Really Shortchanging Artists? A Look at Some Actual Data., ICMP The Value Gap, Luiz Augusto Buff, YouTube’s Value Gap, Jonathan Taplin, Forget AT&T. The Real Monopolies Are Google and Facebook, Rebecca Blake, The DMCA Notice: “Take Down” is Letting Down Artists, PlagiarismToday, Take Down and Stay Down – Rethinking the DMCA; European Commission Staff Working Documents – Impact Assessment (On the music industry problem: “Additional uncertainty arises from the question of whether specific service providers that store and give access to content uploaded by a third party can benefit from the hosting service provider status provided under the Directive 2000/31/EC437 (E-Commerce Directive-“ECD”). It is up to the courts to assess on a case by case basis whether a given service qualifies as a mere technical, automatic and passive hosting service provider. National courts have often found that user uploaded content services were covered by Article 14 ECD. However, in a number of recent cases, national courts have deemed such services to go beyond Article 14 ECD, highlighting the importance of protected content for the business models and the revenues of user uploaded content services. Consequences: The situation above has led to the situation where rightholders are confronted with large use of their content on user uploaded content services, have no or limited control over the use of their content, and fail (or have difficulties) to enter into agreements for the use of their content and obtain a remuneration.” On the problem of press publishers: “Press publishers have attempted to conclude licences with online service providers for uses of their content online, and sought to participate in the advertising revenues generated by their content on third parties’ websites. However, they have generally not managed to do so, despite the fact that these services often engage in copyright-relevant acts.”) On the problem for publishers, see, also, Hugh Stephens, The EU Digital Single Market and Publisher’s Rights: Protecting the Public Interest (“in many cases the bulk of online ad revenues are not going to those who generate the content but rather to commercial content aggregators who use snippets of content—headlines, key paragraphs, photos and images—lifted from news publications and organized into categories to attract readers.”); AAP Letter to President Elect Donald Trump (“Provisions of the Digital Millennium Copyright Act (“DMCA”), which Congress enacted in 1998 to encourage online availability of popular copyrighted works while promoting a balance of interests and cooperation between copyright owners and Internet service providers in dealing with online infringement of such works, wildly succeeded in encouraging such availability. However, the relevant DMCA provisions do not achieve that intended balance and cooperation due to numerous instances of judicial misapplication and the unanticipated appearance of service provider business models that foster, exploit and profit from online infringement by their users while offering only token compliance with the law.”) Piracy of copyright materials is also a major factor that contributes to widespread downloading and streaming of infringing content without compensation to copyright holders. See, for example, David Price, Sizing the Piracy Universe, NetNames Envisional, Sept.2013.

The practise of infringement is tenacious and persistent. Despite some discrete instances of success in limiting infringement, the piracy universe not only persists in attracting more users year on year but hungrily consumes increasing amounts of bandwidth.

The free and simple availability of copyrighted content through piracy ecosystems continues to drive the popularity of hundreds of web sites, the actions of hundreds of millions of internet users worldwide, and the consumption of thousands of petabytes of internet bandwidth. Users of piracy ecosystems, the number of internet users who regularly obtain infringing content, and the amount of bandwidth consumed by infringing uses of content all increased significantly between 2010 and 2013.

See also, Barry Sookman, Is unauthorized online copying theft and does it hurt creators?, Barry Sookman, Canada: online piracy a problem hurting artists, creators and the economy, Barry Sookman, IIC estimates global economic and social impacts of counterfeiting and piracy.

[3] Barry Sookman, An FAQ on TPMs, Copyright and Bill C-32, December 14, 2010, Barry Sookman Change and the Copyright Modernization Act, November 7, 2012.

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