thereport ISSUE 418 | 11 OCTOBER 2018

Article of faith

After Article 13 was approved by the , what happens next? in association with SECURE YOUR SandboxSummit TICKETS NOW! CLICK HERE... #MarketMusicBetter AT THE LONDON ART HOUSE | OCTOBER 31 2018

Sandbox Summit LONDON is the only one-day Check out the latest agenda here. Speakers include: conference that is entirely dedicated to music marketing. Callum Caulfield Head of Marketing, Atlantic Records Patrick Ross Director, Digital Strategy, Music Ally Tickets will sell out soon, so be sure to secure your Gemma Reilly Director, UK Marketing, BMG Dan Griffiths Director, Digital Marketing, The Orchard place now to be part of this essential event in the music Sam Hill Director, Digital Marketing, BMG Nikoo Sadr Director of Marketing & Sales, marketing calendar. Rachel Stoewer Head of Digital, Cooking Vinyl Records Nordics, The Orchard Chris Garrett MD, Decimal Kara Mukerjee Head of Digital, RCA Label Group UK Brooke Salisbury Head of Marketing, Domino Hannah Neave Head of Global Marketing & Artist The event includes: Stephen O’Reilly Director, ie: Music Development, TAP Management l Label case study presentations from Atlantic (Callum John Leahy Director, Ignition Records Live McKay Commercial Director, Caulfield) and BMG (Sam Hill and Gemma Reilly) Duncan Byrne Digital Marketing Manager, Universal (Norway and Sweden) Involved Group David Mogendorff Artist Content l Keynote presentation from YouTube’s David Claire Mas Head of Digital, Island Records and Services, YouTube Mogendorff Lars Ettrup CEO & Co-Founder, Linkfire l Panel discussions on the tensions between labels and managers; the pros and pitfalls of using the Be sure to secure your tickets asap here: latest tech in marketing campaigns; the merits of https://SandboxSummit.lnk.to/tickets bringing advertising in house and a special For larger group sales and sponsorship opportunities campaign surgery session please contact [email protected] l Stu Dredge presents Game On: Fortnite, Esports and the Opportunities for Music We look forward to seeing you there. l A chance to vote on the Music Ally Campaign of the Year Award featuring AWAL, Asylum/Atlantic, Polydor, RCA and Republic/Island l Aftershow drinks reception*

* Our aftershow drinks reception is kindly supported by The Orchard 1 In this report, we’ll explain what happens next: the ‘trilogue’ process ISSUE 418 11.10.18 REPORT ARTICLE 13 that now takes place to hammer out the text of the final legislation, before another vote in the European Parliament and then implementation by EU member states...”

The music industry celebrated Article 13’s s it turned out, the vote wasn’t even cover even short snippets of – for example progress, but what does it mean close. 438 members of the European – newspaper articles.) AParliament (MEPs) voted in favour In this report, we’ll explain what and what happens now? of Article 13 in the proposed new European happens next: the ‘trilogue’ process copyright directive on 12 September, with that now takes place to hammer out 226 voting against and 39 abstaining. the text of the final legislation, before It was a notable victory for the another vote in the European Parliament music-industry bodies that had been and then implementation by EU member lobbying in support of Article 13, which states. will create an obligation for internet music:)ally has also been talking platforms with large amounts of content to some of the music-industry bodies Safe harbour uploaded by their users to strike the that were most involved in the lobbying necessary licences, and use filtering process – the IFPI, IMPALA, BPI and PRS technology to identify and block (if for Music – to get their views on what the required) unlicensed copyrighted content. crucial vote means for this industry; on the Talk to the leaders and policy heads at campaigning that led up to it; and on what evolves those bodies, and you’ll realise that the happens next. vote – and particularly the margin of victory We’re well aware this is one side of the – came as a genuine surprise. They woke story: we’ll be following up soon with a up on the morning of 12 September hopeful report talking to some of the tech-industry that months (or even years) of lobbying bodies and activists who campaigned had persuaded MEPs of their case. against Article 13, to understand what their Yet they also woke up worrying that take is on the situation. This issue focuses Article 13 could get voted down, following on the response from the music trade an equally-passionate lobbying campaign bodies, which were understandably more from tech-industry bodies and activists willing to talk. We have summarised the against it. postvote reactions from the tech industry Passionate, but controversial: an online later in this Report. campaign that battered MEPs’ inboxes with We’ve also dug in to one of the key emails of protest wasn’t matched by large unsettled questions with the copyright crowds at physical-world protests, leading directive: the question of how small a to accusations of spamming. company has to be to qualify for exemption As it turned out, the online campaign from Article 13’s requirements – and how may have steeled MEPs to vote in favour ‘small’ should be defined. of Article 13 (and the directive’s equally- And – brace yourselves, British readers – controversial Article 11, which focused on we’ve asked what the upcoming exit of the

report requiring internet services to pay ‘press UK from the European Union means for the publishers’ for reproducing their content – likelihood of the copyright directive being the so-called ‘link tax’ that was predicted to implemented there, post-Brexit. :) the 2

ISSUE 418 11.10.18 REPORT ARTICLE 13 They have to go away, mix it all together, and work out what recipe they like best. These type of discussions can go fast or they can go slow: it depends how far Next step: the ‘Trilogue’ apart everyone is...” – Helen Smith, IMPALA

The 12 September vote was just a EU member countries. And the third is the “Really, their mandate is to negotiate European Parliament, which is the 751 MEPs some way between the texts that are there, step in a longer legislative process elected in those member states, from a not to come up with a new direction or a variety of parties. new set of texts,” he says. As with other legislation, the European “User uploads? Liable for copyright copyright directive is essentially three draft and take a licence. All three texts are very texts (or ‘negotiating mandates’) – one from similar, so we can’t be in the situation now each institution. The vote on 12 September where that’s not dealt with,” says Frances was for the European Parliament to Moore, chief executive of IFPI. approve its negotiating position, with the Once the trilogue is concluded, there will Commission and Council having previously be another vote in the European Parliament set out theirs. to approve the final, agreed text. That’s The trilogue, which kicked off earlier this unlikely to happen until 2019, which month, is when the three institutions come introduces an element of tension, since together to nail down the final version of there will be elections for the European legislation. Parliament in May. “They have to go away, mix it all together, “We have a time limit to get this through and work out what recipe they like best. in,” says Moore, suggesting that one risk is These type of discussions can go fast or of delays to the vote which push it beyond they can go slow: it depends how far apart the lifespan of this Parliament. “The risk we everyone is,” says Helen Smith, executive run is that somebody tries to run this out chair of independent body IMPALA. of time. There are already those suggesting An important thing to understand they’re going to try to postpone,” she adds. about this process as it relates to the Another risk from the perspective of the copyright directive and its Article 13 – the music bodies is that MEPs fretting about three institutions are already broadly their re-election chances feel pressured n the immediate aftermath of the know about if you weren’t embedded in in agreement about the need for UUC to change their vote, although it would be European Parliament vote, you’d have the world of European policymaking. New (user-uploaded content) services to require highly unusual for the European Parliament Ibeen forgiven for thinking that Article laws in Europe are the result of work by licences, and to put technology in place to reject legislation that had been through 13 – and the wider copyright directive – had three institutions. The first is the European (filters) to identify copyrighted content that the trilogue process. been passed in to law. It was being hailed Commission, which is the EU’s politically- is uploaded. Once approved, that’s not the end of as a victory for the creative industries, after independent executive arm, responsible “On this matter, they’re probably the story: it will then be the job of the EU’s all. Yet the vote was merely approval by the for drawing up the initial proposals for new going to find some common ground, member states to implement the copyright

report Parliament for the legislation to move on to legislation. I would think, fairly quickly,” says Smith. directive, which (again, like other European its next stage: the ‘trilogue’. The second is the European Council, Ian Moss, director of public policy at the legislation) they have some ability to It’s not a concept you’d necessarily which consists of the heads of state of the BPI, agrees. modify for their own purposes. :) the 3

ISSUE 418 11.10.18 REPORT ARTICLE 13 Lessons from the vote

he margin of approval for Article 13 The less-informed coverage suggested that YouTube “The whole of the European Parliament was considerable, but why? And what was considering whether they wanted to Tdoes it mean for future lobbying ‘spanked our bottom’ – we really did see expressions back creators and the rights of creators battles? like that. What in actual fact was the case was that to be fairly rewarded for their work, or to 438 votes in favour to 226 votes against Parliament said ‘there’s enough noise around this for us listen instead to technology companies Article 13 is some margin. The first lesson who didn’t want to be responsible for the to have to look at it – Frances Moore, IFPI from the Parliament’s vote is that it shed a content on their platforms,” says Geoff new light on its previous vote, in July 2018, Taylor. which at the time was reported on as a “The less-informed coverage suggested We’ll get to the scaremongering a “So this is important in practical terms: rejection of the directive by MEPs, and thus that YouTube ‘spanked our bottom’ – we little later, but it’s fair to say that the it will lead to better remuneration for a victory for the critics of two controversial really did see expressions like that. What music bodies see the 12 September vote artists and labels. But also as a matter of articles. in actual fact was the case was that as resounding backing for their view principle: that parliamentarians decided Both IFPI’s Frances Moore and BPI Parliament said ‘there’s enough noise that existing legislation providing ‘safe that the interests of creators needed to be boss Geoff Taylor argue that in fact, MEPs around this for us to have to look at it’” harbours’ for internet companies has protected in the digital space, and that the voted against fast-tracking the copyright says Moore. led to the much-discussed ‘value gap’ balance that had been struck in previous directive – which is what would have “When they did look at it, they came out between the scale of music consumption legislation had not been correct.”

report happened if the July vote had been in on our side… So the scaremongering stopped on platforms like YouTube and the royalties This is the view across the board of favour – in order to have a full debate on it the fast-track, but didn’t stop it when it came that it generates for rightsholders, and by the music bodies. “In political terms, it in September. to a real examination of the evidence.” extension performers and songwriters. obviously sends a very strong message the 4

ISSUE 418 11.10.18 REPORT

that the Parliament believes that by campaigns that were not as genuine the European industry bodies battling for this question absolutely needs to be and transparent as the headlines of the Article 13 to be adopted. “Clearly the tech addressed,” says IMPALA’s Helen Smith. campaign would have led you to believe.” lobby marshalled all their resources and Don’t underestimate the trepidation with Geoff Taylor agrees. “The sense that went to length to scare MEPs off from which these industry figures were viewing bots were being used to spam MEPs’ making this stand. They were suggesting the vote before it happened: Moore freely email addresses wasn’t well received. The that once again this could break the admits she woke up on the morning of 12 disparity between the on-the-ground internet. We’ve never believed that’s the September unsure of which way the result protests and what was being done case. Those are tactics deployed by big would go. electronically was picked up on by most technology companies when it came to A bruising lobbying campaign was partly MEPs,” he says. SOPA / PIPA in the US,” says Taylor. the reason for that. “Parliament is more “It’s difficult to tell how much of an “It was like SOPA / PIPA on steroids!” emotive: it is elected by the people, and influence the MEPs’ negative impression agrees Moore. “It created a lot of MEPs listen closely to their constituents,” from those tactics had on the vote, misinformation and a lot of fear. And says Moore. “And when this got to and how much was separately on the fear for Parliamentarians is tied in to the Parliament, we came up against one of the substance of the arguments.” elections next May. Some of them were Frances biggest lobbies it had ever seen.” Taylor and Moore both use the same telling us that they’d been told if they were Moore The nature of that campaign is one of comparison for the campaign against to vote for this legislation, their chances of the most polarising aspects of the whole Articles 11 and 13: the protests against the being re-elected were nil.” Article 13 debate. The campaign saw MEPs with their objections to the directive proposed Stop Online Piracy Act (SOPA) “It was like being hit by trucks, to be familiar actors line up on both sides: music resulted in their inboxes being battered to and the PROTECT IP Act (PIPA) in the US in quite honest. You’re going against this (and other creative industry) bodies on one the point of being unusable. 2012. Internet companies including Google, massive hurricane coming towards you, side, and an array of tech-industry bodies That may have annoyed MEPs, but it Mozilla, Wikipedia and Reddit encouraged and you’re trying to get through because and internet activists on the other. was the fact that the scale of the email people to email Congress and protest via you have truth on your side. But you can’t Talk to people on the music side, and campaign wasn’t matched by ‘physical- social media – and ultimately the legislation even get to the Member of Parliament’s you’ll hear the view that Google was the world’ protests – demonstrations organised was shelved. office, because they’re completely blitzed near-silent opponent at the centre of a web to express opposition to Articles 11 and The memory resurfaced for some of by misinformation and emails. MEPs of proxy-organisations that it often has 13 – that may have caused a backlash from It’s difficult to direct funding relationships with. Talk to MEPs. In contrast to millions of emails, Geoff tell how much of people on the tech side, and you’ll find just- many of the physical-world protests Taylor as-firm claims that Articles 11 and 13 posed attracted sparse crowds – and in some an influence the real dangers to free expression online. cases that’s putting it politely. MEPs’ negative (Including the argument that Article 13 “They were going to prove they had a impression from would actually benefit Google, because it million protesters in Europe, but what they would squash the likelihood of competition had were 30 people here, 90 people there, those tactics had for YouTube, which already has the another 10 elsewhere and so on. I think on the vote, and content-filters (Content ID) mandated by the biggest turnout was 100 or 150,” says how much was the directive.) IMPALA’s Helen Smith. separately on the One thing that’s clear, however, is that “I think that led many parliamentarians substance of the

report some of the campaigning tools used by the to put into context the millions of emails lobby against Articles 11 and 13 backfired. and tweets they had received. They didn’t arguments...” Websites set up to help people email want democracy in Europe to be decided – Geoff Taylor, BPI the 5

ISSUE 418 11.10.18 REPORT

stopped looking at their emails: Beneath the wilder noise of these one said they had 10,000 emails on this arguments, there were people on both issue alone.” sides trying to engage with the arguments The BPI’s Ian Moss backs this up. “The of the opposition. IMPALA, for example, put volume became so ridiculous as to become out a point-by-point response to the key farcical. MEPs were getting emails faster concerns of Article 13 critics - and Helen than they could delete them,” he says, Smith says they were taken seriously. while stressing that the mismatch with the Ian Moss “We wanted to be sure ourselves, and number of people willing to protest in the we wanted the decision-makers to be streets was telling. sure they were introducing a set of rules “When they looked at the press in their that was reasonable,” says Smith. “The countries, and those smattering of people whole purpose for us is about providing at demonstrations, there wasn’t the sense safeguards in the legislation so that that this was a genuine public campaign.” decision-makers and citizens are satisfied There are other conclusions about what that the rules go as far as they need to and the vote on 12 September meant. Some not further.” see it as further evidence that European “We certainly didn’t want to just dismiss legislators, generally speaking, are more “The volume [of emails] became so ridiculous as to them out of hand,” adds Ian Moss of the sympathetic to the rights of creators than become farcical. MEPs were getting emails faster than BPI. “Demonstrating that the concerns those in the US – historically at least: they could delete them. When they looked at the press were overblown did require engaging with the successful passage of the Music in their countries, and those smattering of people at the substance of the issues – and trying Modernization Act (MMA) currently has the to explain why an environment in which American music industry purring. demonstrations, there wasn’t the sense that this was a content is licensed and technology is used “I do think that European genuine public campaign...” – Ian Moss, BPI to prevent infringement doesn’t mean that Parliamentarians would say ‘China owns creativity will be suppressed. In fact, it will the devices, Americans own the internet, their own interests ahead of the interests one another,” says Geoff Taylor. “The music encourage creativity.” and we own the culture, so somehow we’ve of consumers,” says Geoff Taylor. “Perhaps industry stood firm together. You go in with This, when you step back, is one of got to protect what is ours’,” says PRS for that was a context in which these issues one big voice and a big message,” agrees the big takeaways for the music bodies Music chief executive Robert Ashcroft. were considered by MEPs.” Frances Moore. from the copyright-directive campaign: Geoff Taylor sees a broader context One parallel between the progress of Like so many political issues in the the belief that European politicians, at in Europe, too: where politicians are Article 13 and the MMA in the US is the modern world, the run-up to the 12 least, back their message that copyright thinking hard about the power of the unity of the various elements of the music September vote featured accusations of is a driver of innovation rather than an largest American technology companies, industry, even though there are other issues scaremongering from both sides. impediment to it. and pushing back where they feel it is which divide them (think managers seeking Critics of Article 13 accused the “Without copyright protection, there’s necessary – for example on privacy, but more from labels, or publishers music industry of crying wolf over the very little incentive to try to make a career also now copyright. and labels at loggerheads over streaming impact of the ‘value gap’ at a time when out of being innovative. The tech industry “The broader context of the perception royalty splits; or independent labels recorded-music revenues are bouncing is highly protecting of its patent rights and that the tech platforms have been lobbying against major-label consolidation). back, while music bodies pushed back design rights,” notes Moss. “Without the

report behaving in a way that is rather arrogant: “It’s very encouraging that the industry at claims the legislation would (for consent of rightsholders, you’re going to that they haven’t been looking after worked together really well. We’re all example) outlaw memes and destroy free impede growth. Copyright is an engine of citizens’ rights, and have been protecting speaking with one voice and supporting expression online. growth,” adds Ashcroft. :) the 6

ISSUE 418 11.10.18 REPORT ARTICLE 13

grow to tens or even hundreds of millions Business time: why ‘micro’ matters of users with minimal revenues and a small staff, however. “These are areas in which each of the One of the key areas of uncertainty still is around institutions has a different take. That’s the type of thing that will be fine-tuned in the who should be exempt from Article 13 trilogue. Germany is particularly concerned about not stopping European startups, for s the trilogue got underway, one example,” says the IFPI’s Frances Moore. of the key issues that needed to “But that’s the whole point of safe Abe settled concerned possible harbour in the first place: when they get exemptions for smaller internet services to the point they’re too active, they should - startups - from requirements of Article be under copyright legislation… One 13 including upload filters. The European pre-release uploaded onto a site could do Parliament’s position is clear: “The enormous damage to an industry. definition of online content sharing service “If you’re talking about small startups, providers under this Directive does not what about a small record company with cover microenterprises and small sized one or two artists? If a pre-release gets enterprises”. The European Parliament’s position is clear: ‘The up there, it could massacre their first week So what are they? We’ve gone digging definition of online content sharing service providers of sales.” into the European Union’s archives so you Robert Ashcroft also highlights the under this Directive does not cover microenterprises don’t have to: the definition the Parliament micro-enterprise issue as important in the has in mind is that a microenterprise and small sized enterprises...’” trilogue. “It was interesting that they said employs fewer than 10 people and has an ‘we’ve got to exempt micro-enterprises’ but annual turnover or balance sheet of less says IMPALA’s Helen Smith. headcount of 38 staff. The next year, its unfortunately their initial definition would than €2m; a small-sized enterprise employs That word ‘impact’ is the key here, revenues grew to €8m and its headcount have included SoundCloud,” he says. fewer than 50 people and has an annual however. “You don’t need to be very ‘big’ to 109 - the latter making it a medium “There’s a little bit of work to do in turnover or balance sheet of less than €10m; to have a significant impact,” says Smith, enterprise by the European definition. trilogue to understand what is ‘micro’ - and a medium-sized enterprise (which “so there is probably some nuance to be How big was SoundCloud in 2011? In maybe it’s about the number of users. wouldn’t be exempt from Article 13) employs incorporated around that in the trilogue, so June that year, the company announced But we’ve got to be pragmatic about this: fewer than 250 people and has an annual that if you’re making a significant impact that it had five million registered users, we need to get the big players with their turnover of €50m or less, and/or an annual then you’re not escaping responsibility a figure which doubled to 10 million by various different business models – ad- balance sheet total of less than €43m. altogether, just because you’re small. You January 2012 - by which point it had funded, user-upload, the Pandoras, Spotify, Music bodies seem comfortable with have to measure size in terms of impact, already raised more than $60m from VC YouTubes and Facebooks – working on a micro and small enterprises being exempt, not just the size of the company.” investors. That’s a guide to the kind of scale common legislative framework that enables in principle. “The Parliament was very To illustrate this, music:)ally took the a startup could reach now before it lost its us to create a functional market.” clear that small operators and startups obvious European example: SoundCloud. exemption from Article 13 IF the legislation “I have personal sympathy with the should have the chance to innovate: to The last year in which it would have is enacted in roughly its current form. micro-enterprise bit. But don’t end up

report provide services without being subject to matched the official definition of a ‘small’ Rightsholders are well aware - defining it so you can create a 200-million this legislation, which is really intended for enterprise was 2011: a year in which it posted Musical.ly is one recent example - of the user global platform that doesn’t earn platforms that are making a big impact,” €4.3m of revenues and had an average speed at which a new digital service can any money.” :) the 7

ISSUE 418 11.10.18 REPORT ARTICLE 13

“If you’re a Spotify or a Deezer, a Table stakes straightforward music platform, you do a deal with the industry on a willing-buyer willing-seller basis. The companies have the If Article 13 in its current state becomes law, what music, you have the money, you do a deal,” says Frances Moore. will it mean for music-licensing negotiations? “In a YouTube-type service, the music’s already up there, put up there by the user. s we’ve explained, there are still So in a negotiation, the industry’s got several steps to go in the process one hand tied behind its back. ‘Here’s the Aof Article 13 - and the copyright money: if you’re not happy, notice-and- directive it’s within - becoming law across takedown’” is how she characterises the the European Union. But if that legislation negotiating position of a YouTube. is based on the current positions of the EC, “Under the terms of the directive, that European Council and European Parliament, can’t happen any more. It’s an enabler what will it mean for the relationships to know that they’re operating in an between music rightsholders and user- environment where if the music’s there, uploaded-content platforms? Particularly there has to be a licence for it to be allowed YouTube? to be there.” It’s worth remembering that the lobbying Geoff Taylor mirrors this view. “It’s about around the copyright directive has been creating equality in those negotiations. going on for a couple of years, and within Previously, when labels sat down with that timescale YouTube managed to strike YouTube, both sides knew that YouTube licensing deals with labels and publishers could take the position that it didn’t to launch its YouTube Music subscription need a licence in the first place. That service. When labels sit down with Spotify, they don’t want fundamentally affects the outcome of a And even before that, there has been a Spotify to walk away because Spotify is a massive negotiation,” he says. clear sense of YouTube and rightsholders “What Article 13 should achieve – once managing to conduct their partnership revenue-generator and has huge reach...” – Geoff Taylor, BPI implemented if the text is effective – is that negotiations at the same time as being on both sides sit down wanting a deal, but with opposite sides of various lobbying battles. In behave, and where we believe they’re not and creative sectors, and we’re committed the ability to walk away.” one sense, then, it’s business as usual from treating music fairly, we’ll both privately and to continued close partnership with these “When labels sit down with Spotify, they now on. publicly exchange our different views.” industries,” said its spokesperson. don’t want Spotify to walk away because “We can agree with what we agree about,” It’s true that Google’s on-the-record But what will it really mean for YouTube Spotify is a massive revenue-generator and says the BPI’s Geoff Taylor. “We believe that response to the Article 13 vote (and Article and similar UUC services if Article 13 is has huge reach. Spotify doesn’t want to lose the position YouTube took on Article 13 was 11 - those news snippets) focused on enshrined in EU member states’ laws? a deal with the labels because it needs all the wrong position. But we were pleased to collaboration. “People want access to The music industry has argued for some the content for its service to be attractive. see the reaction from Google after the vote, quality news and creative content online. time that it will create a ‘level playing field’ This has levelled the playing field.”

report which focused on collaboration and working We’ve always said that more innovation and between these platforms and the music- To outsiders, one of the more curious together. That’s what we believe too… collaboration are the best way to achieve streaming services that have to license their aspects of the Article 13 debates has been We want to partner with them where they a sustainable future for the European news music upfront. that YouTube already has a content-upload the 8

ISSUE 418 11.10.18 REPORT

revenues - the old SoundCloud model - opportunity is to deal with the ‘value gap’.” from undermining the legitimately-licensed Ashcroft agrees. “The United States platforms.” is not the place to look to seek a logical The various bodies are careful not to copyright environment! Europe is, and the speculate about what will happen once world is looking at Europe. China is looking YouTube gets to a negotiating table with (for at Europe!” he says, while harking back example) a major label in an Article 13 world, to the need to edge away from a purely- as that will be a matter for their individual oppositional relationship between European members. rightsholders and American technology “We’re very confident that there will still companies. be a tremendously-successful YouTube, “The first time they tried to enter the which will still have all kinds of content on it, subscription market, it was very much under including music content,” says Geoff Taylor. pressure from the labels. This time they’re “It’s just that more of the fruits of that will serious, and they have some really strong get shared with the creators of music.” ideas about how to curate music,” he says Robert Ashcroft is similarly positive about about YouTube. the future relationship between YouTube Why would YouTube fight so hard to retain the status and music rightsholders. quo, rather than accept this new way of working which “When I talk to the people that we negotiate with in YouTube, we’re on a is strikingly similar to the way they work already?” journey together. They’ve launched a – Robert Ashcroft, PRS for Music subscription service, and they want to see the thing work! I would like to see a filter of the type mandated by the copyright “Why would YouTube fight so hard to collaborative approach, notwithstanding directive: Content ID. The ability for retain the status quo, rather than accept this bitter fight that we’ve had. We still rightsholders to be made aware of infringing this new way of working which is strikingly have a very good working relationship uploads, then choose to block, monetise or similar to the way they work already?” says with YouTube, and I fully expect to have leave them alone is exactly, in theory, what Robert Ashcroft. constructive discussions with them.” Article 13 aims to enable for this kind of “But at present the mechanisms for The bodies all have their eyes on the service. taking down content are so cumbersome, wider ripple effect from the copyright (Indeed, one of the key arguments it’s like fighting an army of soldier ants, link directive once it’s introduced. It comes back against it from critics was that the expense by link. Your skeleton is left lying on the to that sense of two different approaches of developing Content ID - which YouTube ground by the time you take the ant to get to copyright: the European and the now says is “over $100m” - shows that it put down.” American approach, with the former seen under Article 13 smaller startups would “All this does in practical terms is change (by the music bodies) as more favourable to “Look at the effect on 12 September on face a daunting expense complying with the balance of risk. The risk moves away rightsholders and creators. the share prices of the big platforms, and the upload-filters requirement, and would from the copyright holders and on to the “What you’re going to see is that if you’ll see a little drop in all the people we’ve thus be fatally hamstrung in any effort to platform holders. And that just makes the this goes through in Europe, it will have a been talking about. Guess which one went

report compete with YouTube. Music rightsholders negotiations different. It would prevent knock-on effect,” says Moore. “We hear up? Netflix. My answer is that subscription argue that cheaper, third-party technology another large platform with hundreds people talking in India and other countries. pays, guys. Subscription pays, so let’s get like Audible Magic is available.) of millions of users worldwide but no There we will be looking to see what the on with it.” :) the 9

ISSUE 418 11.10.18 REPORT ARTICLE 13

Robert The Brexit headache Ashcroft Timing is everything as the UK prepares to exit the European Union

f the final copyright directive is approved and ready for European Union members My expectation is Ito implement sometime in the spring of that the trilogue 2019, there’s a big question mark over one will conclude of those countries – which may not be a before the end member by the time this happens. The UK is scheduled to complete its of the year, but I ‘Brexit’ from the EU on 29 March 2017, but would be surprised amid talk of extensions, transition periods if this went for a and even the (still remote) prospect of the vote before May: it UK government falling, a new election and/ or a repeat of the Brexit referendum, there is will be one of the a very real question over its EU membership last things that status at the time the legislation is ready for goes through in this implementation. Parliament...” Ian Moss says that the cleanest – Robert Ashcroft, solution would be for the legislation to be PRS for Music implemented at the moment of the UK’s withdrawal, and thus implemented in the UK However, he does outline some possible finds itself in the junior position in any “So there is a delicate situation: a law as part of its withdrawal act. twists in this process. Moss talks about post-Brexit trade deal with the US, it could will be passed after Britain formally exits “The more messy solution is that the the difference in the US and European find itself under pressure to swing towards the European Union, and then the member British government has been on the record approaches to copyright – tipped a little the American copyright approach rather states have two years to pass it in to law – of supporting this issue, and would put it more towards fair-use in the US, and a little than the European one. But for now, this and they will undoubtedly pass it in to law into UK law as a matter of course anyway, more towards creators/rights in the EU. is speculation. The fact remains that the slightly differently in each country, as they post-Brexit,” says Moss. Moss suggests that the US is very separate timescales of the copyright did with the CRM directive.” “The UK have been involved in the keen to make its copyright regulations directive and the Brexit process mean a “The current government supports ‘value gap’ debate: they’ve been very part of any trade treaty that it signs – certain amount of uncertainty. our decision: you have to go back to constructive and helpful until now, so they you can look to the just-signed USMCA “My expectation is that the trilogue will the Cameron government, and [then- would intend for this legislation to become trade deal between the US, Mexico and conclude before the end of the year, but I chancellor] George Osborne’s infatuation part of their legislation. I would wonder Canada, which extended the US’ DMCA would be surprised if this went for a vote with ‘Silicon Roundabout’ to have a

report why they would be operating so strongly safe harbour to both countries, sparking before May: it will be one of the last things Conservative government that wasn’t in Council if they didn’t intend to do it criticism from the RIAA. that goes through in this Parliament,” says entirely on the side of the creative afterwards,” says Moore. The implication, then, is that if the UK Robert Ashcroft. industries [on copyright].” :) the 10

ISSUE 418 11.10.18 REPORT ARTICLE 13

The neighbouring right will restrict Criticism continues the sharing of news online and the upload filter will restrict user uploads. Article 13’s critics are disappointed with These are bad outcomes for European the Parliament vote, but not defeated citizens...” – Siada El Ramly, EDiMA

This reflects the view among opponents Copyright for Creativity put out its of Article 13 that the legislation is not a own blunt statement. “The European done-and-dusted affair: that there is the Commission promised to modernise potential for changes in the trilogue process, copyright, but instead of creating a well- and ultimately even the chance for a functioning legal framework addressing reversal of the approval when the European the concerns of creators and end-users Parliament votes on the final directive. it proposes to protect old business EDiMA, another trade association models by creating what it claims to be representing tech companies, issued its a ‘well-functioning marketplace’,” said its own statement following the vote on 12 coordinator Caroline De Cock. September. “The measures adopted today are Caroline remarkably similar to those already rejected De Cock by a majority of MEPs last July and this is both disappointing and surprising,” it claimed – although music bodies disagree with the ‘rejected’ element, seeing the July vote as one in favour of further scrutiny of the directive plus a full debate, rather than a rejection of its contents. s we’ve noted earlier in this report, uploaded content, thereby damaging “The neighbouring right will restrict the Google’s official response to the European citizens’ fundamental rights and sharing of news online and the upload AArticle 13 vote was measured, undermining platforms’ limited liability filter will restrict user uploads. These are focusing on collaboration with the creative regime, a legal cornerstone for the European bad outcomes for European citizens,” said “To do so, the EC creates industries. But some of its higher-profile digital sector,” it said. director general Siada El Ramly. ‘RoboCopyright’, compelling intermediaries supporters in the lobbying campaign did “We regret that a majority of Members “We hope that the concerns of EU hosting user-uploaded content to come out with strong criticism of the vote of the European Parliament ignored citizens, and all of the academics, small implement content filtering technologies and the legislation in its current form. the widespread warnings on the risks publishers, startups, and the UN, that and handing over the content policing to the For example, the Computer & of the copyright proposal. We now have been expressed will still be taken right holders. Our message to the EC: Stop Communications Industry Association urge the Council and Parliament to into account during the next stage of ‘RoboCopyright’ and ancillary copyright,

report (CCIA) put out a statement regretting come to a balanced outcome in the negotiations. We look forward to working and start to focus on users and creators.” the vote. “Upload filters will introduce final negotiations,” said its senior policy with everyone involved in the aim of a better The Communia Association, which a general obligation to monitor user manager Maud Sacquet. outcome for all.” advocates for policies that expand the the 11

ISSUE 418 11.10.18 REPORT

public domain and limits the scope of to cause these effects, it must just be copyright, published criticism too. hyperbole. And since their politics are driven It doesn’t unify “There is no way around it, the outcome by supporting one particular oligopoly over of today’s vote on the copyright directive what’s allowed and another, it’s natural for them to assume the in the European Parliament is a big loss for what isn’t in different “other side” must be similarly motivated,” user rights and the open internet. MEPs EU member states, she wrote. have decidedly sided with the demands of “Any opposition is dismissed as a Google- even though we all the creative industries to hand them more orchestrated campaign – an absurd belief, control over how we access, use and share use the same internet but like most conspiracy theories, highly copyrighted works,” it wrote. to share and access effective at shutting down factual debate.” “Under Article 13, rightsholders would get works...” Google’s role in any lobbying campaign more control over how copyrighted works focused on copyright tends to elicit – , can be shared on online platforms. Germany passionate views, to say the least: its It will allow them to force platforms to filter funding relationships with some of the content in ways that will negatively impact organisations lobbying against Article 13 users rights.” came under scrutiny this year, as they have Like other critics, Communia thinks that done in past campaigns. This scrutiny is the battle is not over yet, even though its justified and relevant to the debate. piece admitted that the trilogue process At the same time, some of those critics would likely be relatively swift before the *were* arguing that Article 13 will cement next vote in the European Parliament. YouTube’s dominant position rather than “This vote, which will likely take place at creators. It does not nurture and protect to the negotiation table on their terms,” harm it. Writing them off as Google ‘shills’ the end of this year or early next year will our new forms of expression, many of which wrote Reda, referring in the former case craftily finding an argument that seemed be the last possibility to prevent (or at least build on existing works in ways that are to Article 11. “To achieve that, some kind of to distance themselves from the company, limit) the effects of today’s land grab by only partly covered by today’s copyright license needs to be required, and the media as some (not all) pro-directive campaigners rightsholders,” it suggested. exceptions,” wrote Reda. industry needs to get to set the price.” did, ignores the fact that a number of the One of the prominent figures within “It doesn’t unify what’s allowed and what The emphasis on ‘giants’ is one of the legislation’s critics are as worried about the the European Parliament throughout the isn’t in different EU member states, even points that music bodies - particularly power of ‘big tech’ as music rightsholders. copyright-directive process has been MEP though we all use the same internet to share IMPALA, given its representation of Reda’s Wired piece made it clear that Julia Reda, who represents the Pirate Party and access works.” independent music companies - disagree the debate about the directive’s potential Germany. Reda’s view is that the vote represented with. It was notable that individual impact is far from over, in any case. The week after the vote on 12 September, politicians viewing copyright “primarily musicians as well as the independent “The supporters of Articles 11 and she published a guest piece for tech site through one very particular lens: that of big community were a key part of the lobbying 13 believe they are merely regulating a Wired outlining her views on the possible media companies, with their waning control effort in support of Article 13. struggle between powerful industries. But impacts of Article 13, and in contrast to over distribution channels” – in other words, Reda did make a good point about the legal and technical experts examining the some of the rhetoric quoted above, her that Article 13 is about reversing a shift in polarised nature of the debate, however, actual provisions, and forecasting their arguments are something the music power (and a redirection of revenues) back when referring to the music industry’s consequences, are near-unanimously industry should be prepared to engage with, to rightsholders. response to Article 13 critics’ views on the sounding the alarm: by interfering with the

report as the process continues. “They are meant to be sticks EU-based possible unintended knock-on effects of the basic dynamics of the internet, what they “It does not recognise and legitimise publishing and music giants can wield to legislation. are regulating is our freedom of expression,” the new stakeholders, the masses of new force US-based internet platform giants “Since they don’t consciously intend she claimed. :) the 12

ISSUE 418 11.10.18 REPORT ARTICLE 13 Music Ally’s verdict Celebrations for rightsholders, but it’s not the end of the road

usic industry bodies and Above all, though, music:)ally’s view rightsholders celebrated on 12 is one that we’ve held for some time: MSeptember, with their joy only that YouTube’s potential as a partner for enhanced by the element of uncertainty the music industry and for musicians is about the European Parliament’s vote right immense, and that resolving the questions up until it happened. But there are several and arguments around safe harbour is going reasons why these celebrations were to be a necessary step towards realising restrained. that full potential. First, there’s the fact that the European Even with the early days of YouTube copyright directive isn’t law yet: there is still Music Premium, you get a sense of the scope for it to be refined during the trilogue sheer power of YouTube turning on the process; MEPs must vote on the final text throttles when it comes to features like at a time (in early 2019) when many may personalisation and recommendations, as be feeling jumpy about their re-election well as artist-marketing partnerships. prospects in May; and then individual EU Perhaps freed entirely from the need member states will be responsible for its (in lobbying terms) to be a ‘passive, actual implementation. neutral intermediary’ qualifying for safe Chickens should certainly not be counted harbour, YouTube can become a truly at this stage by anyone concerned. And pro-active, aggressively-innovative second, that’s also because it’s vital that platform for music. the final directive does nail down the in Europe at least. Several of the music- wherever it happens in the world. That’s what the goal should be now for precise language and definitions to make it industry bodies mentioned the shelved This may be an unpopular view within the music industry, rather than relish at the absolutely clear what Article 13 covers - and SOPA / PIPA legislation in the US as a the music world, but… music:)ally would prospect of making YouTube’s pips squeak at to protect freedom of expression online spectre haunting their thoughts in the push back a little against the view that the negotiating table next time its licensing well beyond the battle around copyrighted run-up to the European copyright directive sparse ‘real-world’ demonstrations showed deals are up for renewal. music and YouTube. vote - because online pressure on decision- the online protests up as purely a scam. It Tech giants and music rightsholders Writing those worries off as makers had a crucial impact then. seems more reflective of modern society: will always have tensions laid bare in scaremongering would be foolish, especially Its impact this time round may have very willing to click a button or sign an the corridors of power in and for an industry whose individual musicians are been crucial in the opposite way: steeling e-petition, but perhaps less willing to get Washington (or, indeed, in Beijing and New both creators and internet users - and thus a number of MEPs to back Article 13, out on the streets and protest. Delhi), but the ultimate prize here isn’t have their own personal stakes in freedom especially those with inboxes rendered The level of automation in some of revenge on platforms that have previously of expression on digital platforms, alongside unusable by the sheer force of incoming the online tools, geared towards people benefited from safe-harbour protection. It’s

report their right to be paid for use of their work. emails protesting about it. That’s sending lots of emails to MEPs, was deeper, more effective partnerships that There are lessons to be learned here something both sides will learn from for certainly negative - and ultimately benefit both sides - and most importantly, about what is and isn’t effective lobbying, future clashes around copyright reform, counterproductive, though. the music-makers and their fans. :) the 13 Music Ally is a music business information and strategy company. We focus on the change taking place in the Music Ally is an ISSUE 417 industry and provide information and insight into every aspect of the business, consumer research analysing 01.09.18 example of perceptive the changing behaviour and trends in the industry, consultancy services to companies ranging from blue journalism at its chip retailers and telecoms companies to start-ups; and training around methods to digitally market your best, with unrivalled artists and maximise the effectiveness of digital campaigns. We also work with a number of high profile music Andrew Fisher, events around the world, from Bogota to and Brighton, bringing the industry together to have a good CEO, Shazam coverage of the commonsense debate and get some consensus on how to move forward. Entertainment digital music sector”

ANTHONY CHURCHMAN STUART DREDGE Contact: music:)ally Business development Editor at large Studio 11, Holborn Studios, 49-50 Eagle Wharf Rd, [email protected] [email protected] London N1 7ED Tel: +44 (0)20 7250 3637 b www.MusicAlly.com e [email protected] EAMONN FORDE WESLEY T. A’HARRAH

Reports editor Head of training & development Registered company number: 04525243 [email protected] [email protected] VAT number: 858212321

© Music Ally Ltd. For the purposes of personal, private use the subscriber may print this publication or move it to a storage medium; however, this publication is intended for subscribers only and as such may PATRICK ROSS CHIARA MICHIELETTO not be redistributed without permission. Subscribers agree to terms and conditions set up on the Music Ally website, except where a separate contract takes precedence. Music Ally has taken all reasonable Director, digital strategy Digital marketing endeavours to ensure the validity of all items reported within this document. We do not assume, and [email protected] [email protected] hereby disclaim, any liability for loss or damage caused by errors or omissions. In particular the content is not intended to be relied upon in making (or refraining from making) investments or other decisions. We cannot be held responsible for the contents of any linked sites.

Our clients include: report the