As Europe Goes to War With Tech Giants, Will Artists Benefit?

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While some see new copyright legislation as a first step toward redistributing power to content creators, others believe the proposals may make YouTube and Facebook even stronger.

On March 26, after two years of charged debate, the European Parliament passed the contentious new Copyright Directive — legislation aimed at updating the law for the internet age.

The directive shifts responsibility for infringement to online platforms — such as the Mark Zuckerberg-led Facebook and YouTube, run by CEO Susan Wojcicki — which now will be required to make their "best efforts" to identify and to either license copyright-protected material or to block it from being shared on their sites.

It also requires platforms to be transparent about revenue earned from individual creative works and to provide rights holders with "fair remuneration" for their films, music and TV series. The European Council, the EU's executive body, is expected to pass the Copyright Directive in April, after which individual countries have two years to write it into their national law.

Anyone with work distributed online in Europe — from Lady Gaga on YouTube to Netflix filmmakers — could benefit from the new legal regime. The music industry has hailed the directive as "world-first legislation" and a potential piracy-killer. The digital platforms, on the other hand, see the Copyright Directive as either expensive, unworkable or both.

David Kavanagh, who represents the Federation of Screenwriters in Europe, sees the law as the first step toward a rebalance of power between European creators and traditional gatekeepers — be they broadcasters, studios or platforms.

Now, the vast majority of European creatives are freelancers signed to buyout contracts who get zero backend remuneration for their work, no matter how successful it is. "This legislation could, if it is widely taken up, move writers in Europe closer to the American model … where we participate in the economic success of our work," Kavanagh says.

Mike Shaw, a partner at Marks & Clerk, a London-based intellectual property law firm, says the directive will have "a major impact" on the big online players, who will have to change their business model to conform to the new law, possibly by limiting ways users can upload content.

Platforms could also set aside a lot more money to buy licenses, though Google said in November that it has spent more than $100 million on technology to identify copyright-protected material uploaded to YouTube and has doled out more than $3 billion to rights holders as a result.

Gus Rossi, global policy director at internet think tank Public Knowledge in Washington, says the assumption in the entertainment industry — "that, with the Copyright Directive, people will start paying for content they are not paying for now" — may be unsound. "If it becomes more expensive for them to license music, YouTube might decide it doesn't make sense for them to continue with their current model," he argues.

For smaller platforms like Kickstarter or Medium, which may lack the funds to pay for heftier licenses or upload filter technology, the Copyright Directive might force them from the European market altogether. The U.S. entertainment industry, and Washington regulators, are grappling with many of the same issues. Europe's plan turns the continent into "one huge natural experiment on licensing and online copyright," says Rossi.

Even the studios are skeptical. Ahead of the vote, the Motion Picture Association, along with the International Union of Cinemas and major representatives from the sports sector, sent a letter to members of the EU Parliament warning the new legislation "would constitute gifts to already powerful platforms ... improving the position of platforms, but not of right holders."

"The supporters of the law, who think this will limit the powers of the big platforms, are wrong," says Evan Engstrom, executive director of tech advocacy group Engine. "They are the only ones who will be able to comply with these regulations. So the law will only make them stronger."

This story also appears in the April 3 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.