Background
This article comments on developments related to the Fair Internet for Performers Campaign (FIPC) in the light of the Draft Proposal for a Directive on Copyright in the Digital Single Market published by the European Commission in September 2016.
The campaign seeks to secure fair remuneration for performers when their recorded performance is played on streaming and other on-demand services offered by digital service providers such as Spotify and Netflix – currently only authors are remunerated consistently across the board (i.e. regardless of contractual agreement). According to the FIPC, fair remuneration of performers would be achieved through the European copyright system with an addition of an equitable remuneration right to the already existing exclusive making available right. The FIPC would like to see this clause in Chapter 3 of the draft proposal, ‘Fair remuneration in contracts of authors and performers’, which currently seeks to improve contractual relations between authors and performers vis à vis powerful contractual counterparts. Chapter 3 has been said to use ‘weak language’ that is ‘unlikely to be effective’ (Kretschmer 2017, among others).
The proposal is now being debated in Parliament, with the Legal Affairs Committee (JURI) taking a leading role in amending it. This involves drafting a report that serves as a first critical reflection on the EC draft proposal (by Maltesian EPP rapporteur Theresa Comodini Cachia) and by requesting opinions from other committees, in this case Committees for Internal Market and Consumer Protection (IMCO), Industry, Research and Energy (ITRE), Culture and Education (CULT) and, most recently, Civil Liberties, Justice and Home Affairs (LIBE).
I report here on the recently adopted opinions of IMCO, ITRE and CULT, which together have submitted nearly 1000 amendments. LIBE is expected to vote on its opinion on 25th September, whilst JURI is scheduled to vote on the amended report on 10th October. The parliamentary vote is scheduled for the coming winter, which means that some form of consensus should ideally be reached with the Council by then. The Presidency compromise proposal on Articles 10-16 published on 30th August is part of this. Minutes about the Council meetings of 11th and 12th September, when the compromise proposal was debated, are to be expected any moment. Considering that other controversial articles have not yet been addressed (e.g. Art.3) and the contested nature of this Copyright Draft Directive generally, delays in this tight schedule are very likely. That said, the fast pace of lobbying activities continues.
Opinions and amendments
MEP Catherine Stihler (a member of the European S&D and the UK Labour Party) was the rapporteur for IMCO. The committee adopted its opinion with 78 amendments on the past 8th June 2017, with a vote of 19 (59%) over 7 (22%) and 6 (19%) abstentions, suggesting some controversy within the committee. Amendments 74-77 cover Chapter 3.
Article 14 on transparency demands greater accountability from powerful contractual counterparts. The article has been specified to the advantage of authors’ and performers’ at the expense of their counterparts, regarding recurrence of reports, accuracy, consideration of promotional efforts (as well as exploitation), and information on sub-license or transfer of rights. Art.14(2) has also been amended to demand from member states ‘sector-specific standard reporting statements and procedures […] developed through stakeholder dialogues’. This avoids arbitrary case-by-case reporting measures, and so will be welcome by authors and performers. The proportionality assessments between i) the value of the revenue and the administrative burden resulting from the obligation (Art.14(2)) and ii) the ‘significance of the contribution’ to the overall work or performance (Art.14(3)) have been significantly limited. This has been done by i) demanding of contractual counterparts that the ‘level of disproportionality’ be duly justified and ii) by deleting Art.14(3). These changes make the article more effective: considering that current technological developments offer inexpensive tools to warrant transparency for all the relevant parties, transparency should form the foundation of any contractual agreement (see previous post for more details on the reasoning for the proportionality assessment).
The contractual mechanism of Art.15 offers authors and performers the possibility of adjusting a contract they entered into when their bargaining power was low so that the new terms offer them an appropriate remuneration commensurate with subsequent success. The two first amendments allow authors and performers to i) appoint representatives to negotiate on their behalf with the contractual counterpart or ii) ‘their successor in title’. These are both positive developments from the perspective of authors and performers: i) collective representation may make it easier to negotiate with powerful counterparts and ii) information on whose hand a contract is in avoids confusion. The last amendment adds the word ‘unanticipated’ to the phrase ‘subsequent relevant revenues and benefits derived from the exploitation of the works or performances’. This, in turn, limits the reach of the article for authors’ and performers’. This is because their contractual counterparts can argue that they only will adjust a contract when authors’ and performers’ success extends beyond the reasonably anticipated. Considering that businesses enter into contract with authors and performers assuming they will be successful, the addition of this word raises the threshold within which authors and performers can invoke this article.
Art.16, which introduces the provision of voluntary alternative dispute resolution procedures, has been left untouched.
In short, from the perspective of the FIPC, Art.14 has been much improved. In contrast, although the amended Art.15 exhibits some good intentions, the bar has risen to make them effective. More work needs to be done by the campaign: careful study of the opinions and amendments to single out MEPs more favourable to (as well as those likely to be persuaded about) the specificities demanded by the campaign will be of much help.
MEP Zdzislaw Krasnodebski (a member of the European Conservatives and Reformists Group and associated with PiS, the conservative leading party in Poland) reported for ITRE. The committee adopted its opinion with 58 amendments on 11th July 2017, with a majority of 36 (60%) over 18 (30%) votes and 6 (10%) abstentions. Amendments 52-58 concern Chapter 3.
The amendment to Art.14(1) is very similar to that of IMCO, without specifying the regularity of transparency statements. Amendments to Art.14(2) offers a ‘right of the author and performer to audit’, as well as the ‘standard reporting measures’ also included by IMCO. While the large majority of authors and performers may not have the means to audit powerful companies, it strengthens the requirement to create standard reporting measures. The absence of limitations to the proportionality assessment shows oversight regarding the imbalance in bargaining power between the large majority of musicians and powerful corporations, especially so considering the decreasing cost of data production.
Amendment 55 represents good news for the Fair Internet for Performers Campaign (FIPC), with the inclusion of a new ‘unwaivable right to fair remuneration for authors and performers’ (Art.14a). Art.14a(1-2) adds to the exclusive making available right an unwaivable equitable remuneration right, in a manner similar to that suggested by the FIPC. Paragraphs 3-4 complicate the simple wording of the FIPC of having the right ‘collected and administered by a […] collective management organisation’. Paragraphs 3 and 4 ensure that collective management organisations (CMOs) administer and collect the rights, but in the former it includes the exemption ‘unless other collective agreements, including voluntary collective management agreements, guarantee such remuneration to authors’. This gives greater flexibility to authors and performers regarding choice of CMO, but could be interpreted as supporting the fragmentation of collective bargaining. Par.3 also specifies ‘authors, audio-visual authors and performers’, without specifying performers, which could be read as audio-visual performers having to wait until the Beijing Treaty comes into force.
Unlike the wording of the FIPC’s suggested amendments, the addition of Art.14a, includes authors as well as performers, leaving authors with a question mark over the effect of this right on their bargaining power. This move could have been influenced by the cross-sectoral agreement of mutual support recently reached between music composers and performers. This may be related to the creation of the Council of Music Makers (CMM)—the recently renamed association between the Musicians’ Union (MU), the Featured Artists Coalition (FAC, these two original supporters of the FIPC), the British Association of Songwriters, Composers and Authors (BASCA), the Music Managers’ Forum (MMF), and the Music Producers’ Guild (MPG)—, which has agreed to offer mutual support on the FIPC and the value gap campaigns (this last one represented mainly through recital 37-39 and Art.13). As mentioned before, drawing on Vetulani-Çegiel (2015), cross-sectoral campaigns have been demonstrated to be more likely to achieve success (Aguilar 2017). As confirmed to me in personal interviews, commissioners and MEPs feel reassured by the coming together of different sectors of an industry behind a campaign and the introduction of this article could be proof of this.
The amendments in Art.15, like IMCO’s, also add i) the possibility of appointing representatives and ii) demand ‘fair’ (instead of ‘equitable’) remuneration from the authors’ and performers’ contractual counterpart, which is better than any remuneration. It then adds a new article, Art.15a, in three paragraphs that is effectively a reversion of rights when there is ‘a complete absence of exploitation of [authors’ and performers’] works and performances, a persistent failure to pay remuneration or a complete lack of reporting and transparency’ (Art15a(1)). Par.2 sets out the timing within which a counterpart has to act upon notification and par.3 adds a proportionality assessment regarding the significance of contribution to a work or performance. Although a reversion right gives authors and performers some control vis à vis their powerful contractors, such limitations as in the last two paragraphs make it very hard, if not impossible, to exert it.
Regarding Art.16, ITRE has importantly added the possibility that authors and performers ‘submit the dispute anonymously through an authorized person or organization’, and so ensured that individual authors and performers don’t fall from their potential employers’ grace when bringing a class action suit against their contractual counterpart or an individual lawsuit that may have implications for the wider community.
From the perspective of FIPC, ITRE’s opinon is perhaps the most positive and straightforward of the three opinions submitted so far (more details on this below).
CULT also adopted its opinion on 11th July 2017, but, considering it had 96 amendments (and worked its way through over 500), it was published later, on 4th September. Drafted by Marc Joulaud (a member of the European People’s Party and of the French Republican Party), the opinion counted with a strong majority of 20 (69%) over 8 (28%) votes and 1 (3%) abstention. Considering the good news for FIPC that this opinion entails, the strong majority offers reasons for hope.
Amendments of Art.14(1) are very similar to that of ITRE (albeit more wordy), but specifies the regularity of reports (‘at least once a year’). CULT’s Art.14(2) is in the same spirit of ITRE’s but instead of demanding a right of authors and performers to audit the report, CULT’s adds a new paragraph (Art.14(2a)) that demands Member State to facilitate dialogue to introduce standard procedures and ‘foster automated processing that makes use of international identifiers of works’ – a first nod at blockchain or similar technologies. An additional paragraph is also added to Art.14(3) (which facilitates dialogue to introduce best practice): (Art.14(3a)) waives the obligation in par.1 if transparency requirements equivalent to that mentioned in par.2 are met by collective agreements. All in all, these amendments strengthen the original wording whilst giving creators and their counterparts some flexibility and negotiating space.
Like ITRE, CULT also creates a new Art.14a ‘Unwaivable right to fair remuneration for authors and performers’. Again, the new clause is for both authors and performers. However, this article is more sophisticated than ITRE’s. For a start, par.1 offers authors and performers the right to obtain fair remuneration only in a context where works and other subject matter is used in ‘information society services that make available works or other subject-matter through a licensed catalogue’. That is, only when played through Spotify or the like, this right will come into effect and shall not be the responsibility of record labels or publishers. Par.2 makes this right waivable, which reduces the potency of the right itself, if powerful contractors feel they can ask authors and performers to waive their rights in standard contracts. This is the case, for example, regarding moral rights in the UK, where the imposition to waive moral rights has become common practice. The second sentence in par.1 adds a further complexity: this right shall be waived altogether if an author or performer chooses to offer her work for free. This condition supports open knowledge and initiatives like Creative Commons, but restricts the power of CMOs seeking licenses in the name of all authors and performers when there may be in fact a mix of license types. However, like in the case of transparency measures, this may be a case of making use of technologies for the effective management of metadata – easier said than done. Art.14a(3) of the CULT opinion conflates the parts of paragraphs 3 and 4 of ITRE’s, doing away with the exemption regarding alternative collective management agreements. Instead it introduces in par.4 a waiver of the provisions, where a similar form of fair remuneration has been agreed through any other mechanism.
CULT begins its amendments of Art.15 in a similar fashion to ITRE, regarding i) and ii) but then goes on to iii) demand from authors and performers that they ‘give due justification to demonstrate that’ the remuneration given is disproportionately low compared to the actual revenues derived from the original agreement. A new par.1a again adds a proportionality assessment regarding the significance of an author’s or performer’s contribution to a work or performance. These additional amendments have the effect of limiting the rights to be vested in authors and performers.
Art.16 has been amended to ensure that submission to an alternative dispute resolution procedure does not prejudice other judicial remedies. Art.16(1a) has been added to allow collective action under this procedure or collective representation. A last sentence requires that ‘the costs directly linked to the procedure should be affordable’. These represent positive developments.
CULT’s amendments are more positive than IMCO’s from the FIPC’s perspective, but are much more cautious than ITRE’s. CULT is heavily influenced by the effect that additional rights to authors and performers could have on the industry itself and is also mindful of citizen rights such as the right to open knowledge. Although the final vote was stronger, the number of amendments submitted and of those condensed into the final opinion, reflect a careful balancing act between widely different viewpoints.
In summary, Art.14 is perhaps best served by IMCO, considering its limitation of the proportionality assessment. The addition of Art.14a by ITRE and CULT is good news for the FIPC, but the campaigners are better served by ITRE, which is the only to offer an unwaivable equitable remuneration right in addition to the exclusive making available right. The same holds true for Art.15, which is strengthened by ITRE. ITRE’s new Art.15a regarding the reversion of the right under extreme negligence represents a thoughtful start that still needs some work. Regarding Art.16, a combination of both ITRE’s and CULT’s amendments would be ideal and truly protect authors and performers by levelling the playing field. But if one had to choose, CULT offers a more rounded option for creators. This analysis has also shown that, counter-intuitively, ITRE represents more strongly the interests of authors and performers than CULT, while the latter appears more cautious of stepping on the major players’ footsteps.
Final thoughts
The amount of amendments suggests that the stakes are high and therefore worth considering carefully. The extremely contested nature of this Directive has also been voiced by MEP Mary Honeyball, who has said that, in 17 years at the European Parliament, she has never seen so much difference in opinion (M 2017). In this context, law scholar Martin Kretschmer (2017) has warned about disproportionate financial backing of the different stakeholders. He also notes that, in this charged environment, for academics, exposure to this dynamic can be uncomfortable and even risk professional integrity, when independent research and commentary is readily read as advocacy. MEPs should therefore be especially cautious of the source and financial backing of any advice.
The FIPC has certainly gained some traction in the debate and continues to make significant progress by wading through the detail and deciding which amendments are important to keep and which ones can be compromised upon. The arguments that the majority of creators have low leverage vis à vis very powerful contractors and that there are no consistent mechanisms in place to remunerate them when their works and performances are used by digital service providers are starting to sink in. The renewed growth of the industry coupled with the decline of radio, support the need for FIPC’s demands. But things are still far from certain.
The Presidency compromise proposal has moved things forward in an interesting way: although there’s no talk about fair remuneration in Chapter 3, the definition of online use of works as communication to the public (and not making available) in Recitals 38 (Option A) and Art.13 (Option B, more clearly) might allow performers to claim equitable remuneration in the majority of European jurisdictions. However, the FIPC published a letter on the past 7th September concerned about the viability of this measure, considering that no specific reference to performers has been made and it continues to be unclear whether and how internet service providers would remunerate this large population.
What next for the FIPC?
· Work with individual member states, that is, their individual Intellectual Property attachés.
· Identify and work with favourable and switch MEPs ahead of the parliamentary vote. (Their names are stated in the Opinion and Amendment documents, along with their positions and/or votes.)
· The national parliaments should be informed, to ensure they know what is at stake when they discuss the implementation at national level.
· Cross-sectoral collaboration is key and should continue to be fostered.
· Grassroots support is essential: the enormous community of performers can help in raising awareness, by sharing the information on the FIPC’s page, through their channels, and encouraging people to speak to their MEPs and national actors.