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Safe harbour in the spotlight as tech platforms questioned as part of Parliament’s streaming inquiry

By | Published on Friday 12 February 2021

Houses Of Parliament

The digital services were finally brought into the conversation as part of Parliament’s big inquiry into the economics of streaming this week.

Though, while much of the inquiry to date has focused on the economics of Spotify-style streaming services, the platforms in the spotlight were YouTube and SoundCloud. And while both those companies do operate premium subscription set-ups like Spotify, their respective user-upload platforms are much more significant.

The real focus for this discussion, therefore, was the pesky copyright safe harbour, and the responsibilities of safe harbour-dwelling services when it comes to removing unlicensed music.

Safe harbour is, of course, the one aspect of the multi-layered debate around the streaming business that generally unites the music community.

Artists, songwriters, record labels and music publishers have all long argued that user-upload platforms have exploited a safe harbour actually intended for internet service providers and server hosting companies, in order to build music services without licences at all from the music industry, or to strengthen their negotiating power when securing such licences, so that they can ultimately make lower payments to the music community.

Earlier in the day, the boss of record label trade group BPI, Geoff Taylor, provided a quick overview of what the copyright safe harbour is, and the issues it has created for the music industry. He said: “Safe harbour is essentially a legal protection that has been granted to internet companies where their users upload content. Essentially, it says that if the users upload content – provided that you take it down, if you receive a notice, because it is illegal – then you are not liable for that”.

That protection has been employed by outright piracy operations, Taylor said, who claim they are covered by safe harbour because they respond to takedown requests. Except content is re-uploaded to the piracy sites as soon as it is taken down, putting a huge strain on copyright owners who have to keep reissuing takedowns.

However, it also impacts on licensing negotiations with what are basically legitimate businesses. “Certain services use [safe harbour] in negotiations”, Taylor explained, “to say, ‘I don’t even need a licence from you, Warner Music, or independent label, I will pay you this much and you can be happy with that, because otherwise we will operate without a licence'”.

“The existence of the safe harbour changes the negotiation substantially”, he went on. “That is why you see that huge differential in per stream rates between user-uploaded content on YouTube, for example, and other streaming services”.

The music industry would like UK lawmakers to reform the safe harbour in two ways. First, to increase the specific liabilities of user-upload platforms that claim safe harbour protection, which is what the 2019 European Copyright Directive seeks to do through its article seventeen.

And secondly, to introduce some sort of takedown-and-stay-down obligations, whereby all safe harbour dwelling platforms would be obliged to keep any one piece of content offline once they’d received a takedown notice about it. The latter is part of the safe harbour reform proposals that began circulating around US Congress late last year.

When the aforementioned copyright directive was being debated in Europe, the safe harbour element of that debate was very much positioned as the music industry versus YouTube. Though plenty of other user-upload and social media platforms exploit the safe harbour too.

And while SoundCloud has enjoyed a much more positive relationship with the music community in recent years, that wasn’t always the case, again mainly because of safe harbour tensions.

That said, both YouTube and SoundCloud do operate takedown-and-stay-down systems already, so in their cases the question is more whether safe harbour impacts on the licensing deals the two companies have negotiated.

Needless to say, YouTube’s rep on Wednesday, Director Of Government Affairs & Public Policy Katherine Oyama, was keen to defend the principle of safe harbour and her company’s use of it.

“If we look at safe harbours, they exist in pretty much every modern economy in the world”, she argued. “They have been credited as being a key foundation for the vibrant digital economy that the UK has. I can say from the tech sector, not only do we see creativity flourishing, but the digital economy in the UK is such an important place for start-ups, fintech and edtech, and safe harbours have been credited as creating a foundation of certainty that allows investment in services”.

And as for the music industry, Oyama went on, the safe harbour allowed YouTube to build a massive user-generated content community, and then a significant micro-licensing platform that generates income for artists, songwriters, labels and publishers when those online creators use their songs and recordings in their videos.

“Many of the partners we work with [in the music industry] receive more than half their revenue every year from the user-generated side”, Oyama claimed. And as the streaming market continues to evolve, and streaming revenues continue to grow, “we see the UGC side truly powering a lot of that growth in the industry”, she reckoned.

It is true that on one level the music industry’s love/hate relationship with YouTube over the years has been complicated because the Google site is many things. It’s a streaming service, it’s a marketing platform, it’s a media platform, it’s an influencer platform, it’s a micro-licensing platform. And how YouTube connects with the music industry, and the value it delivers, in revenue terms or otherwise, is different depending on which of those aspects you focus on.

However, from a music industry perspective – it’s great when platforms like YouTube provide new marketing channels and unlock new micro-licensing revenue streams – but it’s a problem when those platforms also compete head-on for users with Spotify-style streaming services which pay higher royalties to the music industry.

That’s a point Downtown Music’s Roberto Neri made earlier in the day, speaking as Chair of the UK’s Music Publishers Association. The main YouTube platform – not just the standalone YouTube Music subscription set-up – is a music service, he argued. Meaning it is competing with Spotify-type services.

The music industry would like the premium services to increase their £9.99 a month price-point, he noted, “but they can’t when YouTube has such a mammoth offering and is almost a default for the consumer to go to. Even the five second ad you have to watch, and click ‘skip’ on when you can, is not much of an inconvenience”.

Of course, although YouTube has traditionally been presented as the music industry’s big foe when it comes to safe harbour – and, as noted, there were some run-ins with SoundCloud for a time – both platforms have much better relationships with the music community today, even if some tensions remain in YouTube’s case.

And, in the user-generated video content space, a TikTok-led shift where platforms increasingly want to include a music library and editing tools within their apps, has shifted things somewhat. Offering such a music library needs music licences, which increases the negotiating power of the music companies, even when some users continue to sync in music outside the app.

However, there will always be new platforms emerging that can rely on the safe harbour to put off securing licences, or to strengthen their negotiating hands once licensing talks begin. And that is why the music industry still wants the pesky safe harbour reformed.

At the moment, some of the key safe harbour dwelling platforms in the spotlight are in the livestreaming domain, with Amazon’s Twitch getting particular criticism from the music community, in the UK, the US, and elsewhere.

MPs were meant to be questioning Twitch’s General Counsel Steve Bené on Wednesday – and he was introduced at the start of the online session – but, presumably because of some technical problems, he didn’t actually speak during the hearing.

Given that Twitch et al are now a key part of the ongoing safe harbour debate, presumably MPs will try to get him back for a future hearing. Meanwhile, you can follow all our coverage of the inquiry into the economics of streaming via this CMU timeline here.

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