EU Copyright Levy Debate Rekindled; UK Needs Better Licensing, Study Finds

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Stalled talks on Europe’s broken system of private copying levies resumed on 2 April, with European Commission-appointed mediator António Vitorino laying out his goals and urging parties to move beyond their entrenched positions. Meanwhile, a report for rights owners found that abolishing levies will hurt them as well as device makers and, possibly, consumers. And in another copyright-related development, a UK government study identified problems with the country’s copyright licensing regime.

Levies are fees imposed on digital reproduction equipment such as blank DVDs to compensate copyright owners for the making of private copies. Not every EU country uses the system, but among those that do, there are significant differences as to the devices affected and the definitions of private copying, European Internal Market and Services Commissioner Michel Barnier said last November when he appointed Vitorino to try to clean up the mess. The varying regimes pose problems for businesses and consumers, to the detriment of rights owners, he said.

“We must find a way to reconcile” national private copying levy systems with smooth cross-border trade in goods and services, Vitorino said in his 2 April statement. That means taking account of new business models that deliver new forms of authorised access to copyright-protected material, and that give rights holders better control over the use of their content and how they are paid for it, he said.

“Significant efforts have been made over the years on this sensitive subject” that he will build on, said Vitorino. But “the purpose of this mediation is to move beyond well-known and entrenched positions” to find workable, mutually acceptable solutions, he said. Individual talks with stakeholders begin this month, he said.

The exercise has two objectives, Vitorino said: To identify possible ways to tackle the issue of disparate levy systems, and to gauge the functioning and scope of the private copying exception in the digital environment. The mediation will focus on several core issues: How to set levies; cross-border sales; determining who is liable to pay levies; visibility of the levy; and private copying and reproduction in the context of new digital forms of distribution of copyrighted content, and their implications for the levy system. Organisations and interested parties seeking solutions should send comments by 31 May to markt-levies-mediation-2012@ec.europa.eu.

IMPALA, which represents independent music companies, welcomed the re-launch of talks. While the methodology and administration of private copying systems “is open to improvement,” imposing fees on blank media and recording equipment is the fairest way to maintain such a copyright exception while ensuring artists are paid, it said. DIGITALEUROPE, which represents tech companies such as consumer electronics manufacturers, said it will engage directly with Vitorino for the moment.

Duelling Reports

Additional support for levies came in a 28 March report [pdf] by Compass Lexecon economic consultants for the European Grouping of Societies of Authors and Composers (GESAC), Association of European Performers’ Organisations, European Federation of Joint Management Societies for Producers of Private Audiovisual Copying, the International Federation for the Phonographic Industry (IFPI), IMPALA and the Society for All Artists. The report analysed an earlier study, commissioned by Nokia, which found that removing copyright levies would benefit consumers, rights owners and device manufacturers.

To the contrary, Compass Lexecon said, abolishing levies will not create a win-win situation for all market players. Rights holders will be worse off because they will lose the revenue generated by the levy and won’t benefit from the unlikely increase in sales of recording devices resulting from the end of the levy, it said. Lower revenues will reduce incentives to develop new, high quality content, it said. Information available on the music industry in 19 EU countries for 2000-2009 shows a positive and statistically significant relationship between copyright levies and content creation, it said.

The outlook for device manufacturers is mixed, the report said. They may, but will not necessarily, benefit from the cost reduction in the short term, but in the long run their revenues may drop as incentives for rights holders to invest in new content will disappear in the absence of levies, it said. For consumers, the effect is “ambiguous,” Compass Lexecon said. They could gain in the short term if removing levy fees significantly lowers the price of electronics goods, it said. But in the long term, they may find themselves worse off if there is less investment in content and, hence, less high quality content available, it said.

The study proves there is economic justification for and welfare benefits from private copying levies, GESAC said. The legal justification for such fees has long been recognised by EU law and by recent decisions of the European Court of Justice, it said.

UK Copyright Licensing Needs Tweaking

UK copyright licensing compares well with that of other countries but could be better, according to a 27 March report [pdf] for the Intellectual Property Office by Richard Hooper, appointed by the government to study the feasibility of a digital copyright exchange (DCE).

Licensing problems exist in several market segments and industry sectors, the report said, including libraries, archives and museums; educational institutions; and the audiovisual, publishing, music and images industries. Problems include complex licensing processes and organisations, repertoire imbalance between the digital and physical worlds, and the difficulty in finding out who owns what rights to what content in what country, it said.

Other issues are how to pay creators accurately for use of their works, and how to reduce the labor-intensiveness and costs of licensing copyright for the high-volume, low-value transactions that characterise the digital world, the report said. There is also a lack of common standards and a common language for expressing, identifying and communicating rights information across creative sectors and national boundaries, it said.

Solutions for these and other concerns will be considered in the second phase of the Hooper study, which began this month, the IPO said. One possible fix is the DCE, recommended in the 18 May 2011 government-commissioned “digital opportunity|” review headed by Ian Hargreaves, digital economy chair at the Cardiff School of Journalism, Media and Cultural Studies (IPW, Copyright, 18 May 2011), it said.

Hooper will report his finding to the government before Parliament recesses this summer, the IPO said. A separate IPO consultation on proposed changes to UK copyright law arising from the Hargreaves report closed on 21 March, and the government will publish its analysis and summary of responses within three months, the IPO said.

Dugie Standeford may be reached at info@ip-watch.ch.

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